Tax Guru – Ker$tetter Letter

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Archive for May 23rd, 2008

Idiot Tax

Posted by taxguru on May 23, 2008

Over the years, many people have described lotteries as taxes on stupidity and taxes on people with no math skills. I still got a kick out of this scene from the most recent episode of Reaper, where Ray Wise as the Devil claims that he invented the lottery and has a familiar nickname for it.

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Rebate Confusion

Posted by taxguru on May 23, 2008

As I’ve pointed out on a few occasions, there is  a lot of confusion regarding the effect of the stimulus checks on the 2008 tax returns.  Not surprisingly, the IRS website has completely contradictory information regarding this, saying both that the rebate will be factored into the net tax on the 2008 1040 and also that it will have no effect whatsoever on the 1040’s bottom line.  Obviously, both those claims can’t be true.

It has been my contention from the beginning that this will be handled just as we had to do with the similar advance  rebate checks a few years ago.  People who did not receive their rebates via checks were able to have that amount credited on their 1040s so that they ended up receiving the same net benefit as those who receive actual checks.

I was browsing the latest H&R Block newsletter and saw that they have also come to the same conclusion as I have:

The tax rebate is an advance credit for 2008 and will be calculated on your 2008 return. Now this is important: you are receiving a portion of your 2008 credit EARLY and if you receive it once, you won’t receive it again when you file your 2008 return.

And, this is important too: if you’re due a higher tax rebate, you’ll get the remainder next year when you file. If you received a higher rebate than you should have, you DO NOT have to pay it back. So far, so good.

A tax rebate is not interest, it’s not income, it’s not a dividend. Pure and simple, and this is worth saying again, the tax rebate payment is an ADVANCE CREDIT for tax year 2008 and will be calculated on your 2008 return when you file in 2009.


Posted in Rebates | Comments Off on Rebate Confusion