To the "its not a rebate" question: Sen. Sanders said refund would need to be counted as income

[Political Heretic]

...on next years taxes. He said this on the Thom Hartmann show last week, in response to a caller who had called in to tell people that the tax rebate would have to be claimed as income next year. Bernie said that wasn't true, that they passed the rebate and it would not have to be claimed as income next year.

Heard a lot of people here saying it would have to be.

[DesertFlower]

1. wouldn't surprise me.

when i get a refund from the state the following year i have to declare it as income. does that make sense? it's money that was overpaid -- not income. how many times are we taxed on the same damn money?

[habitual]

2. if you have to declare it, it means you used it as a deduction the previous year

in other words, you only have to claim a state refund on your federal taxes if you deducted your state taxes that tax year (the one where you were originally taxed on your income that you got the refund for) on your federal, which you do precisely to avoid it being taxed twice.

If you get that $$ back that you deducted to avoid double taxation (which means it is now not taxed) then the fed considers it income to tax you on it.

[DesertFlower]

4. yes. we do use it as a deduction. nt

[magellan]

3. From what I've read, that's correct

It's not free money, it has to be claimed as income on next year's tax form.

I only have to think about whose bright idea this was to know there are strings attached.

[habitual]

5. i am pretty sure that is not correct..:

this is a rather interesting article with lots of info on the rebate:

http://money.cnn.com/2008/02/08/pf/taxes/rebates_what_you_need_to_know/

with this particular section answering the handling of the rebate in 2008... it turns out that it is an advance payment of a CREDIT they will give you in 2008.

from the article:

Do I have to pay the rebate back?

No. And here's why.

Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.

It's based on your 2007 income initially. If it turns out that your 2008 income and number of children would have qualified you for a larger rebate than the one you received, you'll be sent the difference. If it turns out your 2008 income was lower than in 2007 and you should have gotten a lower rebate, you get to keep the difference.

"If you were supposed to receive a larger payment than you did, you will get the extra money," said Treasury spokesman Andrew DeSouza. "If you received more than what you should have gotten, you will not be penalized."

[johnnydrama]

7. yes

We are receiving a tax break next year in the amount of whatever you get for the rebate. This is an advance on that tax break.

[magellan]

9. "an advance on a credit you'll receive on your 2008 return"

So doesn't that mean you have to deduct it from whatever credit you can claim next year?

[habitual]

11. no, because it will be THIS credit that they are now giving you.

it will have nothing to do with other credits normally on the tax return such as the Earned Income Credit, etc.

I think the best way of looking at it is this (assuming you qualify for the credit):
1. they are giving you a credit next year on your taxes.
2. Instead of taking the credit next year, they are advancing it to you this year.
3. Your taxes next year are unaffected as all normal credits are as usual and the Stimulas Rebate Credit will have already been paid and would not be deducted (because you got the $ already)

[magellan]

15. Got it

Thanks for explaining. I still think these "tax cuts" are a bad idea, designed to make people think the government's giving them something for nothing when that is hardly the case. But I live in FL and I see how stupid people can be, voting themselves tax cuts and then whining when the social services they rely on are cut as a result. They expect something for nothing.

This country is drowning in ignorance and greed.

[scarletwoman]

6. Your subject line says the exact opposite of what the rest of your post says.

So I'm still confused.

[Political Heretic]

12. Yup I screwed it up and can't edit it. I omitted the important NOT

[scarletwoman]

14. Bummer when that happens! Thanks for explaining the missing word. (nt)

[cliffordu]

8. What's it going to do to my Social Security and Medicaid?

What about my food stamps??

I ain't kidding.

[nadinbrzezinski]

10. It was last time around, so why would that be different this time around?

I know he means well, but given the past it was, I am assuming it will be until I file and am pleasantly surprised

[Political Heretic]

13. I left the "not" out of the title. He says this time it will NOT count as income.

He says they passed an actual stimulus rebate.