The Planned Tax Rebate

OK, now riddle me this:

While I should (hopefully, fingers-crossed) be entering shiny new tax brackets next year, how can I, a student making slightly better than minimum wage, pretty much living off of student loans, get a, "tax rebate," of $600? I think my taxes this year will have been something like $500, which I'm going to get back. (I don't claim EXEMPT because I like getting my tax refund. It's like forced savings for college students.)

How, do I ask you, do I get an extra $600?

How?
 
LostAngeles said:
OK, now riddle me this:

While I should (hopefully, fingers-crossed) be entering shiny new tax brackets next year, how can I, a student making slightly better than minimum wage, pretty much living off of student loans, get a, "tax rebate," of $600? I think my taxes this year will have been something like $500, which I'm going to get back. (I don't claim EXEMPT because I like getting my tax refund. It's like forced savings for college students.)

How, do I ask you, do I get an extra $600?

How?
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You mean "how" in the logical, semantic sense, or "how" in the technical sense?

If you mean the logical sense, the only respectable answer is "magic." :)

Technically speaking, it sounds from the article like the proposed implementation isn't yet finalized. Some of the proposals appear to be to offer refundable tax credits, which can reduce your tax bill below zero (the gov't owes you money you didn't actually pay).

If the final implementation doesn't make the tax rebate fully refundable, then people wouldn't actually get any money back if they had no tax liability, and you could only receive up to your maximum taxes back if you didn't pay the full $600 in.

The other method offered up in the article is to have the government cut you a check for the amount of your Social Security payroll taxes, although it doesn't go into much detail about the cap amount or anything. I'm guessing they would cap the maximum amount receivable at whatever amount they would otherwise issue as a rebate.
 
Huh-What? said:
It appears the rebate will likley become fact.

http://www.chicagotribune.com/business/chi-thu_stimulus-rebates-300_0124jan24,0,2743470.story
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Well it ought to happen quickly or there's little point to it.

I am trying to remember the last time anything like this was done by the UK government, and I can't. Perhaps the one similar measure was a temporary abolition of stamp tax on property purchases that the conservatives brought in to help with the early 1990s housing slump in the UK. But a fistful of banknotes to every taxpayer that was jusy a one-off . . . can't think of one.
 
acuity said:
You mean as opposed to not paying for something already produced?

If you default on payment, future production is impared by the expense of recovery from your default. If you pay, future production is not impaired.....
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I could buy this if the rebates in particular did something to stave off the mortgage foreclosures. This particular amount spread out over the whole population probably won't have that effect.

So yes, if one looks at the nature of the current problem in the lending markets, lenders will need to recover their losses before that problem will revert to business as usual. I am not aware the problem is with any other credit markets. Though I'm sure there are interrelated effects. I don't think the current problem here is the result of too much credit card dept. I think it is mostly related to the collapse of the ponzi scheme in the housing market and the rapid equity losses in real estate that resulted. A one time payment could be applied to a credit card dept, but it is unlikely to help with your mortgage payment.
 
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It is just money that you will not be getting back in your refund for the tax year.

They are giving you your money that you over-payed in your withholding early and making you think they are giving you money.

Silly people.
:mad:
 
LostAngeles said:
OK, now riddle me this:

While I should (hopefully, fingers-crossed) be entering shiny new tax brackets next year, how can I, a student making slightly better than minimum wage, pretty much living off of student loans, get a, "tax rebate," of $600? I think my taxes this year will have been something like $500, which I'm going to get back. (I don't claim EXEMPT because I like getting my tax refund. It's like forced savings for college students.)

How, do I ask you, do I get an extra $600?

How?
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I believe you just need to have an income above $3,000/yr and less than $75,000/yr. That is if I saw the correct information in the news. What I'm waiting to see is if it applies to my income which is all self employment income. Hopefully it will and presumably it will be to net and not gross income.
 
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JEROME DA GNOME said:
It is just money that you will not be getting back in your refund for the tax year.

They are giving you your money that you over-payed in your withholding early and making you think they are giving you money.

Silly people.
:mad:
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To do that your taxes would have to go up as much as the rebate. I think you are confused.
 
skeptigirl said:
To do that your taxes would have to go up as much as the rebate. I think you are confused.
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No. Do you not remember the tax rebate scam that Bush did early in his presidency?

This is the same scam.

Your tax liability does not change one single bit. You will be paying the exact same amount. They are just giving out an early refund of the over-payments from withholding.

Every single American will be obligated for the exact same amount of income tax with or without this "rebate".
 
While I still have a hard time understanding how so many people do not understand that ARM stands for "adjustable rate mortgage" (and as a result their rates might actually adjust upward), I would think the recent interest rate cut could keep a lot of those silly people in their homes when rates reset.

The tax rebate is also fine by me. Although, as noted above, I'd be happier if they'd never taken it from people in the first place. Since I'm overseas now, I'm not sure if I'll get it (despite having to file U.S. taxes). If I do, however, it'll be going to pay down my U.S. mortgage.

What is the calculation? For every dollar paid against the principal early, you save $3 in interest later?
 
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skeptigirl said:
I could buy this if the rebates in particular did something to stave off the mortgage foreclosures. This particular amount spread out over the whole population probably won't have that effect.
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Yes--this tax rebate is not targeted at putative mortage defaults from interest rate resets. The story I linked to in post 5 is about that.

