[supera]

Hi,

Just saw this latest news on CNN.

Taxpayers would get checks under economic stimulus plan - CNN.com


Can somebody please explain what this mean? Does it mean we will be getting a free money from the government? Or is it just some kind of advance refund for FY 2007 taxes?

If this is true and that they will be sending $1,200 check in the mail, how to ensure I get it considering that I moved to another state/address since my last tax return last year?

Thanks!

[ebaines]

As happened back in 2001, this plan is intended to be "free money" (to use your term) - although it's described as a rebate of your 2007 taxes. So in essence the government is giving back some of the taxes you have paid, reducing the amount of your tax bill for 2007. It has nothing to do with whether you are expecting a refund for overpayment or not. You would get your rebate check the same way you get a refund check - in the US mail. When you file your 2007 tax return you should have course use your new address so the IRS is aware of it. There is also a change of address form that you can submit to the IRS - it's Form 8822 - see:
Tax Topics - Topic 157 Change of Address – How to Notify IRS

[supera]

Thanks. So based on what you are saying first they will process our tax returns/checks for 2007 and then process these rebate checks. Thanks for the info on the Form 8822.

[AtlantaTaxExpert]

Hopefully it will be managed better than the 2001 rebate.

[supera]

Hi ATE,

Can you please elaborate? I wasn't here in US in 2001.

I am just a bit confused on what my course of action should be.

- Are they going to send this rebate based on FY2006 (last year tax status) or FY2007 (this year tax status)?

- If FY 2006, then they have my old address on file. Should I send then a From 8822 immediately and then file my FY2007 returns later?

- If FY 2007, will the rebate and refund be different checks?

- Is this applicable for non US citizens? We have been filing taxes every year as resident aliens (for tax purposes)

[AtlantaTaxExpert]

In 2001, they issued what they call a "pre-bate", which means it was an ADVANCE against the next year's tax refund.

In most cases, the pre-bate was automatically deducted from the following year's tax refund. But in many cases, it was not. Also, in many cases it was deducted from the refund, but the taxpayer NEVER GOT the pre-bate check.

So you had cases where the person got the pre-bate, but it was NOT deducted from the tax refund or NO tax refund was due. These people got an UNFAIR advantage of getting the money and NOT having to pay it back!

In other cases, the refund was debited for the pre-bate, but the taxpayer never got the pre-bate check, usually due to an address change! These people got SCREWED!

It is my understanding that the upcoming rebate will NOT AFFECT your 2007 or 2008 tax refund. It is simply a GRANT sent to the address on the 2007 tax return. If you file your 2007 tax return prior to when these checks are issued, THAT address will aply and you do NOT have to send in the Form 8822.

The rebate SHOULD apply to resident aliens.

I am not sure it will apply to non-resident aliens, as the final bill has not yet been passed by the Senate.

[supera]

Thanks ATE! That was very informative...

[AtlantaTaxExpert]

Glad to help!