http://www.gop.gov/Content/2001AdvPayQA.htm
I read this page, and can’t quite get my hands on it. Is this $300 check an advance rebate for money I would have normally gotten when I filed my taxes in 2002?
If so, will my refund be $300 lower than it would have been otherwise? If I end up owing taxes, will they be $300 higher?
It seems like the best thing to do with the check is mail it right back to them…
“What is the purpose of these 2001 Advance Payments?
The law is intended to give taxpayers the benefit of a new 10% tax bracket had it been in place for 2001.” from your link.
In other words, no the $300 you get back this year will not effect your federal taxes for next year but it may effect your state tax. Notice also that is says 2001.
“Is this payment taxable income?
This amount will not be included in income on your Federal tax return. Requirements for your state return may be different.” also from your link.
Rather than mail the check to them you are welcome to mail it to me.
I was under the impression that this wasn’t a true rebate, more of an ‘advance’ on any refund you may be owed next year. Of course, they will also rewrite the 1040’s so this isn’t glaringly obvious when you do you taxes next year. I’ll know if I’m wrong on this when I do my taxes next year. I’ve got a feeling that my refund will be substantially less next year.
Here is my understanding of it, and if it is wrong I really hope someone comes along and points me in the right direction.
Consider the following two scenarios the tax package never passed:
1. I would be getting a $100 refund
2. I would owe the Feds $100
Now, under scenario 1 I will shortly be getting a check for $300, and when I file in January I will still get my $100 refund. Had the ‘advanced payment’ program not been in place, in January I would have claimed a $400 refund. I would get $400 because I have socked away via my withholding an extra $100, and the new tax package entitles me to take an additional $300 in tax credits.
Under scenario 2, I will get a check for $300, and when April comes along, I’ll be sending them $100, just as I would have anyway. Had the payment program not been in place, I’d find that I did not underpay by $100, but I actually overpaid by $200. I’d now be figuring my taxes to include a $300 (which I wasn’t when I found that I owed the C-note) credit which cancels out my $100 debt.
This is obviously a layman’s oversimplification (I don’t know how any new rates come into play) but I hope that this is the gist of it. Any corrections are more than welcome.
lawoot and Rhythm have it right. The IRS is returning to you $300 of the withholding from this year. This will reduce your tax paid by that same amount, thus reducing your 2001 refund, which you will file in early 2002, by $300.
I don’t get it neither! Is this “refund” supposed to take the place of the money we would be getting back when we filed our tax returns, or is this money we will be getting on top of our “regular” refund? And if that’s the case, then where the heck is our “regular” refund?
http://www.detroitnews.com/2001/politics/0107/26/-254330.htm
This isn’t really a refund at all according to that article. The best thing to do is send it right back to the IRS. According to the article, the extra tax/lower refund will be silently incorporated into the tax tables.
There have been a number of threads on this. I’ll leave the searches to you. Suffice it to say, Number Six and others are wrong. The $300 or $600 represent the benefit to you of a retroactive (to 1/1/01) reduction of a portion of the 15% bracket to 10%–up to $12,000 for joint filers, $6,000 for singles and $10,000 for heads of households (who will be getting a $500 check).
If the checks weren’t coming now, you would owe that much less or get a refund that much larger in April. The plan was to get the money out now. There are other changes, including lowering every other rate by one percentage point (only effective 7/1/01) that will also reduce your taxes come next April.
So send the check back if you want. You’ll just be giving the government the interest, and you’ll get it right back again in April.
I should also note that every April from now on (until 2010), your taxes will in fact be that amount lower. And the other changes will be of much greater benefit, particularly for those spending or saving for college, saving for retirement, or just those making a lot of money…
But virtually everyone will be paying less federal income taxes from now on.
6 months interest of $300 at 2% APR(a savings account) is $3.00. I’ll gladly give the government $3 knowing that I won’t owe them $300 more in April. I watch my estimated tax payments so that I never get a refund. But I don’t need a big shockeroo in April for $3.
Upon reflection, I believe I owe Number Six an apology. Your refund will in fact be $300 less than it otherwise would have been. Assuming the same income (and ignoring other changes in the tax cut), you will get the same refund next year that you got this year. But (here’s the key part that everyone seems to be missing), you’ll be $300 ahead because you got $300 additional this year!
You are not getting screwed on this deal; your taxes are not going up next year because of the $300 you got this year. Again, a new 10% bracket has been created. If the checks weren’t being sent out now, this would be reflected in your refund (or payment). There will be no shockeroo in April (and again, you’ll likely be pleased because the 28%, 31%, 36% and 36.9% brackets are all declining by one percentage point).
I won’t get lower taxes. Medicare and Social Security rates will rise higher, I just know it.
How come they’re always referring to this as “George W. Bush’s tax refund?” GWB could never have come up with something this complicated.
Forgive me for beating a dead horse, but I need a further explanation. From reading the above replies, I understand that my $300.00 check will come from 2001 tax refund.However,I heard rumours that the individual states (in my case, Virginia) would rewrite their tax laws so that these refunds would simply disappear into the state coffers. I feel like a rug has been pulled out from under my feet: first I find out the federal government is refunding $300.00 but then the state steals it back. Please tell me that I get to keep my $300.00, please
You’re safe, medstar, unless the VA General Assembly takes action. Given that they don’t meet again until next year, and a tax increase retroactive to the beginning of the prior year is unlikely (though not impossible), I think you’ll get to keep your $300.
Let me refer you to this thread for further elucidation.