How You Can Still Get Last Year's Tax Rebate

The Chicago Sun Times posted a article discussing last years tax rebate, and how those who did not yet receive it can still do so. A snippet of the article can be found below, but the full text can be read here.

If you lost your job last year, you could probably use some extra cash. Here’s a source of money you may have overlooked: last year’s tax rebate.

In 2008, the IRS sent more than 119 million taxpayers rebate checks of $600 per person, or $1,200 for couples. Parents received an additional $300 for each dependent child younger than 17. The checks were part of an economic stimulus package enacted in February 2008. But many taxpayers didn’t receive a check, or received a reduced amount.

One reason was the income cutoff: The rebates were phased out for single taxpayers with 2007 adjusted gross income of more than $75,000, and married couples with AGI of more than $150,000. Congress based the rebates on 2007 tax returns to get the money in taxpayers’ hands more quickly, says John W. Roth, senior federal tax analyst for tax publisher CCH.

But the rebate was really a credit against 2008 taxes. As a result, taxpayers who didn’t receive a rebate in 2007 may be able to claim it when they file their 2008 tax returns. Likewise, taxpayers who received a reduced rebate may be able to claim the balance.

NYC Mayor Fights $400 Property Tax Rebates in Court

From Reuters:

New York City Mayor Michael Bloomberg said he was fighting the city council in court over whether he has the authority to withhold $400 property tax rebates that he says the city cannot afford.

"We are in court right now," the independent mayor told reporters on Thursday. If the court sides with the Democratic-led council, Bloomberg said the checks would be mailed to homeowners.

"We will always obey the law," he said. If the tax rebates are granted, the city will have to make other spending cuts, he said.

New York is under pressure to close a $1.3 billion deficit in 2009. The mayor's fight with the council is unusual and underscores the severity of the budget problems.

The battle may also test Bloomberg's financial expertise, the cornerstone of his campaign to win a third term.

"We will work with the city council to try to get the right balance" of measures, he said.

The Tax Rebates were a Flop?

Although it may be a bit early to be making such a dramatic statement, Martin Feldstein of the Wall Street Journal has done so in an opinion piece.

“The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.

These conclusions are significant for evaluating the likely impact of Sen. Barack Obama's recent proposal to distribute $1,000 rebate checks to low- and middle-income workers at an estimated cost of approximately $65 billion. His plan, to finance those rebates with an extra tax on oil companies, would reduce investment in refining and exploration, keeping oil prices higher than they would otherwise be.

Here are the facts. Tax rebates of $78 billion arrived in the second quarter of the year. The government's recent GDP figures show that the level of consumer outlays only rose by an extra $12 billion, or 15% of the lost revenue. The rest went into savings, including the pay-down of debt.

For a more comprehensive picture, we can see how households divided their overall increase in disposable personal income -- that is, household income including the rebates and net of income taxes and payroll taxes -- between additional consumer outlays and saving. The official GDP figures show that disposable personal income increased between the first and second quarters by some $98 billion (one-fourth of the annualized figure of $393 billion shown in the government report), up from an increase of $22 billion between the final quarter of 2007 and the first quarter of 2008. So disposable personal income rose by an additional $76 billion, a bit less than the rebates because of declining employment and reductions in other sources of income. The corresponding rise in consumer outlays increased to $36 billion from $24 billion. So the additional $12 billion of consumer spending was less than 16% of the extra $76 billion of disposable personal income. By comparison, savings rose by $62 billion, or five times as much.”

Feldstein does present valid information. However, I think it is still probably too early to see the entire affect of the economic stimulus package. Taxpayers who used the money to pay-down debt will likely have more spending money in the next few months.

Tax Rebates to Complicate Tax Filing in 2009

As Congress works to iron out the details of an economic stimulus package, many people are already predicting complications for tax day on April 15, 2009. If approved, the stimulus proposal would take the form of checks to be sent out this spring. However, they are expected to be advances on a one-year tax cut in 2008. The IRS is going to use data from the 2007 tax year to calculate each households check. Adult taxpayers are expected to receive between $500 and $600 and there is also going to be a $300 per child credit. Therefore households with two parents and two children could get as much as $1,800 from the federal government.

Unfortunately, since the IRS is using 2007’s data there are going to be some problems for individuals passing the age of being a qualified child in 2008. In these situations the parents will be mailed a check this Spring that they will have to repay come next year’s tax filing season. Additionally, if a taxpayer's child passes away during the year they would also have to return the money.

Tax Rebates are Coming Soon!

The Tax Policy Blog posted this interesting article reminding everyone that tax rebates are coming soon. Over the past few days there has been a lot of talk about the country’s economy and emergency stimulus plans designed to increase American spending. However, as the Tax Policy Blog reminds us, billions of dollars in tax rebates are already scheduled to be sent out over the next few months. Last year "over $140 billion in individual income tax refunds were sent out from January 2007 through March 2007. Plus, another $78 billion was sent out from April through June."