federal stimulus question

[moose]

I have a question regarding the federal stimulus for this year

Seeing that we now have less taken out on the federal side, will that affect the tax return at the end of the year? For instance as a single bachelor with no dependents, I usually see a return on the federal side of $900-$1000 a year. If they are giving us x-hundred dollars in small increments each week (my check has $10 more in it), will that come out of the federal return?

Im sure the answer is that it won't, because that would be absolutely an absolutely ridiculous sleight of hand by our government.

[Bodhi]

My understanding is that is does come out of the end of the years return (if you have one coming).

Keep in mind, that giving the government more than they are entitled to is a bad move anyway.  You should adjust your filing status so as to get very little back, or pay a small amount instead.

[Shuffler]

Yup it'll come out. Keep in mind they don't have any money. All money that they control comes from us, the taxpayer. The only folks it helps are the ones who pay no taxes.

The main idea of a stimulus is to stimulate the economy by giving you a bit more to spend now instead of at the end of the year.

[Anaxogoras]

Yup it'll come out. Keep in mind they don't have any money. All money that they control comes from us, the taxpayer. The only folks it helps are the ones who pay no taxes.

Who are they?  I remember having to pay income tax when I was 16 and making $5/hour.  Then there's sales tax.  No matter how poor I've been, the only way I ever got out of paying taxes was by being unemployed.

The main idea of a stimulus is to stimulate the economy by giving you a bit more to spend now instead of at the end of the year.

I'd take that up another level: the idea behind stimulus is to control the rate of unemployment.  Keynes really had a fantastic idea there, but no one bothers with the other half of it, which is paying off the accrued debt after economic recovery.

[OOZ662]

Who are they?  I remember having to pay income tax when I was 16 and making $5/hour.  Then there's sales tax.  No matter how poor I've been, the only way I ever got out of paying taxes was by being unemployed.

Me, for the past few years up until a couple months ago. No income but Social Security Disability, paying no taxes, getting a tax return, and also the factor of paying sales tax...with taxpayer's money.

[Reaper90]

Who are they?  I remember having to pay income tax when I was 16 and making $5/hour.  Then there's sales tax.  No matter how poor I've been, the only way I ever got out of paying taxes was by being unemployed.

"They" are the aproximately 48% of the US population that once their returns are filed and they receive their credits/refunds get as much or more back than they put in over the course of the year, if they paid any at all.

Sales tax, property tax, usage tax.... all of these are state/local in nature and not federal so secondary to the "stimulus" discussion.

[Anaxogoras]

If you make any money at all, you pay taxes.  Whether credits for various things equal more than what you payed is a different story.  For my part, no matter how little money I made as a teenager or in my early twenties (even while as an independent), I still payed more tax than what I got back from any credits.  If someone had a different experience, please speak up.

Last year we had a baby and bought our first house.  It was the first time ever that credits have equaled more than what we payed in federal taxes.  I'll be honest and say that it felt good after paying taxes when I was quite poor some years ago.

[batch]

if you were quite "poor" and didnt receive a larger return than what you paid in then you either made a mistake on your filing or theres more to the picture......... EIC has been around longer than  youve been filing taxes....... with standard deductions and EIC half the nation doesnt "pay" taxes

many make the mistake of thinking theyre paying simply because it comes out of their check....... when you get it back at the end of the year you didnt really "pay" you simply loaned

as stated sales,state, local taxes do not apply as they have nothing to do with federal income tax

you have to have a fairly generous income before you actually start "paying" taxes

Edit: to answer the OP..... yes that "stimulus" youre receiving each week...... which isnt really a "stimulus" its simply reducing the amount they borrow from you........ will reduce the amount of your return at the end of the year

as well as any other "stimulus" youve received.... such as the lump sum checks they sent to some people...... or the "cash for clunkers" rebates on new car purchases........ this is all treated as taxable income and will reduce your return at the end of the year

[Anaxogoras]

IIRC, EIC is only worth a few hundred bucks.

Edit:

If you don't have children.  That seems to be the big game changer.

[71313]

if you claim 0 you will always get money back

[batch]

IIRC, EIC is only worth a few hundred bucks.

Edit:

If you don't have children.  That seems to be the big game changer.

Yes kids do make a difference... but it doesnt zero the difference....... a married couple no children earing combined $40K will pay zero taxes

as far as the amount of EIC its a sliding scale and based on single vs married vs 1 kid vs 2 kids

it has a central point on the scale which varies each year based on the tax schedule....... for example in 2008 a married couple with 2 kids and an income of $20K would get 100% return of any money they paid in plus receive an additional $4,553 ...... a single person who worked F/T at "minimum" wage would recieve 100% return of any money they paid in but not receive EIC........ a single person working P/T at "minimum" wage and earning $5,800 during the year would receive 100% return plus an additional $438........ so the scale varies a bit depending on your income and marital/dependent status

note for married w/ 2 kids you have to earn $42K before you are ineligible for EIC... and at that income level you still get 100% return of any money you paid in

[68ZooM]

(Image removed from quote.)

If you make any money at all, you pay taxes.  Whether credits for various things equal more than what you payed is a different story.  For my part, no matter how little money I made as a teenager or in my early twenties (even while as an independent), I still payed more tax than what I got back from any credits.  If someone had a different experience, please speak up.

Last year we had a baby and bought our first house.  It was the first time ever that credits have equaled more than what we payed in federal taxes.  I'll be honest and say that it felt good after paying taxes when I was quite poor some years ago.

I've had the same experence as you have had, always paying more than i got in return. untill june of last year when my son came to live with me untill he turns 18, 2008 was the first year i got something back, granted not much but it felt real nice to get something back, this year me and my son bought a new house (got a killer deal) with a 4.1/4 percent loan and ill get the first time homebuyer tax credit, which will greatly help out with anything that comes up.

Been working sense the age of 12 and after never hardly breaking even on my tax returns its nice to get alittle back after working for 37 years

[PJ_Godzilla]

Who are they?  I remember having to pay income tax when I was 16 and making $5/hour.  Then there's sales tax.  No matter how poor I've been, the only way I ever got out of paying taxes was by being unemployed.

I'd take that up another level: the idea behind stimulus is to control the rate of unemployment.  Keynes really had a fantastic idea there, but no one bothers with the other half of it, which is paying off the accrued debt after economic recovery.

Gavagai, I'd disagree. What Keynesian policy generally manages to do with this kind of federal pump-priming is make and distribute bad news. Consider the Keynesian economic "miracle" of 30's era NASDAP Germany. Unemployment was kept low by "federal" job creation - mostly in arms/public works. Problem was, by abdicating the market mechanism of supply/demand, much of the production was for things for which people chose not to pay. The documented result: a 1/3 reduction in real income (depsite nominal income growth) over the period 33 to 39. That reads like gradual currency collapse. The "miracle" wasn't. And war, and the creation of enemies internal and external (some of them wealthy), was simply more palatable to the leadership than some reversal of "Yes we can" to an acknowledgement that "we screwed up".

So, is it any wonder that the next step was confiscatory? I think not. Consider Keynesian experiments in postwar Britain, if you want to see further ugliness, that is...

[sluggish]

This is an excellent point.  If you are the kind of person who plays it close you will probably owe this year.