Do We Have To Pay Back The Tax Rebate?
Short Answer: NO.
I have read a lot of misleading stories on the rebate portion of the Stimulus Bill. For instance, Liz Pulliam Weston, writing in MSN Money writes:
To produce this cash, Congress created a one-time tax credit to reduce taxable income for most taxpayers this year.
Normally, you wouldn’t see that cash until the spring of 2009, when you filed your 2008 return. But Congress wants to speed that money to you now, so checks will start going out in May.
Remember, this is your money you’re getting back, and the rebate checks are basically an advance on your 2009 refund. When similar rebates were sent out in 2001, said tax expert Mark Luscombe, "a lot of people were upset to see their (next) refund reduced."
While technically true, I find it misleading because this is not a deduction we were expecting. It’s not like we are getting an advance on an existing credit. This is a one time credit for the express purpose of putting more cash into consumers hands earlier.
I found the best explanation in an article on CNNMoney.com:
Your rebate is a one-time tax cut – an advance on a credit you’ll receive on your 2008 return.
It’s based on your 2007 income initially. If it turns out that your 2008 income and number of children would have qualified you for a larger rebate than the one you received, you’ll be sent the difference. If it turns out your 2008 income was lower than in 2007 and you should have gotten a lower rebate, you get to keep the difference.
"If you were supposed to receive a larger payment than you did, you will get the extra money," said Treasury spokesman Andrew DeSouza. "If you received more than what you should have gotten, you will not be penalized."