UPDATE 2: The Wall Street Journal had a good column (may require subscription) with answers about the stimulus plan. Some of the Q&A:
Q: Do I have to file a federal income-tax return for 2007 in order to get something this year?
A: Yes. "You have to file a return for the 2007 tax year in order to receive a rebate check" during 2008, says an aide to Senate Finance Committee Chairman Max Baucus.
The IRS "will calculate the rebate from that return, estimating the reduction in tax liability for 2008 that results in the rebate check," the aide says.
Q: Do I have to figure out how much I'm supposed to get this year?
A: No. You don't have to apply. The Internal Revenue Service is supposed to handle it for you. As one congressional staffer put it, "all you have to know how to do is open an envelope" -- or tell the government how to zap your money electronically into your account.
Q: Will Uncle Sam tax these payments?
A: No, say representatives of the U.S. Treasury Department and congressional tax-writing committees.
Q: But what about all these rumors that the payments will cut into what I get as my refund next year?
A: They're wrong, congressional staffers say. "Please be aware that there have been erroneous reports that stimulus rebate checks are an advance on next year's tax refund, so that any refund a taxpayer might normally receive would be reduced by the amount of the 2007 stimulus check," says the Baucus aide. "This is not correct."
Amy McAnarney, executive director for H&R Block's Tax Institute, says, "The actual credit will be calculated on your 2008 return. If you're due a higher credit, you'll get the remainder next year when you file. If you received a higher credit than you should have, you do not have to pay anything back."
"What might happen next year," a House staffer says, "is that somebody who didn't get their full amount this year could get more, based on their return for 2008. For example, if you had a child born in 2008 and you were within the income caps, you'll get another benefit of $300 next year when you file your return for 2008."
UPDATE 1: Here is the breakdown of who gets how much based upon the proposal, which may be changed by the Senate.
If your adjusted gross income (AGI) is less than $3,000, you get nothing.
If you are single and your AGI is $3,000 to $6,000, you will get $300 to $600 plus $300 per child.
If you are single and your AGI is $6,000 to $75,000, you will get $600 plus $300 per child.
If you are married and your AGI is up to $150,000, you will get $1,200 plus $300 per child.
If you are single and your AGI is over $75,000, you will get $600 plus $300 per child, less 5% for every $1,000 over the $75,000.
If you are married and your AGI is over $150,000, you will get $1,200 plus $300 per child, less 5% for every $1,000 over the $150,000.
Total package is estimated at $150 billion with about $28 billion going to individuals who paid no taxes. Timeframe for actually receiving the funds could be as early as May, though most estimates are for July or later.
From Dictionary.com Unabridged (v 1.1), the definition of 'rebate':
–noun 1. a return of part of the original payment for some service or merchandise; partial refund.
–verb (used with object) 2. to allow as a discount.
3. to deduct (a certain amount), as from a total.
4. to return (part of an original payment)
5. to provide a rebate for (merchandise) after purchase.
[Origin: 1400–50; late ME rebaten (v.) < OF rabatre to beat, put down, equiv. to re- re- + (a)batre; see abate]
This means that, in order to qualify for any sort of rebate, an individual must have, by definition, first paid something. If the second definition is used, there must first be something owed in order to allow as a discount.
In sticking with the definition, only individuals who've actually paid federal taxes and not gotten all of them back as part of a refund, should be eligible for a rebate.
By definition, individuals who've paid no taxes should not be eligible for anything under this portion of the so-called stimulus plan.
Yeah - right. Who thinks that Congress or the President will insist on following the definition? Anyone?
What's going to happen is that our elected officials will take to the microphones to espouse a redistribution of wealth under the guise of 'fairness' by saying it isn't fair to give money back only to the 'rich.' That the 'less fortunate among us' also deserve some 'help.'
How fair is it to give a rebate to those who've not paid anything in the first place? If a person walks into your store and demands a rebate without purchasing the required products, you'd laugh and tell him to get lost. But somehow, our elected officials seem to think that this same scenario is not only logical but 'necessary' when it comes to the proposed tax rebates.
It's redistribution of wealth under the false assumption that taking from the taxpayers and giving cash to everyone, regardless of prior payments, will somehow stimulate the economy.
They're wrong - and any amount of common sense would demonstrate just how wrong this is. But that's never stopped them before - so expect it to happen anyway, with the hoped-for results never materializing.