So yes, if one looks at the nature of the current problem in the lending markets, lenders will need to recover their losses before that problem will revert to business as usual. I am not aware the problem is with any other credit markets. Though I'm sure there are interrelated effects. I don't think the current problem here is the result of too much credit card dept.
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Really I think the rebate is an attempt to soften what appears to be a general downturn in consumption (or a fear of a greater downturn, now that the unemployment rate has jumped up by a noticeable amount.

I think it is mostly related to the collapse of the ponzi scheme in the housing market and the rapid equity losses in real estate that resulted.
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I agree that is the origin of the slowdown
 
JEROME DA GNOME said:
It is just money that you will not be getting back in your refund for the tax year.

They are giving you your money that you over-payed in your withholding early and making you think they are giving you money.
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My understanding is that this net stimulus, of approx USD140billion, which is about 1% of annual GDP, not an advance on what people would have collected later. Do you have a source?
 
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2001 tax rebate scam

The "rebate" was based upon the lower tax rates passed. The checks were money not owed in the new tax rates.

The Treasury Department points out that this is not officially a "rebate" ... it's an "advance payment" to taxpayers of money they would have gotten back from the government as a rebate when they filed their tax returns next April (for 2001).
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The current "rebate" scam has not been spelled out as of yet, but there is not reason to think it is much different than the 2001 "rebate" expect there is no tax cut tied to it.
 
Jerome is absolutely correct here about the previous rebate scam. I remember having to deduct the amount of the check from my pitifully small refund, and I was explaining this to my spouse with great anger yesterday, as she has forgotten what a ripoff it was.

This was to convince people to spend that money foolishly as it appeared to be a "windfall", yet it was simply an advance on your return.

I would hope that they wouldn't pull that same stunt this time, but I'm not hopeful.

For those who get this magic check, be sure to do your research before spending it. If it's another scam, be prepared to pay it back in April.
 
JEROME DA GNOME said:
2001 tax rebate scam

The "rebate" was based upon the lower tax rates passed. The checks were money not owed in the new tax rates.



The current "rebate" scam has not been spelled out as of yet, but there is not reason to think it is much different than the 2001 "rebate" expect there is no tax cut tied to it.
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OK, I understand that. But the 2001 tax cut was a genuine reduction in tax, coupled with a measure to get it to consumers faster than what would otherwise happen (which is: they would be owed tax back from the IRS but would not collect it until the end of the tax year or later). You can call it an advance on a rebate that would have happened later but that misses the point. There would have been no "rebate later" had the new lower tax band not been just created. People did not need to repay the money they got.

How was that exactly a "scam"?
 
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Learning Phase said:
This was to convince people to spend that money foolishly as it appeared to be a "windfall", yet it was simply an advance on your return.
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Consider that recessions and booms are arguably created by people hoarding/not spending money "foolishly" and borrowing/spending money "foolishly" respectively. It is at least possible that couter-cyclical fiscal policy could be averting foolish decisions rather than increasing them.

I would hope that they wouldn't pull that same stunt this time, but I'm not hopeful.

For those who get this magic check, be sure to do your research before spending it. If it's another scam, be prepared to pay it back in April.
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Again, if the government says: "We're cutting taxes, and giving you this year's benefit now. Of course that means you won't get this year's benefit again after the tax year has ended." I fail to see that this makes it a "stunt". What happened next April would still be a windfall compared to the outcome if there had not just been a tax cut.

Am I missing something?
 
acuity said:
OK, I understand that. But the 2001 tax cut was a genuine reduction in tax, coupled with a measure to get it to consumers faster than what would otherwise happen (which is: they would be owed tax back from the IRS but would not collect it until the end of the tax year or later). You can call it an advance on a rebate that would have happened later but that misses the point. There would have been no "rebate later" had the new lower tax band not been just created. People did not need to repay the money they got.

How was that exactly a "scam"?
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The taxpayer is presented that the government is giving them something extra when in fact the government is advancing them a refund of overpayment.

This is a fraud, trick, deception, misrepresentation, in essence a scam.
 
JEROME DA GNOME said:
The taxpayer is presented that the government is giving them something extra when in fact the government is advancing them a refund of overpayment.

This is a fraud, trick, deception, misrepresentation, in essence a scam.
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But it's only an overpayment because they are cutting taxes.

Like if your employer says "I'm giving you a bonus at the end of this year and actually you can have half of it now", and you didn't normally get bonuses. Would you say that was a scam and resign in disgust?
 
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acuity said:
Consider that recessions and booms are arguably created by people hoarding/not spending money "foolishly" and borrowing/spending money "foolishly" respectively. It is at least possible that couter-cyclical fiscal policy could be averting foolish decisions rather than increasing them.
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What about government "foolishly" borrowing/spending and most importantly creating new money?

Again, if the government says: "We're cutting taxes, and giving you this year's benefit now. Of course that means you won't get this year's benefit again after the tax year has ended." I fail to see that this makes it a "stunt". What happened next April would still be a windfall compared to the outcome if there had not just been a tax cut.

Am I missing something?
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They are not cutting taxes this time.

Any taxpayer can change their withholding and preform the same action throughout the entire year.

The intention is to give the false impression that government is giving the taxpayer something extra, they are not.
 
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