Some Americans are getting awfully excited about the prospect of spending their own money.
The $168 billion economic stimulus package just passed by Congress will ship checks of up to $600 for individuals and $1,200 for couples starting in May. Most households will get these checks, although individuals with adjusted gross incomes of more than $75,000 and couples making more than $150,000 will see less or nothing at all.
Additionally, families will get $300 per child.
The biggest change since the original proposal: Those who paid no income taxes will get $300 as long as they earned at least $3,000, including veterans disability or Social Security benefits.
An estimated 130 million taxpayers will share the rebate money.
- Smart Spending blog: Rebate? Bonus? One is easier to spend
To produce this cash, Congress created a one-time tax credit to reduce taxable income for most taxpayers this year. If it turns out that you're entitled to a bigger tax credit than the checks you receive, you'll be able to claim that when you file your return next year.
You'll have to account for any rebate checks you receive this year when you fill out next year's taxes. That doesn't mean you'll get less than what you would have if there were no tax credits and rebate checks --- but accounting for the checks on your next return will ensure you don't get the tax credit twice.
By the way, even if you didn't earn enough in 2007 to be required to file a tax return by April 15, you should do so anyway to make sure you get on the Internal Revenue Service's mailing list for the rebates.
Spending money is not your patriotic dutyYes, Congress and President Bush hope you'll blow this money as quickly as possible to give the economy a shot in the arm.
But politicians' short-term attempts to influence the economy -- and their ability to get re-elected -- should not be your primary concern. Doing what's right and responsible for your own finances will leave you better off and will probably be better for the economy in the long run.