Questions about refund checks loom
How much will checks be worth? When will they arrive in the mail? If you don’t get a check, what then?<!—->.
Monday, July 09, 2001
How much will checks be worth? When will they arrive in the mail? If you don’t get a check, what then?
Those are just a few of the questions people are asking financial experts these days as they wait on the federal government’s extra "tax refund" this year.
"With the new tax bill that was signed, the government wanted to generate an economic stimulus," said Robert Payne, a CPA in South Point who’s watching the situation closely. "And it’s not a rebate; it’s a refund, because the money already belongs to you."
An explanation book on the Economic Growth and Tax Relief Reconciliation Act of 2001 numbers about 640 pages, and includes information on everything from the extra refund checks to the demise of the estate tax, Payne said.
"The checks we’re talking about getting are just a small part of the whole bill," he said.
Those small parts, though, will be mailed to taxpayers in late July through the latter part of September, in order of the last two digits of taxpayers’ Social Security numbers, Payne said.
That timing points to Washington leaders’ strategy, the CPA said – it’s during the back-to-school season when it will be spent to spur economic growth.
It’s also a good political move, because people will talk about how the government "gave us some money back" this year, Payne said.
Treasury department officials said anyone who filed a tax return this year will receive the extra refund. Those that filed single returns will receive $300; single parents will receive $500 and married couples will receive the maximum payback of $600.
There is a catch, however, in that only people who "paid" taxes to the government will receive the checks, Payne said.
In other words, if a family listed enough in earned income tax credits, child tax credits and other deductions to get back all the tax they paid to the government, they will not receive a check this year, he said.
Even if you don’t fully qualify this year, though, there are provisions to deduct the extra refund from next year’s tax returns, Payne said.
"Everybody’s going to get it, it just might take two years for some," he said. "I think there will be a lot of people confused on why they do not get a check."
And, that’s why the government’s spending about $21 million on letters to notify people this month, Payne added.
The Economic Growth and Tax Relief Reconciliation Act of 2001 provides for $1.35 trillion in tax cuts. Some of the tax cuts will take effect this year, while others will be phased in over the next 10 years. Here’s a summary of other provisions that may affect you for 2001:
· Marginal tax rate reductions. The current tax brackets of 28, 31, 36 and 39.6 percent will drop one percent on July 1. The rates are scheduled to drop again in 2004 and in 2006. The IRS will send out new withholding tax tables so your employer can adjust the amount of income taxes withheld from your paychecks.
· Child tax credit. The child tax credit for dependent children under age 17 will increase from $500 to $600 per child for 2001. The credit will continue to increase until it reaches $1,000 per child in 2010.
· AMT relief. The alternative minimum tax (AMT) hits taxpayers who claim a large number of exemptions or deductions. To provide temporary relief, Congress has increased the AMT exemption amounts for 2001 through 2004.
· Corporate estimated tax payments. The Sept. 17 deadline for corporate estimated tax payments has been extended to Oct. 1.
· Beyond 2001. The new law also includes tax benefits relating to children, education incentives, pension and IRA provisions, estate and gift tax provisions, and marriage penalty relief provisions. These tax benefits will be phased in from 2002 to 2010.