New $800 tax rebate ?

[rgtaxservice]

.

Could it be that simple?

Congress will handle it...it can't be that simple.

It's just another sham like the last 'rebate'. It's an advance. The only real winners will be the credit card companies and bill collectors. People won't be buying TVs, they will be paying off debt and increased utilities.

Besides, this isn't 'magic money', where is it supposed to come from?

[JohnH]

Interesting Question

It' s hard to say what people will do with it. Some will pay off debt, some will buy TV's, some will give it to charity, some will spend it on booze, and some will blow it at strip clubs. However, I have infiintely more confidence in the ability of the individual to make economic decisions than in any politician to make them for us. So I'm not going to object to a tax reduction of any amount or in any timing simply because I can't make a definitive statement about WHAT people will do with THEIR money.

I'm also not going to object to a tax reduction on the basis of "where's it going to come from?'. If that becomes the standard, then there's as much ratonale to raise taxes (maybe more so) as there is to leave them as they are.

In any event, if they eliminate the 10% bracket, even for only a year, it is not a sham - it's a real tax reduction simply because people will be paying less taxes than they would have been paying had the action not been taken. That's the definition of a tax reduction. The second issue concerning how the money is passed along to its rightful owners is a matter of timing, and that;s where the politics of the matter begin to surface.

[Koss]

What happens when we ask the client, "Did you get that check that Bush sent out over the summer?" This brings back bad memories when the client would say, "No, I can't remember that."

I can see the CP2000s now....I suppose this will be a boon to those of us who charge by the hour, and to the furniture stores/auto dealerships too!

There were certainly some folks who didn't remember, or chose not to remember, the "rebate" checks of $300. And my office had plenty of clients who felt they were somehow getting screwed. The perception was that the government gave them an extra tax refund, only to "take it back" when they actually filed their return the following year.

But I don't remember seeing any CP-2000 notices. What I remember is that if the client failed to report the rebate, the IRS simply caught the error during the initial processing, and reduced the refund by $300.

Burton M. Koss
koss@usakoss.net

[Jesse]

.................plenty of clients who felt they were somehow getting screwed. The perception was that the government gave them an extra tax refund, only to "take it back" when they actually filed their return the following year.

These clients are what I remember most.

[Koss]

Rebate Redux

We saw a few cases where the additional refund that was generated by the "rebate" was "issued" by the IRS, but never made it to the taxpayer, because it was redirected to another agency to be applied to a debt such as child support a student loan.

In some of these cases, the client was truthful when they told us they "never got the check." But the refund was issued, and was in fact applied to their debt. So it reduced the amount they owed in child support, or the student loan, or whatever it was. They constructively received the funds, so the it still had to reported on the return.

Most clients in this situation actually understood this. A few had a hard time with it. Some were in such bad shape financially, or were so irresponsible, that they had not really looked at any statements from the student loan or child support obligations in years. These folks were unaware that the rebate had been applied to their benefit on those accounts.

BMK

[rgtaxservice]

Smoke and Mirrors

It's not a rebate. It's an advance just like last time. Rebate just sounds better.
Either way, I'd take it. I just don't care for the fact that the govt is trying to BS the people into thinking it's a rebate.

Remember, it was the govt that tried to classify ketchup as a vegetable.

[Y2KEA]

I remember the fiasco of the the first "tax rebate" way back when. The IRS set up an 800 # to call & see if the rebate had been issued to a particular SSN. I never took anyones' word about if they got their rebate or not. I spent a lot of time on the phone for which I was paid nada. This was when I worked for a major brand name tax preparation firm.

Since I have my own practice now, if this goes through, you can be sure there will a line charge for doing the legwork this time around.

Indeed the term rebate gives the average taxpayer the warm & fuzzies, but we know it is in fact an advance on your refund.

With regards to this "rebate", since a rebate is money you get after paying for something, shouldn't this be called a prebate?

[ChEAr$]

Yes,

I


With regards to this "rebate", since a rebate is money you get after paying for something, shouldn't this be called a prebate?

