stimulus payment - final post on this topic

Well, judging from the examples at the IRS web site, the correct answer should be $300:

Does the basic on-line explanation from the IRS fit the bill? It's aimed at ordinary people*, or does it still have too much IRS-speak?

The top-level entry for the IRS explanation is at

• But bureaucrats often miss this target, at least when writing...

Perhaps, given an "unlikely scenario". Thank goodness there's that Circular 230 disclaimer at the bottom of every message... ;-)

I haven't read all the replies, but is it possible that such an explanation does not exist? After all, we're talking about a tax rebate, not a phenomenon of nature.

Ask yourself, is there a tax consequence to Joe and Jane *not* understanding? Whatever they miss in 2008, they can claim in 2009.

Please do not start three or more threads on the same topic, it is contrary to the aims of a moderated newsgroup, IMHO.

-Mark Bole

A Reasonable Explanation:

The payment is not a rebate. It is an advance payment of a refundable tax credit for tax year 2008. Anyone who files a 2008 tax return and computes a credit that is less than the advance payment does not have to pay any part of the advance payment back. Anyone who files a 2008 tax return and computes a credit in excess of the advance payment will get the excess.

The General Rule to obtain an advance payment in 2007: Every taxpayer who files a tax return will receive the lesser of $600 or their tax liability (regular plus AMT) measured without including the child tax credit. $1200 on a joint return.

The Special Rules: Certain taxpayers will receive a minimum of $300 ($600 joint return) if they meet either of the following two rules. Rule 1. They have qualifying income (any combination of social security benefits, VA benefits and earned income) of at least $3000. Rule 2. They have gross income greater than the sum of the basic standard deduction plus the personal exemption (2X the personal exemption on a joint return) and they have a tax liability of at least $1.

Any taxpayer who meets the Special Rule will receive an additional $300 for each qualifying child eligible for the Child Tax Credit.

The amount of the advance payment will be reduced by 5% of the AGI in excess of $75000 ($150,000 joint return).

Nonresident aliens, dependents, estates and trusts are not eligible. Each taxpayer must have a social security number to qualify, If one spouse does not have a SSN on a joint return, both spouses are ineligible. A qualifying child must also have a social security number.

So much for avoiding IRS-speak and CPA-talk! ;-)

According to Merriam-Webster, a "rebate" is "a return of a part of a payment". The fact that part of my tax payment might be returned to someone else who didn't owe any tax in the first place does not make the definition inapplicable.

Really, whatever term you use, it is a mid-year tax cut for most people, and a government welfare payment for others (those for whom the "refundable" part is significant).

Now if the marketing types had been on the ball, instead of calling it a "stimulus payment", maybe they should have taken a cue from the Alaska folks and called it a "freedom dividend" or something like that...

-Mark Bole

Is the following correct or am I still off in some dream world somewhere?

If the taxpayer has at least $1 tax liability: Filing status Qualifying income Tax liability Payment Children

Alan's explanation is as clear and concise as you're going to get.

Which affirms my point, namely what the OP is asking for doesn't exist.

Although Alan stated "the payment is not a rebate", a rebate is exactly what a story today from Associated Press ("Rebate letters to cost $42 million"), as well as Turbotax and H&R Block, are calling the payments.

-Mark Bole

I remember seeing a story on the news a couple of weeks ago. Some psychologists were interviewed, and they said that studies show that if it's called a "rebate" people are more likely to save it, while if they called it something like a "bonus distribution" people are more likely to spend it.

Stu

My last post on this subject:

A rebate is a return or refund on something you have already paid. The stimulus payment is therefore not a rebate as it is not a return of any taxes you already paid. Congress & the Pres. created a refundable tax credit for tax year 2008. You will see this tax credit on your 2008 tax return. They then gave the US Treasury permission to send you this refundable tax credit in advance of your having to file your 2008 tax return to obtain it. If the advance payment is larger than your 2008 tax credit.... your in luck as you don't have to pay it back. If your tax situation in 2008 generates a credit that is larger than your advance payment, your in luck again as you will get to use the excess to reduce your 2008 taxes.

So if a dependent (over age 17) who files taxes will get no "rebate" this year, next year when the person files no-longer-as-a-dependent, will he or she only get a tax credit up to what taxes are owed, and, if less that $600, not get the "full" $600 "rebate"?

Not a rebate per se, but certainly eligible for the full maximum credit.

ChEAr$, Harlan Lunsford, EA n LA

"Alan"

I disagree, wage pay checks from 1/1/2008 to 4/30/2008 showing with holdings of Federal Income Tax would certainly have been credited the US TREASURY, which are deposited on a weekly basis... through out the calendar year.

So, as on now and through the distribution phase those folks actually out working for a living ARE paying taxes in 2008, in this STIMULUS is a REBATE of some of those payments, which will be RECONCILED when the 2008 return is filed in the spring of 2009.

I believe the mechanics of this operation are better than the fiasco of the early 90's when someone thought it was a bright idea to lower the Circular E FED-WH factors to put a few pennies in peoples weekly paycheck, that action was an effort to implement a mid-year tax reduction. The end result was a -LOT- of folks who have balances due at the end of the year rather than refunds, talk about some PO'd Tax Payers.

I have to agree with Alan on this one. How can one receive a rebate on something not yet paid? And taxes aren't "paid" until the return is filed? And since it's for 2008, those returns won't be filed until next year about this time.

So I would recommend we call it an "advance rebate". Or maybe an "advance rebate in a political year."

Ah, now you got it. But, remember it's not just for "those folks actually out working for a living", it also includes retirees drawing disability and/or social security checks only.

Oh yes, remember it well.

ChEAr$, Harlan