Tuesday, February 19, 2008

Second chance on Rebate and Tax Increase?

Since the final legislation for the stimulus package and the rebates has been enacted, various news reports are indicating that it's in effect a prebate on 2008 taxes, except that payments this year are based on 2007 payments and in some circumstances don't have to be paid back.

The IRS is less forthcoming, and their web site does not indicate that there's a second chance at the rebate in 2009 when filing the tax return for 2008. And no indication whether the tax credit will be phased out for those with an AGI above $75000 this year, so I still don't know whether the Tax Rebate is a Tax Increase for Some.

If the phaseout is in effect based on 2008 AGI, and your income is just above the phase-out threshold, then it may be possible to get the rebate by increasing your 401(k) before-tax contributions, since this will lower your AGI.

Hopefully the IRS will soon update their web site, so that it won't be necessary to parse the language of the legislation to figure this out.


Charls King said...
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