Archive for the 'taxes' Category

Stimulus bill Q and A

The New York Times has a fairly comprehensive question-and-answer post on the stimulus bill President Obama signed into law earlier this week.

While there are tons of possible questions and scenarios that could apply to you and your family, the Q and A gives broad answers to help make sense of the whole thing. It covers everything from Cobra to the new tax credit and changes to the Alternative Minimum Tax.

If you’re feeling really brave, you can read the stimulus bill in its entirety on House of Representatives’s site.


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What does the stimulus bill mean to you?

A bit, according to The Consumerist. Mostly, it’s extra tax breaks: a tax break if you purchase a home sometime in 2009, an individual and couples tax credit, extended unemployment benefits, and a few more noteworthy items.

The original document is about 1,000 pages long, so we appreciate these news outlets skimming the giant package into a more digestible chunks.

Don’t see your tax form? Here’s why



Some members have wondered where their American 1 dividend tax form is. It’s tax season, after all, and if you’re like me, you want to get them done and over with.

If you don’t see your tax form online or you didn’t recieve your form in the mail, there may be a few reasons. You will not receive your tax form if:

  • You earned less than $10.00 in dividends
  • You paid less than $600.00 in interest on a real estate type loan
  • If we don’t have a correct address on the account and a tax form was mailed (it gets sent back to us)

Forms were sent on January 28, so if you don’t see it among your e-statements or you haven’t received anything in the mail, chances are you won’t get one.

Hope that helps!


Smart uses for your tax rebate check.

What should you do with your $300, $600, or bigger rebate check coming this summer? We found the best advice from around the web on what to do with your money.

The most important thing to remember? Be smart about it. Don’t waste an opportunity. We know the government wants you to spend your rebate to “stimulate” the economy, but there are smarter things to do with the money – especially in these tough economic times.

Pay down debt: “Using the money to cut your debt can be a win-win both for you and for credit card issuers…In a slowing economy, the last thing you want to do is overextend yourself.” (Fool.com)

Save for a rainy day: “The money is there in an emergency, but since you can’t just empty it out by writing a series of little checks you’re less likely to touch it. The standard rule of thumb is to sock away three to six months of living expenses. So start with your refund and take it from there.” (bankrate.com)

Service your car: “If you’ve been putting off that oil change and tune-up because you just didn’t have the money — this is the time. And check the tires. Extra bonus: A well-maintained car with properly inflated tires burns less gas and saves you money in the long run.” (bankrate.com)

Pay toward a retirement IRA or college savings account, or see an attorney to draft wills and other needed estate planning documents. (ABC.com) Call American 1’s Member Relations department for more info on this point.

Make home improvements: “Putting your tax rebate money toward such improvements as lighting, painting and electrical repairs can produce over 100% returns on their cost when it comes time to sell, making this a good place to spend the tax rebate.” (thestreet.com)

“Do I have to pay back my tax rebate check?”

No.


You don’t have to claim it on your 2008 taxes, you don’t have to pay it back in any way – it’s essentially “free money.” The economic stimulus checks won’t reduce your tax refund – if you get one – next year, either.

I know, I know. It’s hard to believe. But it’s a “thanks for being an American citizen” check, one that the government hopes you will put to “good use” on the economy. However, there are better things to do with your tax rebate check, as we’ve learned.



FAQ about tax rebate checks



The Washington Post has a great Q and A session on some frequently asked questions about the tax rebate.

Here are some good questions a lot of people are asking:

Q: I’m a working veteran with a disability: I am considered 30 percent disabled by the VA. I currently work full time and file taxes. I will be eligible for the $600 incentive payment. I read that disabled Vets may be eligible for $300. Is that in addition to the $600 I will already receive or is that only for vets who do not file taxes?

A: No. The $300 minimum payment may go to veterans who don’t normally file returns, but qualify for the stimulus payment.

A: I’m confused about the tax rebate. My husband and I got a letter saying singles would get $600 and married couples would get $1200. But a friend of ours got a letter saying the amounts were $300/$600 respectively. Which is correct?

A: The actual amount depends on the information contained in your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.

Q: Will we have to claim this as income on our 2008 tax returns next April 15? If so, I’m just going to put 1/3 in my savings account so that I have money set aside for those taxes.

A: No. You will not owe tax on your payment when you file your 2008 federal income tax return. The stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 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 on your 2007 return but you do on your 2008 return. You will need to have the letter as a record of the amount you previously received.

Q: I read somewhere that the upcoming tax rebates will be an advance against 2008 taxes and will need to be paid back in 2009 when we file our 2008 returns. Is this correct?

A: No, this is NOT an advance payment. You will not owe tax on your payment when you file your 2008 federal income tax return.

Be sure to check out the IRS’s information page for more answers to your tax rebate questions. Also, Michelle Singletary’s column in the Post is always a good read, especially if you’re interested in personal finance, budgeting, and getting out of debt.