I was told by “somebody” that the stimulus checks we received will be deducted from our tax refunds for 2008? Is that true?
Nope. The tax rebates are not taxable and will not be credited against your 2008 return – unlike the 2001 rebates which were credited against the 2002 returns. There was some initial confusion about this – even CNN reported it differently, but that has since been cleared up.
I haven’t seen the 2008 returns yet but my understanding is that you will report the amount received on your individual tax return. This is ostensibly to make sure that everyone got their fair share (insert throat clearing here). The IRS says that the 2008 tax instructions will “include a worksheet to help those who did not qualify for a payment or those who received a reduced amount determine if they can obtain a benefit when they file their 2008 tax returns next year.” My cynical take on it is that the IRS wants to make sure that everyone files – again.