The proposed tax 'rebate'

[aktep]

@bouv

But I will than have to add that $600 onto my taxable income for 2008? So it really will be $600 minus whatever percentage for my tax bracket?

No. It’s not income. It’s your own money back (taxes you overpaid), or money the government is giving your for free as negative tax (a special type of tax credit). This was a common misconception in 2001 - that you had to report it on your taxes. It’s no more taxable than your tax refund is.

I was under the impression that if you had less than X dollars from a given source (I always thought it was $1000, or something) you didn’t have to report it?

If someone pays you less than $600 and would normally need to provide you with a 1099 for that payment, they do not need to provide a 1099 to the IRS. This doesn’t mean you don’t report it. It’s still income for you, but it saves tons of paperwork for companies that hire one-off contractors. For example, a school district in a decent sized city will have up 1000 different people officiate athletic contests or judge music competitions and collect a small check from the school. If they don’t pay someone over $600 in the course of a year, they don’t have to fill out the 1099, and they save time and money from printing up all 1000 of those (and, as a referee, I don’t want 20 1099s for $50-$200 each when I’m already keeping records).

[Roadfood]

@aktep

No. It’s not income. It’s your own money back (taxes you overpaid), or money the government is giving your for free as negative tax (a special type of tax credit). This was a common misconception in 2001 - that you had to report it on your taxes. It’s no more taxable than your tax refund is.

It does, however, need to be reported on your state tax form as income (at least in some states, California for one). Because federal income tax is is not taxable as state income, you deduct your federal tax from your state income. This, being a refund of federal income tax, will now lower the amount that should have been deducted from the state income, and hence should be reported on the next year’s state form. At least in CA, there is a specific line in the income section for federal refund amount.