Money Life Network
Will The Economic Stimulus Payments Have To Be Paid Back
Posted on June 5, 2008 |
Welcome to Free From Broke, subscribe to my RSS feed or subscribe via email to get these articles free to your inbox. Thanks for visiting!
Now that many have already received their economic stimulus payments, and have figured out what to do with it, I’m seeing a lot of questions asking whether the stimulus money needs to be paid back.
The quick answer is no. According to the IRS the money is not taxable and will not reduce what you may be owed in a tax refund for 2008 (filed in 2009). In fact it’s possible that you get more back next year, if you didn’t already get the maximum, based on next year’s return. See the amount was based on your 2007 return so if you didn’t qualify for the full amount you may still qualify for the difference based on your 2008 return. Don’t worry if you received the full amount already. No matter what your 2008 return says you won’t have to pay anything back.
Now the the longer answer - You are going to have to pay back the economic stimulus payment! In some way, shape, or form we will pay that back. The money has to come from somewhere.
Let’s look at the ways in which the gov’t received income:
- Taxes (from income and corporate taxes).
- Loans (in the forms of government backed securities such as bonds, bills, and notes).
- Printing more money in the treasury.
Which do you think the money will come from? Printing money sounds like an easy way to find the dough but it’s not a policy the US uses due to the fact that more money creates inflation (Inflation is always and everywhere a monetary phenomenon - thank you Milton Friedman). And who wants even higher prices?!? We can issue more loans. Did you know that in 2006 we paid $406 Billion in interest payments on loans made to cover the national debt? Where does that money come from? See above. So that leaves us with taxes.
Yes, I believe we will be paying back the economic stimulus payments in the form of taxes. It may not be as one lump sum like we received it but it will be paid out. It’s just lumped together with the rest of the national debt.
Could this be avoided? Maybe. But only if the national debt, which is over $9 Trillion, is reduced to zero in our lifetimes. This would mean that government would have to cut back it’s size and spending. Most likely many programs that help people would fall victim to the cuts. I’m not saying it’s impossible for this to happen, just improbable. I hope I’m wrong.
Of course another way to look at it is it won’t be us but our kid’s generation that will pay it back. I’m not too sure that’s a positive spin on it though.
So there you have it! Do we have to pay the economic stimulus payments back?
No, but yes.
What do you think?
Sign up with ING Direct and get a $25 bonus. See here for details.
photo by Refracted Moments
- You Might Enjoy These Other Posts
- Economic Stimulus Check Did It Help And What About A Second?
- Our Economic Stimulus Check Arrived
- 15 Things To Do With Your Economic Stimulus Check
- What If The Economic Bailout Plan Works?
- Don’t Let Credit Card Debt Weigh You Down
Filed Under Budget, Economy, Taxes, debt
Comments
15 Responses to “Will The Economic Stimulus Payments Have To Be Paid Back”
Trackbacks
- Personal Finance Buzz
- Links for Super-Charged Living - June 7, 2008 | My Super-Charged Life
- Links for Super-Charged Living - June 7, 2008 | My Super-Charged Life
- Hanks Weekly Hangouts #33 (June 8, 2008) | My Investing Blog
- The 156th Carnival of Personal Finance: Songs of Summer | Prime Time Money
- Sunday Money Roundup - My Cluttered Life Edition.
- Moments of fame « Funny about Money
Leave a Reply
Recent Posts
Follow Free From Broke
Follow Me on Twitter
Recent Comments
- Kevin Wright said: I love Frank's idea for leftovers. However, don't be afraid to go to lunch with friends and colleagues. Networking can pay off down the road, and you should not underestimate the importance of socializing at work. Along with working hard, the more you are liked, the easier it is for promotion and raises. on I’m Saving By Bringing Lunch To Work
- Heather said: Right now we are planning on continuing our weekly contributions to retirement even though the markets look dreadful. on What We’re Looking To Do With Our Finances In The Next Year (And A Contest)
- Mindful Money in Miami said: The best advice we ever received was from my mother after my father passed away and we received a small inheritance. She urged us to use the money as a deposit on a house because the interest rates were so low at the time. We did so, and I'm very grateful we followed on Best Financial Advice You’ve Received
- BSCC said: I started bringing my lunch to work about a year ago. At first it was kind of hard to see all my co-workers leave for lunch and come back talking about how good their gourmet lunch was. After a while, I started to bring in some gourmet lunches of my own (cooked at home) on I’m Saving By Bringing Lunch To Work
- hank said: Wow, so many to choose from... I guess I'd have to go with "invest for the long term"... Case in point, today's economy. If you're NOT doing that, you may be in for a surprise...
on Best Financial Advice You’ve Received
Informational Links
If You'd Like To Donate To Free From Broke
Free From Broke Stumble Upon
Free From Broke Twitter
Free From Broke Technorati
Free From Broke Digg
Whew! You scared me for a minute there. I’m glad that we don’t have to pay anything back immediately, but as you suggest, I’m sure we’ll be giving it back in taxes eventually.
great article! I am so irritated about the National Debt. When is THAT bubble going to collapse???
Lisa
That national debt is scary. $4 trillion more and it will be the size of our GDP. Good or bad, I don’t know — but I wouldn’t want to owe one year worth of my salary.
Yes, we will be paying it back, in inflation. The Fed government doesn’t have any money, all they can do is print it, which creates inflation.
@ Jeff - When I think of it, the stimulus check was more of a loan on our taxes of sorts. Like - here’s some taxes back, we’ll get it later from you.
@ Greener Pastures - I hope something can be done with the debt. That’s not a bubble any of us want to see burst!
@ Pinyo - Let’s see for an individual debt=income is real bad. Can’t be good for a country.
@ Curt - From what I understand the US hasn’t really used printing money as a way to pay back it’s debt. That would really hurt us. Think the south in the civil war or Germany before world war II. People carrying wagons of cash to buy bread. That’s the road we go towards when we print more money to pay debt. Let’s hope the US doesn’t choose that direction.
No, but yes. Seems like a typical government answer. Put it in a firesafe lockbox and save it for your kids when they have no money.
@ Eva - Lockbox is nice but it will lose value due to inflation. Better off with a CD perhaps!
The government does not print money, the federal reserve does. The federal reserve is owned by private (most likely european) sources. It is no more “federal” than federal express. And they charge interest on every dollar they print (lend) the US government. Hence, you will pay be the debt but it won’t be in taxes it will be with your rights and freedoms. This economic bailout, for those of you who actually care, is a further attempt to consolidate wealth by the elite at the expense of everybody else. Good luck pretending like this is a good idea!