Let's start with a definition. Rebate: A deduction from an amount to be paid or a return of part of an amount given in payment. (obtained from here)
That's what this upcoming check is. It's a rebate, folks. Listen closely: reeeeeebate. They are "returning" money that we will pay during 2008 when we pay our taxes. You don't pay back rebates. If you go to Menards and buy paint, and it has a rebate coupon, and you send it in, the money they send you back is yours to keep*, right? They give you a discount for doing something - sending in the coupon. In much the same way, the government is giving you money, "discounting" your taxes to come, in effect, hoping that you'll do something - go spend it.
Ok, granted, I concede that it's only in theory they are returning "our money", since A) the money we actually pay in taxes will be loooong gone before it ever hit the IRS's bank account, and B) we haven't actually paid it all in yet. And I get that the government will obviously be borrowing more money to make these payments since they are in debt up to their eyeballs, and that in the scope of the government's financial picture, that may not be a great choice.
But that doesn't change what they are. They're rebates, despite the fact that they are being given BEFORE we pay the money in. Seriously, look up "rebate". Go ahead, I'll wait. OK, you don't need to, I put the definition up there. But they are rebate checks - that's why they are called "rebate checks".
Sooo, since I kept reading that the checks were everything BUT a rebate, I thought, just for kicks, I'd see what the people handing out the CHECKS had to say about this particular aspect of the happy money we're getting in May. To that end, I give you, dear reader, a few questions and answers from our "friends" at the IRS, straight from the horse's mouth, all the way in fabulous Washington D.C.** ...
Q. Is my Stimulus Payment taxable?
A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment.
Q. If my Stimulus Payment is not going to affect my 2008 tax refund or increase the tax I owe next year, why is it I need to retain the letter that lists how much I received?
A. In the event you do not qualify for the full amount on your 2007 return but you do on your 2008 return, you will need to have the letter as a record of the amount you previously received. [Added 4/11/08]
Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?
A. No, the Stimulus Payment will not reduce your refund or increase the amount you owe when you file your 2008 return.
This info came from http://www.irs.gov/newsroom/article/0,,id=179181,00.html . Feel free to click to read ALL the FAQs for more information on the rebate checks.
Then I found this information, which better explains WHY it won't affect your 2008 return that you'll file in 2009, from http://www.consumerismcommentary.com/2008/02/08/how-will-the-economic-stimulus-tax-rebate-affect-2008-tax-returns/:
Updated March 18, 2008.
First of all, there will be no effect to 2007 tax returns. The “rebate” that will be signed into law next week is actually an “advance” on a new credit that will be presented on 2008 tax returns.
In April 2009 or thereabouts, when you file your taxes for 2008, the IRS will run the calculation for the stimulus rebate again.
If the results show that you would have received more (due to an additional child, for instance), you will be sent the difference (or owe less on your final tax bill).
If your results show that you would have received a smaller rebate, then you get to keep the difference.
To summarize, the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income, but it is a new credit, so you don’t have to “pay it back.”
Here two important things to remember:
In order to receive the rebate in approximately May 2008, you need to file your 2007 tax return.
The amount of the rebate is calculated using your earned income; if you earned over $3,000 in 2007, you’ll be eligible, but if you had an adjusted gross income of over $75,000, then the rebate will be reduced by 5% of your overage.
Somebody said the other day "What, so it's just free money? Like I'm supposed to believe that?!?!" No, it's not free--it's costing the government their usual rate to borrow it from China, or whoever, but to you, it's "free" by definition. You get it, you don't owe it, and you'll never have to pay it back. Sounds too good to be true, which I think is part of the confusion, especially when people look at the government's current financial situation; but I can't find anything that says you'll have to pay back one dime of it, even if it turns out you weren't entitled to as much as you got.
So rest easy, and relax about next year's taxes. They'll be a pain in the ass, all on their own, soon enough. Aren't they always?
OH! One more note on this topic. Be careful. Please, please, please use your head. This is one last tidbit from the IRS website:
Warning — Scam Artists Are Calling Taxpayers about the Stimulus Payments
If someone claiming to be from the IRS calls or e-mails you about the payments and asks you for a Social Security, bank account or credit card number, it's a scam. The scammers are trying to get your personal and financial information so they can empty your bank account, run up charges on your credit card and more. Find out more — see IR-2008-11, IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting.
*OK, granted, Menards' rebates suck - you get "Menards money" and you have to spend it there, and that sucks. But it's still free money, you just have to spend it there. So look at it that way - at least you don't have to spend your money in the IRS's gift shop or some shit...
**I am aware that not all, or possibly even ANY, IRS offices may actually exist in Washington D.C., I have no clue, if you want the truth. But I use it as a symbolic statement representing the idea that the IRS is a part of our federal government, which rests its head in fabulous Washington D.C. Don't get hung up in the little stuff, man, you'll get a headache, too.