A "prebate" given to taxpayers by a bunch of reprobates.

[Y2KEA]

A "prebate" given to taxpayers by a bunch of reprobates.

I like your thinking:
rep·ro·bate:
noun, adjective, verb
1. a depraved, unprincipled, or wicked person: a drunken reprobate.
2. a person rejected by God and beyond hope of salvation.
–adjective 3. morally depraved; unprincipled; bad.
4. rejected by God and beyond hope of salvation.
–verb (used with object)
5. to disapprove, condemn, or censure.
6. (of God) to reject (a person), as for sin; exclude from the number of the elect or from salvation.

Sounds like a politician to me.

[BOB W]

Nice observation................

[Koss]

Not a rebate

With regards to this "rebate", since a rebate is money you get after paying for something, shouldn't this be called a prebate?

It would probably be more accurate to call it a prefund.

Or maybe taxpayers would understand it better if the check was accompanied by a tax form already filled in by the IRS. The IRS could prepare and send a form along with the check showing all the calculations used to determine the amount of the check. It could be called...

Form 1040-ER, Estimated Refund

BMK

[veritas]

Pretty good Koss

How about 1040-PP?


(Pandering Politicians)

[Snaggletooth]

Shell Game

On the streets of this small southern town, there has been more buzz about this $800 gift than anything else, even including preacherman and widderwoman.

I've had more questions about this than appointments.

Where does the money come from? $145 Billion is not coming from tax increases, windfall oil profits, or any other source. The govt does not have a $145 billion surplus either. Anyone care to venture?

Comes from the treasury, in which case the deficit grows and the government has to borrow it. This either has to come from banking money supplies or from foreign sources. China has been financing much of it.

Or, they might just print the money, creating inflation.

Either of the above raises interest rates and depresses the economy. But that house of cards won't fall until after the election.

[Black Bart]

Groooaaannn.

I had forgotten all about the rebate's taxability that we had to go through. What a mess that was -- nobody remembered if they did/did not get it.

Why, for Heaven's sake, do they keep making these ineffective, futile token gestures anyway? They do nothing but increase the national debt. The newspaper says the Congress/Senate is going to:

Give everybody $500: Two weeks later the pore folks will have spent themselves right back to where they were before, while people who don't need it will simply drop it in the savings account with zero economic effect.

Raise unemployment benefits: That's okay for three months, but after that...what? How about they stop letting factories emigrate and put people back to work? When they sold NAFTA to us it was supposed to be a two-way street, but I haven't seen any Mexican factories show up here, have you?

Increase food stamps: Now there's a real winner. Congress obviously thinks that food stamp recipients are the backbone of the American economy. No doubt this will greatly benefit the average, taxpaying, middle class worker who will run out and buy a house with increased food stamp payments. Good grief.....

[b]Tax cuts: Advocates for the "poor" are already complaining that these should be made refundable rather than credits since the majority of this noble group don't owe any taxes to cut in the first place.

At the risk of stating an obvious need, is there any possibility of putting a two dollar cap on gas for a year? I don't know if it's even legal to do that (do you?), but, if possible, it certainly would help -- some people are buying only a quarter of a tank (or less) at a time. Not much chance of my oil-affiliated party (Republicans) or the prez doing anything about that one though. Funny, even the Dems don't talk about that much; makes you wonder if oil money also flows to the political left.

[Snaggletooth]

Ceilings

Bart, talk about a $2/gallon ceiling.

Mr. Bush is not against ceilings. In fact, he proposed a $250,000 ceiling on the amounts people could sue for malpractice. It didn't fly.

Notice that there was no ceiling on the amount the hospital or doctors could charge, only a ceiling on what the injured could recover. My father was gored by a bull a couple years before he died, and his insurance company paid over $450,000 for his recovery. Intensive trauma care was $43,000 per day.

Totally off-topic for a tax forum -- just wanted to slip this in so readers can know just how politicians cater to vested interests. I would have supported the ceiling on malpractice awards if it had been accompanied by a ceiling on the amount which could be charged. Fat chance, especially from the medical lobbyists.