Calculate a Tax Rebate for 2008, 2009
May 8, 2009
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Step 1:
The most common form of tax rebate is the income tax refund. At the end of the year, after deductions have been calculated, a substantial number of people discover their income tax return states that they owe less money than they have already paid to the federal government in income tax withholding. This is usually because income tax withholding never takes a person’s deductions into account, as those are personal and highly variable. Instead, they are calculated on a simple formula of total income and deductions for household concerns. The resulting positive balance is refunded to the taxpayer.
Rebate from the Budget Surplus
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Step 1:
In 2001, a tax rebate was given to U.S. citizens as part of an economic stimulus package: $300 for single people; $500 for single parents; $600 for married couples. One had to be an eligible taxpayer to receive a rebate, so some citizens who did not pay taxes in 2000 did not receive any payment. As the federal government was running a budget surplus at the time, this tax rebate was paid for largely out of the surplus. It was, therefore, a tax rebate above and beyond the traditional income tax refund.
The False Rebate
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Step 1:
Another rebate was issued to U.S. taxpayers in 2008. This rebate was $300 for singles, $600 for married couples and $300-plus per dependent child, up to a limit of $1,200. As with the 2001 rebate, this rebate was made only to eligible taxpayers. As the federal government was running a budget deficit in 2007 and 2008, however, this was a “false” rebate, as there was no surplus of tax money to be refunded. Rather than giving the excess taxes to the people, the government was instead borrowing more money to make stimulus payments.
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