Posted on 03/11/2009 7:29:32 AM PDT by Robert A Cook PE
The democrats demanded, and Bush (foolishly) accepted their "demands" for a stimulus to fight the Democrat-created "fuel crisis" of February, March, April, and May of last year.
For most IRS filers - but for no illegal aliens and tax cheats, this was 600.00 per individual, 1200.00 for married - no kids, etc. A substantial amount if used properly. Easily forgettable if it was wasted on trivial junk or fast food and lottery tickets and "stuff". As most would be in many cases.
But ....
The IRS claims it was taxable, it woul dchange your "taxes" for 2008.
This is true. Sort of.
What that May 2008 "stimulus" REALLY ends up as is an immediate and irrevocable $1200.00 DROP of your expected tax rebate - or an INCREASE of 1200.00 in your tax BILL. Forget whatever past tax planning you might have done.
Assume you received $1200.00 last May. Sure, you don't owe 2008 taxes on that 1200.00 dollars.
No, it didn't "reduce" your 2008 taxes by 1200.00 It didn't "increase" your 2008 income by 1200.00 either.
Instead, what it did was "advance" 1200.00 of your POTENTIAL 2008 tax refund into a check issued in May 2008. In effect, it DECREASED what you think you already paid in taxes in 2008.
Yes, you will still owe the same total amount of taxes to the IRS on April 15. But now, by accepting the democrats yells for a May 2008 "stimulus," you will have actually "withheld" 1200.00 LESS less last year than you expected.
And nobody mentioned that last May!
Assume you received that $1200.00 check last May.
If you normally get $150.00 after filing your income taxes, now you will OWE 1050.00 in taxes on April 15. (1200.00 - 150.00). If you think you are going to owe only $750.00 when you file on April 15, you will now OWE THE IRS $1950.00 when you file.
See what happens when those who are expecting a tax "refund" have to suddenly pay several hundred dollars. And delaying the file date doesn't delay what is due!
April and May consumer spending is going to die.
Yep I got slapped by this as well. We can cover it, but it was pile of poop frankly. I would rather have been taxed on it.
Wait a minute, if that $1200 is income, aren’t I only liable for 25% of that as taxable?
Odd math. I’m not sure I buy it.
Odd math. I’m not sure I buy it.
I don’t buy it either. Did you come up with this on your own, or did you ask the IRS?
So those of us who didn’t get a stimulus check because we made too much money in 2007 actually may have come out ahead? Or are we being charged for a stimulus we didn’t get?
This story is confusing. Is it “income” or is it an advance tax credit?
The same thing will happen with anyone who gets a tax “cut” under Obama. The tax tables aren’t changing, just the withholding.
Surprise!!!
Won’t affect me, I don’t qualify for government goodies and I never have a refund due to me. I always pay, no matter how much extra I have them take out. But alot of other folks are going to get nailed.
i guess this is why they ask on the 2008 return if you received your 2008 stimulas and if so how much...if its too good to be true it usually is....
What is sounds like is that it was just an advance payment on an expected refund.
So anyone that didn't have such a refund pending actually received a tax-free loan from the government, and the loan is now due on April 15th, 2009?
Might I ask what your source was for this information?
When you do your 2008 taxes there is a line to claim a credit. This is if you did not receive your $600 check. If you did receive it there is no impact what so ever on your taxes. Read the tax instructions.
I used TurboTax to do my return and didn’r see any effect from the rebate on my 2008 refund.
From factcheck.org:
“Like most things involving the IRS, the 2008 stimulus payments generate a lot of questions, details, exceptions and paperwork. On the face of it, the idea is simple: If you file your 2007 taxes with at least $3,000 of taxable income, you will be eligible for a minimum payment of $300 (and a maximum of $600). Those with high incomes may not receive a payment, or may get a lower amount. But that doesn’t eliminate the IRS’ need for a multi-part Frequently Asked Questions list.
The answer to this one, at least, is fairly clear. The payment is not included in your tax refund check, but it is not taxable income. You won’t have to pay taxes on it in 2008, and it will not reduce your 2008 refund. The IRS does recommend keeping a copy of the official notice detailing the amount of your payment – for your records, of course. Would you expect anything else?”
Well I’m glad I applied it to debt then, I guess I will have to pay more this year. At least I saved some interest...
That’s the way it works: What they actually did - and as the commercial tax software (TurboTax, etc.) verifies - was REDUCE the amount you think you withheld.
So, if you THINK you withheld 8750.00 in federal taxes last year to pay $8600.00 owed in taxes, so you THINK you are going to get a 150.00 refund when you file.
Instead, they sent you 1200.00 of that 8750.00 BACK to you in May of last year.
So, you fill out your tax forms...Exactly as planned.
You still owe $8600.00 in taxes. Exactly as planned.
You only have $7550.00 withheld. Ooops.
You will STILL OWE $1050 in 2008 taxes on April 15.
You actually ended up withholding $1200.00 LESS than you think you did.
And you have no money for gas, groceries, or goofing off in April.
How did you answer the “Did you get a stimulus check in 2008?” at the beginnig of the process?
I did read the instructions, and I thought I even understood it.
My refund was lower by the exact amount of the stimulus check, go figure.
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