How did I pay it back in my '02 refund?
I keep hearing this, but I don’t remember any such thing.
Can someone explain, please?
Peace,
mangeorge
Your sentence makes no sense.
But if you are enquiring as to how it was that the '01 rebate was made up by your April '02 tax return (for tax year 2001), then I believe you will find that, when you filed your return, you had to reduce any refund you may have been due by the amount of the rebate you had already received. I think that’s how it worked, and what people are talking about now.
?
You mean the “H” in “How” should have been lower case? Or that you just can’t continue the title into the message?
I’ll make more an effort to find my '02 form, but your explanation fits. I simply don’t remember all that.
I do not believe you had to declare it as income. I know there was some confusion about this.
We had a CPA do our taxes, so it worked out.
I also hired a CPA.
I could find no mention of the rebate on my '02 return. Line 10, as in other years, added my state income tax refund to my income.
You asked “How did I pay it back in my '02 refund?” Because a refund is an amount received from the govt., the idea that a taxpayer can “pay back” anything “in” a refund is puzzling.
The idea is that “they” would somehow deduct the amount of the rebate from my refund. Your refund is even attachable. Ask any deadbeat dad, for example.
Really? That seems pretty strange to me. Your tax refund isn’t something that the government grants you is it? It’s just the extra money your employer withheld, they are giving back your money, that you overpaid, right? So if this is really the way the rebate was ran, it isn’t really a rebate at all, but a no interest loan.
In '01, you got a “rebate” of some of your payroll witholdings for federal tax because there was a reduction in the marginal tax rate for the lowest tax bracket.
The IRS sent you a $300 check mid-summer. If you did not get the check but were qualified for the rebate, there was a spot on the 2001 1040 to claim the “rate reduction credit”. You would claim your $300 here (Rate Reduction Credit Worksheet - Line 47).
The tax tables and tax schedules for the 2001 1040 were constructed to take the $300 credit into account when calculating taxes (essentially, the new 10% bracket for income up to $6000 was left off the chart – you paid 15% on this money since you already got 5% of it back)
It’s not really accurate to say that they took the 2001 rebate out of the refund you got in April 2002 (it’s not really inaccurate, either). Since everyone overpaid taxes through payroll witholding in the first part of the year, you were going to get that $300 back at one point or another. The IRS chose to give it to you earlier than they had to.
Short answer:
Everyone who earned more than $6,000 had their tax liability reduced by $300 due to a law that was passed mid-year, that was retroactive to 1/1/01.
If you get a paycheck, it was being deducted from using a formula that expected you to owe the $300. If you pay estimated taxes quarterly, ideally you were using a formula that expected you would be owing that $300.
When the law was passed, suddenly the IRS had $300 of everyone’s money that strictly speaking was now overpayment.
Two choices remained : keep the overpayment, publish the new tax schedules, and come April 2002 everyone either gets $300 more or owes $300 less than they had planned in January 2001. OR, send the overpayment back to the taxpayer, and publish tax schedules with the old rates to account for this.
The end result for the taxpayer is the same with either option. But mailing checks to everyone has a political bonus. (Plus, the taxpayer actually benefits by getting the money earlier, and some taxpayers benefitted because the rebate was mailed based on your 2000 tax return - if it was too small, you could take the credit in 2001 I mentioned above, but if it was too large, you got to keep the extra).
Short Short answer:
Yes, your 2001 rebate did come out of the refund you got in 2002 but only in the sense that you got a portion of your 2002 refund early, but if the law hadn’t passed that sent out the checks, the number at the bottom of your 1040 on April 15, 2002 would have been the same anyway, and you wouldn’t have got that check in August.
So we didn’t get screwed, but some of us got fooled in a way. Either way, we were “ahead” by $300 over what we would have had if nothing had happened.
Man, do we need something less complicated.
You think?
Yeah, I’ve been thinking.
Maybe a telethon? Cute lawmakers singing cute songs? The Prez (Clinton) doing a faux striptease? MC’d by By her hubby?
Yeah, I’d donate.