Is the economic stimulus package a loan?
Photo by: saturnism
My wife is involved in a few “mommies” forums on the internet and ran across a discussion about the upcoming economic stimulus package. Many of the ladies were saying it was a loan and not really a rebate at all. I had read/heard similar things while browsing the internet as well. Before I answer the question, let’s understand a little more about the package and it’s intent:
What is the economic stimulus package and why are we getting it?
The economic stimulus package is a tax rebate that more than 130 million households will receive starting in May. The tax rebate is not taxable, and it won’t reduce your 2007 or 2008 refund. It also won’t increase the amount you owe when you file your 2008 return.
The purpose of the stimulus package is to encourage consumer spending in order to boost the economy. The US Government is hoping that people will use the funds to purchase items and thus raising consumer spending and sales.
How much will I receive and when will I get it?
Payments will begin in May with all payments to be mailed out by the beginning of July. In order to receive the rebate, you must be eligible. You are eligible if you meet the following requirements:
- Have a valid Social Security Number (SSN)
- Show a qualifying income of at least $3,000 on your 2007 federal income tax return.
- If married filing jointly, both people listed must have valid SSNs. If one doesn’t, you are not eligible
How much you will receive depends on a few factors including: Your income, whether you file individually or jointly and the number of children you have.
For individuals you will receive between $300.00 – $600.00. Those filing jointly will receive between $600.00 and $1,200.00. Those who have children will receive $300.00 for each eligible child. Eligible children include those eligible under the Child Tax Credit and those having valid SSNs.
Be aware, the rebate payments are reduced at higher levels of income. Those with higher incomes may receive a reduced payment or no payment at all. You can read more about this here.
Is the economic stimulus package a loan or not?
No, the economic is not a loan. Think about it, a loan would defeat the purpose of the package. If it was a loan, people wouldn’t spend it as they know they would need to pay it back soon. There are a number of people on the internet saying otherwise, but it isn’t true. The money is begin given to you so you’ll spend it. This is straight from the IRS FAQ:
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.
Since it is a 2008 stimulus package, you are getting the money early. The actual amount of your final rebate will be calculated based on your 2008 tax return. If you are due more money than you received in your early rebate payment, than that will be included in your 2008 taxes, if however you received too much, you will not have to pay it back.
- IRS Basic Information on the Stimulus Payments
- IRS Economic Stimulus FAQ
- 2008 Economic Stimulus Package Explained at Cash Money Life
- What To Do With The Fed Economic Stimulus Package Tax Rebate? at Moolanomy
- Congress to Pass Stimulus Package While the Band Plays On at The Dough Roller
- Will the Economic Stimulus Package Really Stimulate? at Credit Withdrawal
What are your thoughts on the package? Think it will make a difference? Where is the money coming from? Add your thoughts in a comment!