Obama's Tax Rebate and Last Year's Rebates

Another season starts and it is looking a lot like last year. There is a stimulus package in Congress as I write this. The best guess for the average person's benefit is a $500 per person tax rebate ($1,000 for a couple). That is a guess since the bill has to pass the House, then the Senate, both versions matched up and passed again when finally the new President will sign it. It is anybody's guess what the final version will actually look like. I am being more diligent in asking for email addresses so that I can keep my clients up to date on this. Likely, they will use the filed return to determine the rebate and send out additional checks but there is also a plan discussed to decrease withholding as a method to return the money.

Then there is the issue of last year's rebate. Back in 2001, when Bush first took office, there was a rebate issued. The following year, there was a line added to determine whether taxpayers had received their check. If you had not received it and you were entitled to it, it was added onto your refund or taken off of your tax bill if you owed. The stimulus checks of last year are the same as that. You need to remember or bring in the letter you received reporting the amount of your check/deposit when you have this year's taxes done so that we can figure out if you are owed additional money. The way the law reads, the IRS issued rebate checks in 2008 for 2008 INCOME based upon 2007 INCOME. Of course that made it an estimate. If you ended up with 2008 income that did not qualify you for the check but received one because your 2007 income did qualify you, you will not be penalized (because they wanted you to feel comfortable in spending the money immediately). If the reverse is true, that your 2008 income DID qualify you even though you did not get a check because your 2007 income did not, then you will be able to claim that money in addition to your normal refund. Confused? Don't worry, Fireside is here to sort it all out for you. I look forward to seeing you this year.