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Can someone confirm my understanding.... the tax stimulus is really against 2008 income, so if your income is too high in 2007 for the total or any rebate, but this is not the case in 2008, then next spring/summer (of '09) you will receive whatever extra you qualify for?

I expect to be in this situation because I had a large cap gain distribution - plus a generous (mostly taxable) moving package from my new employer - that will disqualify me for most or all of the rebate this year. However, in 2008, I expect I will quality for much more if not all of it.

So, do I understand correctly? I'll get whatever extra next year?


Second, am I to understanding that the rebate is not taxable this time around? Or won't be added into near year's taxes owed? As apparently was the case last time around?
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What? Too soon? ;)
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Can someone confirm my understanding.... the tax stimulus is really against 2008 income, so if your income is too high in 2007 for the total or any rebate, but this is not the case in 2008, then next spring/summer (of '09) you will receive whatever extra you qualify for?

Confirmed. The checks to be sent this year are based on information on 2007 returns, but the are actually an educated guess as to what your 2008 refundable credit will be. If the check was too little you get the balance as a credit on your 2008 return. If the check was too much you get to keep the change.

Second, am I to understanding that the rebate is not taxable this time around? Or won't be added into near year's taxes owed? As apparently was the case last time around?

I'm not sure how you got confused before, but neither of the two prior "prebates" has been taxable in any way. The two prior ones were prepayments of retroactive reductions in current year's taxes, as is this one. It must be accounted for when you file your return to make sure you don't get the benefit twice, but in no way is it taxable, nor does it have to be "paid back."

Phil
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Can I ask two more questions about the stimulus package?

1) Surviving Spouse -- same rebate situation as MFJ?

2) When divorced parents take turns claiming the kids as dependents, would they each end up with the full $300 per kid? The one who claims the kids on the 2007 return would get the money this summer, and the one who claims them in 2008 would get the credit on the 2008 return? Or will there be some sort of cross-checking to prevent this from happening?

Thanks,

- Parkway
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1) Surviving Spouse -- same rebate situation as MFJ?

No. If a MFJ return was filed for 2007 the advance check will be based on that filing status. If the spouse dies in 2008 the surviving spouse is still entitled to file a joint return for 2008, so there's no issue. Everyone who doesn't file MFJ for 2007 or 2008 is treated the same.

2) When divorced parents take turns claiming the kids as dependents, would they each end up with the full $300 per kid? The one who claims the kids on the 2007 return would get the money this summer, and the one who claims them in 2008 would get the credit on the 2008 return? Or will there be some sort of cross-checking to prevent this from happening?

The situation is not addressed in the statute, so both get the payment, unless someone in Congress catches on in time, not likely to happen in an election year when they're throwing money at the voters.

The parent claiming the child in 2007 will get the additional $300 for the child in the advance check. When that parent files in 2008 the additional $300 will not be included in the credit on that return. The law says that the credit on the 2008 return is reduced by the amount of the advance check, but it can't be reduced below zero. Thus, the one who claimed the child in 2007 keeps the $300.

The parent claiming the child in 2008 gets the $300 on the 2008 return. Since it wasn't paid in an advance check, that parent also gets the benefit, this time in a tax liability reduced by $300.

I still say it would have been simpler to toss $100 bills from the Goodyear Blimp.

Phil
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Thanks Phil, as always!

1) Surviving Spouse -- same rebate situation as MFJ?

No. If a MFJ return was filed for 2007 the advance check will be based on that filing status. If the spouse dies in 2008 the surviving spouse is still entitled to file a joint return for 2008, so there's no issue. Everyone who doesn't file MFJ for 2007 or 2008 is treated the same.


I'm asking on behalf of someone whose spouse passed away in 2007. So 2007 status = MFJ, 2008 status = surviving spouse. She may not have to file for 2007 (bulk of income from Social Security).

But if Surviving Spouse is not treated like MFJ for this purpose, then it sounds like she could get more money by filing for 2007 rather than waiting to claim it in 2008. Of course, who knows what her 2008 income situation will look like, but filing for 2007 should cover her bases, yes?

I still say it would have been simpler to toss $100 bills from the Goodyear Blimp.

Well duh! :-)

- Parkway
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I'm not sure how you got confused before, but neither of the two prior "prebates" has been taxable in any way. The two prior ones were prepayments of retroactive reductions in current year's taxes, as is this one. It must be accounted for when you file your return to make sure you don't get the benefit twice, but in no way is it taxable, nor does it have to be "paid back."

I was a college student at the time, so I was going based on something I read on the internet, which is never a good idea I guess ;)
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