Friday, January 18, 2008

News articles like this are the reason that I began skulking around the personal finance blogosphere and eventually began wanting to write my own.

I can't make heads or tails of this.

Clearly, the reBATE is different from a reFUND, but I'm not clear in exactly what way. I understand that a reFUND is basically the government sending you back money that you paid above and beyond what you owed (sort of like getting change at a store). I understand that a tax credit is a one time thing that you have to earn, like an earned income credit, credit for interest paid on student loans or mortgages and things like that. And it seems like credits apply no matter what, so if I were still in school instead of working full time and didn't even make enough to PAY taxes, I would still get something back.

But what's a reBATE? Is it just a one-time thing where they eliminate a bracket (if I follow the article correctly) for a certain period of time so that people automatically get money back that they might not otherwise? Am I really going to be getting something back this year? I typically break about even or have to pay a small amount because of my freelance income, which is the way I prefer it.

But man, right now, I could use some extra money. However, I won't be doing what the government wants me to do with it (spend, preferably purchasing debt, to spur the economy) but restocking my emergency fund--it's going to be taking an ugly hit in the next few weeks, and I'll be focusing on building it back up.

To sum up, I hope someone with greater understanding of what this means for me as a taxpayer. And also, it scares me a little that I do my own taxes and still don't understand a lot of this.

1 comment:

  1. I don't think any brackets are being eliminated. I think the idea goes like this: "You paid $X in taxes for 2007! We're going to give you some back and tell you to take the money and run." It doesn't affect your tax liability, I don't think--it's just the government saying, "You paid us this money, we think it's better used at the mall, go out and shop!"

    Make sense?

    (p.s. How did I miss that you work in publishing? Will you email me and tell me where? I'll tell you if you tell me!)

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