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Home > Remember! Tax Check will be Taxed

Remember! Tax Check will be Taxed

March 28th, 2008 at 01:40 pm

Our tug-o-war has begun! My DH is spending the tax rebate before we get it (Mr. Spender) and I am arm wrestling with him (ok, thumb wrestling) to save it.

He reminded me -- and all of you -- the income will be taxed on your 2008 return!

Don't spend it all therefore! At least 25% of ours is not really ours.

GOOD NEWS! We (mostly he) built a septic system for our weekend home which is scheduled for delivery in May (modular).

IT WAS APPROVED by the County Inspector this past week. A HUGE relief. Unbelievable what he did with a little bitsy tractor and loads of time. It meant:

--digging a big hole and placing a tank at 6' down, so it ends up with about 1.5 feet of soil cover (he didn't drop it!)

--digging 210 feet of some 5 foot wide trenches that had to be PERFECTLY flat. So he would dig about 6 feet, jump off the tractor, use a level to make sure it was flat (and hand shovel if it wasn't), put in a 'distributor' pipe, get the level and make sure THAT was flat, then get back on the tractor and do it again.

REPEAT 50 times.

Saving? LOTS. A septic system costs in the $5-6 thousand ballpark to hire out. Ours? In the $2-3 thousand ballpark plus sweat equity. A great way to save on exercise gym costs too! Smile

Back to the tax rebate:
He wants a new bed to furnish this new house. He deserves it. I agree to whatever he wants basically, and fortunately he doesn't have extravagant taste. Just something long lasting, nicely designed and to rest his tired self after all the work he has accomplished.

11 Responses to “Remember! Tax Check will be Taxed”

  1. kashi Says:

    Actually, according to the IRS website, it won't be taxable.


    (It's the 5th question down in the Other section)

    Whether or not that's actually true is debatable...I'm definitely saving most, if not all, of mine.

  2. Amber Says:

    I would be really surprise if the money is not recouped some way or anther

  3. Joan.of.the.Arch Says:

    But states with income tax will be taxing it unless specific legislation is passed, which some states are doing.

  4. frugaltexan75 Says:

    Lucky for me, Texas has no state income tax - so I don't think I'm in any danger of having it taxed. The only taxes I'll be paying related to the Rebate will be taxes on the interest! Smile

  5. Carolina Bound Says:

    Hey, I say if your hubby saved $3000 putting in a septic system, he deserves a good bed!

  6. Sami Says:

    I definitely have a state income tax and have NEVER been taxed on a tax rebate/refund . . . EVER! @@

  7. M E Says:

    From our friends at H & R Block :

    2. Will the tax rebate be considered income and will I be taxed on it next year on my 2008 return?

    No and no. The tax rebate is an ADVANCE CREDIT for tax year 2008 and will be calculated on your 2008 return. If you're due a higher payment, you'll get the remainder next year when you file. If you received a higher rebate (payment) than you should have, you DO NOT have to pay it back.

  8. Joan.of.the.Arch Says:

    I should say states with an income tax may be taxing it unless they enact legislation specifically to prevent it. It is up to each state to define as they wish exactly what is income. Some states say that they shall consider as taxable income only that which the federal government considers as taxable income. Therefore if the federal govt doesn't say the "rebate" is income, then those state will say it is not income.

  9. monkeymama Says:

    Actually, I don't see how the states can tax it. States in general don't tax federal tax refunds, which is basically what it is.

    The Federal government has said specifically that this is an advanced refund on a change to 2008 tax law.

    However, for people who make the $3k income and usually don't file taxes, who get the rebate? I could see how the states may make that taxable. I just don't think most of us have to worry about it.

    Likewise, it's been clarified that it isn't taxable to the Feds...

  10. monkeymama Says:

    This is probably the confusion on the state side:

    "First, the stimulus payment is not taxable at the state level. Verenda Smith at the Federation of Tax Administrators says the confusion stems from the fact that some states offer a deduction for federal taxes paid. If an individualís federal tax payment goes down, so will the amount of the deduction, which means that person would be paying slightly more in state taxes. Thatís not a tax on the stimulus payment, but it reduces the deduction thatís intended to defray federal tax expenses."

    Text is http://www.factcheck.org/askfactcheck/is_the_economic_stimulus_payment_taxable.html and Link is

  11. pretty cheap jewelry Says:

    thank you all for the info, need to study this more...

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