Re: Almost official
Good point there v1_0, I wonder if you would have to report that on your 2008 return as taxable income or non-taxable(gift). I hopes it the latter.
Ahh... neither. The income would be taxed at your tax bracket. The gift would not be taxed. The third - and more likely - is an 'early tax refund'. Here's an example of the three:
Let's say you can figure out your 2008 well enough ahead of time so that you neither owe taxes or overpay. So that when you send the tax forms in, your payments throughout the year match what you need to pay in taxes. [This is before the rebate/whatever].
Now, if the 'rebate' is in the first category (taxable income) - your income is increased by 300$ (or whatever you get). Theoretically you should pay tax on some percentage of that - but maybe not if it dosn't bump you enough. Worst case, you now owe 90$ (.30% tax bracket). However - the government has just decreased their revenue by 210-300$.
If the 'rebate' is in the second category (non taxable) then your taxes won't change and the government decreases their revenue by 300$.
Now, if it's the last case - an early tax refund - which is what happened the last time, then when you calculate your taxes there will be a line *after all the deductions, etc* that in effect adds the 300$ back in. In the case of the example above you would now owe the government 300$!! Since you aren't getting a refund on your actual taxes but did get a 300$ early tax refund check. From the government's perspective, their revenue isn't decreased. This is classic borrowing from Peter to pay Paul. This is why it can be voted in so quickly - the only government budget impact is loss of interest on the money.
What's really funny here is that the government is making each of us 'loan' ourselves money... In reality, many people overpay and get refunds when tax time rolls around. This just will decrease the size of those refunds. Now, for the people who don't get refunds - or are really close - this will increase the payment at tax time...
Now, I'm sure that there is some fineprint so that people under a certain threshold will get their money free and clear. But it probably won't be 300$, either.
-V
