Stimulating economics

During the course of a short conversation with a co-worker today, I uncovered a couple of misconceptions she had about the Economic Stimulus Payments the government will shortly begin to distribute. If an accountant has no clue, there must be a lot of seriously confused people out there.

Disclaimer: I am not, nor do I play on t.v, an agent for the heartless scum-sucking irrational IRS. I am, however, blessed with a certain ability to read and understand heartless scum-sucking irrational IRS pronouncements. Below is my interpretation of their insanity process for the stimulus payments; you may, however, want to click through the links and verify my statements.

1. The amount of the stimulus payment is not tied to the amount of your 2007 tax refund. It's just that those of us who filed our returns on time and had our refunds direct deposited to our accounts will get our stimulus money first (neener, neener, neener!). Payment schedule here. I am assuming that anyone who had to pay with their return and did so via direct debit will also be in the first wave, but I was too lazy to click through the IRS site to find that specifically stated. The payments will be processed based on the last two digits of the main filer's social security number. If you did not use direct deposit and your social ends in 88 to 99, your check will not be mailed until July 11th.

2. Everyone is getting either the $600 (single) or the $1,200 (married) plus $300 per kid.

Errr - no.

The methodology and theory behind how the dollar value of the payments is calculated makes perfect sense, if you are of the same rather twisted, let's make this difficult by trying to be "fair" turn of mind as the agency. It is tied to the amount of your tax liability for 2007; if your total tax liability is less than the high end of possible payments ($600 single, $1,200 married), but higher than the low end ($300 single, $600 married), your rebate will be equal to your tax liability...I'm fairly certain...errr...um...

Better go check things out at the IRS calculator. You will need your 1040 to complete it, and even the IRS says this calculation is just an estimate (the trolls in the basement of the IRS service center in Kansas City want a little wiggle room if they forget to carry the three when calculating your payment for real). There are also some examples here, but honestly, unless you really care about how the various groups and sub-groups of filers are treated, don't waste your time reading it; put your actual numbers into the calculator and get your own, personal, troll-generated number.

Oh - and as always, if you currently owe the IRS anything, they will keep your rebate and apply it to the outstanding debt.

Remember, this payment is to be SPENT to stimulate our lagging economy. If you really, truly cannot figure out how to spend this munificence, please forward the funds to me, and I promise, I will put them to good use.