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Financial Planning / Tax Strategies
|Subject: Re: Water Cooler Talk||Date: 1/27/2009 11:39 AM|
|Author: TMFPMarti||Number: 104009 of 120812|
It was an advance on the refund you would receive in 2009.
Well, yes and no. It was that, but it was also a corresponding increase in the amount of refund that you would have received in 2009. They enacted a tax year 2008 refundable credit that, in effect, lowered all eligible taxpayers' 2008 tax by $x. Then they sent $x to those taxpayers based on TY 2007 returns. What sorts out on the 2008 returns is additional money for people whose advace payment wasn't as much as the actual 2008 reduction in tax. A couple of examples:
1. You had a baby in 2008. There's possibly additional credit money due from that.
2. You had an abnormal income spike in 2007 that made you ineligible for the advance payment. Your income is back to normal in 2008, and you qualify for the credit.
Going back to the OP of this thread, if the co-worker's refund was abnormally low something that had nothing to do with this stimulus stuff changed from 2007 to 2008.
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