JG Excerpt:That answer did not answer the question thoroughly enough. The question did not ask whether the refund was taxable, but whether the payment would have an effect on next year's taxes as an "advance payment."
Q: Will my payment reduce my 2008 tax refund or increase the amount I owe in 2008?
A: No. The stimulus payment is not taxable.
ALL of the earlier MSM reports on the economic stimulus plan referred to either “payments” for individuals who have some income but no tax liabilities, and “rebates” for everyone else who pay Federal income tax.
Apparently and without notice, that has all now changed........maybe. After surfing the web looking for the right answer, it does seem the IRS is now calling the “rebate” a "stimulus payment" and has dropped all "rebate" language.
On the surface it appears all stimulus will be defined as “payments,” so it can only be assumed here that the "payment" will not increase or decrease any tax refund or additional tax to which you would otherwise be committed to next year. It is an additional credit (hand-out) for 2008, which we will be receiving in advance....supposedly. After having said all this, there still seems to be no one able to answer the question "Will my payment reduce my 2008 tax refund or increase the amount I owe in 2008?" with any definitive authority.
About.com Excerpt:Why would anyone need to save information to "assist" them with next year's taxes?
Notices
Most taxpayers will receive two notices from the IRS. The first general notice from the IRS will explain the stimulus payment program. The second notice will confirm the recipients’ eligibility, the payment amount and the approximate time table for the payment. Taxpayers will need to save this notice to assist them when they prepare their 2008 tax return next year.
Lowdown On Tax Rebates:Probably the best explanation yet. It's an advance on a tax cut slated for next years (2008) 1040. So IT IS a rebate!!
The rebates serve as a one-time tax cut initially based on their 2007 incomes - an advance on a credit taxpayers will receive on their 2008 return.
Additional opinion on next years taxes.
3 comments:
State taxes? It may be considered income. In addition since it a credit - handout - surplus based on next years return, but using this years return for validation, you may qualify next year but not this year.
After your comment, I've updated the posting with new information as it became available. You were absolutely correct calling it a credit and validating the payment on next years taxes.
God Bless
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