Another Look At The Rebate Checks

Now that both houses of Congress has approved the stimulus package and the President has signed it, the checks are in the mail. Well not quite. The Treasury Department says that it will be early May of this year before they actually get in the mail. If you get one at all.

Will you get a check if you owe the IRS? How Much will you get? Will you get a check at all? These are all questions, I will answer in today's post.

Tax rebate checks will be mailed to about 130 million people, according to the Internal Revenue Service. Because of amendments made to the bill in the Senate, some 20 million retirees living on Social Security and 250,000 veterans receiving disability benefits also will get checks.

Single tax filers with adjusted gross incomes of less than $75,000 and couples filing jointly with adjusted gross incomes of less than $150,000 will qualify for full rebates.

How much is the rebate?

Most taxpayers will receive a check of up to $600 for individuals and $1,200 for couples, with an additional $300 for each child. Children are defined as younger than 17.
- Topeka Capital-Journal

OK, but there are people who owe the IRS, what about them? I might point out, that I am not talking about tax dodgers here. I am talking about people who for one reason or another came into a windfall of money. Spent it all. And now can't afford to pay the taxes. These people are guilty of poor planning, not of tax invasion.

If you owe taxes, the IRS will withhold your rebate and apply it to what you owe, according to a Treasury Department spokesman.
- MSNBC

So you are going to get a rebate check. What should you do with it?

Dave Ramsey actually made some suggestions recently that I thought would be perfect to share with you my readers.

1. Pay off debt.
Dave Ramsey says, that this may be a no-brainer, but he expects few people will actually do it. As he points out, if you actually do this, then you will be one step closer to being able to buy that I-Pod, TV or whatever it is you have your eye on (for cash).


2. Invest it.
This is the idea I like best and if I wasn't payig down debt with mine would be exactly what I would do with my $600. Think about it, the way Ramsey put it. If you invest in a good "mutual fund averaging 12%. In 2018, that one-time investment will grow to approximately $2,000! If left in for 20 years, it will be worth about $6,500! For the married folks, this free money can grow up to $13,000 over 20 years." Now that's what I call a good investment.

- and finally -

3. Have some fun
Ramsey says that there is nothing wrong with having some fun with your rebate check. A nice dinner out, a couple pair of jeans, a movie are all fun things you could spend some of this money on. However, Ramsey reminds us, no warns us, to know our boundaries. "The quicker you get out of debt," Ramsey says, "the more fun things you can do and the more money you can give away to bless others."

So there you have it. What more can I say? Well there is one more thing. Something that even I believed was fact, for which it isn't. Take a look at this quote, also from the Capital-Journal article.



I have heard this is just an advance on next year's refund. Is that true?

No. This is actually a tax credit for 2008 that normally would reduce the tax you pay when you file next year. Instead, to stimulate the economy, Congress ordered a prepayment of the tax savings.
- Topeka Capital-Journal




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go ahead share your thoughts with me now.