Owing to your vast capacity (read drama) for describing your current financial situation, I am confused about your status. Did you, or will you, file a tax return this year?
This was my understanding, too. I recall a GQ thread about this back when it was first announced, but my search-fu fails me.
And paying down your debt only makes things worse. You pay credit card company, they have more money and start advertising harder, folks who have spent their $300 realize that they are just as broke as they were before and apply for lines of credit.
For the OP: Your economic sense is worse than our government’s.
I don’t know how it works for everyone. I especially don’t know how it works for people who actually are making money.
I do know that for me, and other disabled veterans, getting a tax-exempt disability pension from the VA, it’s a handout, with no coming liability for it. The only question I’ve got is whether the VA is actually going to stand by what I was told: That they won’t be adjusting future pension payments to correct for the additional income such veterans get.
No it is not.
From here
Q. Is my stimulus payment taxable?
A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. In the event you do not qualify for the full amount this year but you do next year, you will need to have the letter as a record of the amount you previously received.
Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?
A. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.
You might find more information about it here
On topic…
I think the OP needs to tell her “friend” to shove it if she does not get the money she owes her. Either she pays up or you move one and find another job. I can understand helping friends out now and then but it sounds like this person is taking advantage of you and you are letting it happen.
Thanks for posting that, and looking it up. I tried that, and then calling the IRS. They referred me to the VA.
And I don’t trust the people manning the phones at the VA to be able to give accurate answers about whether the VA will adjust the payment for this. Those same people told me it was highly unlikely that I’d be hit for the $80 I was paid for jury duty last year.
I’ve been told on the phone that the economic stimulus payment is not income, so it doesn’t count, but I’m taking it with a huge grain of salt.