Tax Refund

[workinghard]

I won't belive the tax rebate until it passes but if it does....i'm hoping the information I found is correct (for my state) "In Illinois, debtors do not usually have to pay their tax refunds to the trustee".

[MajorMike]

why can't you direct deposit???

Our trustee told us we could keep ours that when we filed to make sure that we have the IRS send us a check and not have it directly deposited into our account because we are in a 13 it won't throw up any red flags. We can efile just not have them direct depsit it. We did that last year and got our refund check and no one ever said anything. We will change our deductions this year once we figure it all out because I would rather have the money every month. I need it!!!

[MajorMike]

This is why you do your taxes so you get no refund!!! You need to adjust!

We filed our BK in september of 04 and it confirmed in 05 I think february. When I filed my 04 return we got that money. It did not even fly by the trustee. $1800.00 I think it was. However the next year because I was confirmed, I thought I would get the money if it was under a certain amount $4000.00 I think was our ceiling , but you would need a explanation as to why it was so much. I sent in a return for $3800.00 and it was sucked up by the trustee, he did not care at all that we had children in the hospitol at the time. I doubt he even read the explanation. Just put a big confiscated stamp on it..... In Texas I believe the number is $2000.00 with out an explanation that comes to you, but it is a crap shoot. I think it is like the federal government where they turn evrything down initially and require you to get an attourney to fight for your money. Banking on the fact you wont have the extra funds to do so.

[helpless]

Trustee said not to have it direct deposited because it would throw up a flag because we are in a 13 and take longer to get the refund. Don't know why, but that is what we were told to do. Hopefully, the trustee knows these things!!

[SANRA308]

The problem with the rebate check is that it is a advance on your next years taxes,[nothings free ] which means that you would get that much less next year. The problem is that if you are like us and adjust your witholdings so you dont get a refund for the trustee to take. you may end up owing next year if you dont have more held out . So the trustee will possilby get your rebate and you will have to have more held out of your check to compensate for the advance the trustee got. Not very fair

[woeisme]

I don't think the rebate is an advance on the following year's tax. If I'm wrong, please refer me to your source, but my understanding of it is that they are enacting a special one time only tax break, not an early refund of the next year's tax. That's why they keep saying it's going to cost the government X-million dollars to enact, it would cost almost nothing (except interest) to be giving an early refund. Initially that is what the wrangling between Bush and the House was over, because he wanted to give a tax break on the first 10K of taxable income, which would have equaled about $800 per person, and the House wanted to include giving money even to people who do not pay any income tax. Now after the compromise, it does include payments to those who don't pay taxes, so how could it possibly be an advance on their future tax refund if they don't even get tax refunds?

[MOMof3]

The rebate is not considered taxable income.

[SANRA308]

its just like the last tax rebate it was the same way. they have even stated this on the news. its a advance on what you would have gotten back for next year and if you are not getting money back you could end up owing. the year after the last rebate we ended up owing for the firet and only time and our accontant stated its was becuase of the rebate. its not free money its to boost the economy now and hopefully prevent recession

[epiphany]

I paid no taxes on the rebate in 2001. I had a girlfriend who had her taxes done by H&R Block that year and she mentioned that the rebate was taxable. I didn't think so and I called my accountant (ah, it was nice to have an accountant but I digress), and he was puzzled by that and said no way. I mentioned it to my parents and they thought that was crazy too.

I certainly think that if that rebate were truly taxable, then the IRS would have automatically caught it for anyone who didn't claim it. But a google search I just did leads me to all sorts of conflicting and confusing information. Possibly there was certain criteria met where it would have been taxable? I dunno.

I am also skeptical that it is taxable because if it is I would think that there would be a lot more hooping and hollering going on by the Bush haters--- saying what a farce it is and yada yada yada (don't get me wrong, I'm no fan or either party). That would be a HUGE story, unless they are all in cahoots for their own strange political reasons....which is always entirely possible. Sigh....
EP

[SANRA308]

some states are different in Oklahoma any refund you get is taxable , we have to put down the refund we got, we even get a form from the state. the issue here is not that the rebate are taxable, but that it is a advance on next years tax refund.

[woeisme]

Ok, so I looked it up to figure out what really happened in 2001. The "rebate" was indeed as SANRA308 posted, an advance on 2002 tax refunds for the 2001 tax year. So if you did not get the rebate check of $500 (or whatever it was, I don't remember, maybe $300?) in 2001, you would have gotten $500 (or $300?)more as a refund once you filed your 2001 taxes in 2002.

However, that being said, there was an actual benefit to taxpayers, which SANRA208 seems to be glossing over. The reason they were able to offer this "advance" on the refund was because they dropped the tax rate on the first $12,000 of taxable income to 10% in 2001, retroactive to the beginning of the year. By dropping this tax rate from 12.5% or whatever it was prior to 2001, most people would be getting bigger refunds in 2002 for their 2001 taxes than they normally would. Therefore the advance was the increase in refund they calculated each person would get as a result of the new tax rate. So while it was an advance on the tax return for the next year, the lowered tax rate meant that people's tax liabilities decreased in accordance, and the advance was just so that they wouldn't have to wait until filing to take advantage of the new tax break (i.e., get their extra $ from the new lower rate).

Now every year people's taxes vary a bit due to a whole lot of other factors, so in some cases a person's tax bill might be bigger or smaller for all kinds of other reasons unrelated to the tax rate on the first $12,000 of income or whatever. So some people might have found out when they filed their 2001 taxes in 2002 that they owed, some got more refunded, etc., the amount advanced was just the "guesstimated" amount that the IRS predicted that people on average would get back over and above the amount they usually recieved.

One last thing to say, no one knows what the true nature of the proposed 2008 tax rebate will be, whether it be another advance, a one year tax rate cut, etc., because it hasn't been determined yet! It has changed dramatically from when Bush first proposed it a few weeks ago, to what the House passed yesterday, to what the Senate might propose, to what the final compromise bill will end up being in Feb or March when it finally gets enacted into law, or it may not even get enacted into law! So we're really kind of arguing over nothing since it doesn't even exist yet, it's just a proposal subject to change and even possibly getting totally dismissed. I want to thank SANRA308 for making me aware of how the stimulus worked in 2001 though, because I really had no understanding of it until her comments made me go research it some. I will definitely take care to pay attention to all the fine details this time though, once/if it is passed, now that I have a better understanding of how the last one worked. Thanks again! You are very perceptive to have caught on to that when I think the majority of us had no idea about it being an advance.

[helpless]

The last rebate was taxable, we forgot to add it to our income and that is how we ended up owing the IRS.

[wooisme]

Who really gives a flying fig fig fig about this , next year, 2001 and so on. All I want to know is if anyone has called their lawyers to see if we CAN KEEP these rebate checks that are going to be coming to us or do we have to give them to the trustee. that's the million dollar question.

[SANRA308]

sad to say but that will be a individual answer thats different for everbody, thats part of what frustrates me so much, there is no consistancy, from state to state, trustee to trustee, I,m not planning on anything