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HOME > ABOUT > PRESS > WHAT ARE YOU DOING WITH THE EXTRA DOUGH?
Article published - May 9, 2008
Credit: NAPA VALLEY REGISTER
What are you doing with the extra dough?
From charities to creditors, Napans share where ‘stimulus’ funds are goin
By JENNIFER HUFFMAN
Gas, student loans, groceries, donations, a trip to Disneyland and more: Register readers have myriad ideas of how to spend the economic stimulus payments most will receive in the coming weeks.
While the government may have hoped citizens would spur on the economy by spending the money on shopping trips, for some people the basics come first.
George Torres, 63, of Napa said once he gets his check, “I’m going to spend it on bills,” namely a new TV purchased in March.
“I will use the money to make an extra payment on my TV. My wife and I expect about $1,200, if I am not mistaken,” he said.
Online readers gave their two cents about the payments. “My rebate is going straight to my savings account,” wrote one reader.
“It’s going to go toward knocking off some of my debt,” said another.
Groceries, student loan payments and gas were also mentioned, as well as a three-day trip to Disneyland for a family receiving $1,800.
According to the National Retail Federation, consumers are expected to spend an estimated $43 billion of the stimulus package dollars on retail commodities, and only $20 billion will be saved. However, a recent survey by H&R Block found that 45 percent of Americans plan to pay bills and only about 16 percent of Americans will splurge on such things as electronics, jewelry and vacations.
Some people don’t approve of the decision to funnel spending money back to taxpayers.
“I don’t even want it,” said Herb McGrew of Napa. “I think its stupid. It just doesn’t make any sense.”
“Clearly, this country’s economy is in big trouble and you aren’t going to solve it by sending someone off to Wal-Mart to buy a new TV set. It’s utterly ridiculous.”
McGrew said he’s donating his payment.
“We’re going to split it up (donating to) NEWS, maybe Molly’s Angels, Clinic Ole, and others. There must be 10 to 50 local organizations that can use the money,” he said. McGrew said he would like to see others consider donating to local charities.
Barbara Kummer of Napa hasn’t even gotten her check but she’s already spent her money — on a donation to literacy programs in Pakistan and Afghanistan. She said the idea came from reading author Greg Mortenson’s book, “Three Cups of Tea."
“I read the book and thought, ‘this is what we should be doing.’ (I am) just one person but it made me feel good,” said Kummer.
Other Napans wondered if the stimulus payment would affect their 2008 taxes. Larry Albedi said he’d reserve some of his check just in case.
Albedi and others can rest easy. According to the IRS, the stimulus payment is not taxable and doesn’t affect 2008 tax returns.
CPA John Dillinger of Ganze & Company said the firm hasn’t had too many client questions about the payments, but that may be because the firm gave clients stimulus payment estimates at the same time they prepared their taxes.
“We were able to determine if they were eligible or not and estimate how much they would be receiving,” said Dillinger.
Clients have called about when they will get their payments, he said.
Dillinger’s reply? “You may already have it, look at your bank account.”
Filers who elect direct deposit for tax returns will see their stimulus payment arrive directly into their bank accounts. Those who receive a tax refund by mail will receive their stimulus payment via mail.
Dillinger pointed out that the stimulus payments do have an expiration date.
“If (people) don’t file a return by Oct. 15 they are not promised the check will be cut before Dec. 31,” said Dillinger, a former IRS agent. “And no checks are allowed to be cut after Dec. 31, 2008,” added Dillinger.
The CPA also pointed out the qualifying income limits.
A single person making more than $87,000 would receive no payment. Most married earners top out at $175,000, which is not unheard of in the days of double-income working professionals. A good number of locals may not receive a check at all, he said.
Economic stimulus payment FAQ
According to the Internal Revenue Service Web site, economic stimulus payments started going out April 28. The last two digits of your Social Security number and whether you opted for direct deposit or a paper check determine when you receive your payment.
It is estimated that $150 billion in payments will be distributed through July 11. Those with direct deposit should receive their payments first, and by May 16.
The IRS site has a convenient link called “Where’s my stimulus payment?” for filers to check on the status of their payments.
Frequently asked questions include:
Is my stimulus payment taxable?
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.
Will the payment I receive reduce my refund or increase the amount I owe for 2008?
No, it will have no effect.
I'm eligible for a payment but I still owe federal income tax from a prior year. Will my payment be reduced?
Yes. For this purpose, the stimulus payment is treated like any other tax refund. This means that part or all of your payment can be used to pay past-due federal or state income taxes or non-tax federal debt such as student loans and child support.
Source: IRS. For more info, visit www.irs.gov
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