The Economic Stimulus Payment
Q. What about this tax rebate everyone is talking about? Is it real? How do I know how much I will receive?
A. It seems like everyone is excited about the prospect of getting money from the government. The IRS has begun issuing lots of guidance on exactly how to go about getting your share of this payment. Because this topic is so complex, I will discuss in two parts. Today, you get the first section.
The most important component is that you must file a Tax Year 2007 tax return in order to receive your payment. That means even seniors must file a return even if they normally fall below the filing threshhold. The IRS made the Free File system available for this class of citizen. Other stipulations include legal resident status and a minimum of $3000 of income in order to receive a payment. If you received a refund when you filed your tax return and you had your refund deposited directly into your account (instead of receiving a check), then your rebate payment will arrive the same way. If you owed additional taxes with your return or had your refund sent in a check format, then you will receive a check for the rebate.
In March, the IRS will begin mailing notices to everyone who may be eligible to receive a payment. The plan is to begin releasing payment in May to those eligible to receive a payment. There is an entire section on the IRS website about this which you can access here.
Next time, we will discuss actual amounts.
I really question if these payments will help the economy. I see it as putting the government (and all of us) deeper in debt. Surveys have shown the majority of recipients will use the dollars to reduce debt, rather than to buy new things as economists hoped.
That is indeed an issue. The government is taking a big risk in making the appearance of getting money into its tax payers’ hands. Perhaps improving the efficiency of the existing tax system would be a better idea or even reducing tax rates income and otherwise.
Whatever the case, there is no way to know how this will affect the economy. What ultimately could happen is that people either save the money or pay off debts which actually increases the amount of case available to financial institutions to make further loans.