Q: I'm single and made $107,000 in 2007. Will I get a rebate check?
A: The answer is "no" with what I know as I'm writing this column. The centerpiece of Washington's current economic stimulus package is tax credits. Here are the details of the rebate as I understand them. Workers who earn at least $3,000 but don't pay income taxes would get checks between $300 and $600. Families would get a $300 rebate for each of their children.
Individual taxpayers with adjusted gross income of less than $75,000 would get a $600 rebate. The tax credit would be reduced for individual filers earning more than $75,000 until there'd be no rebate for anyone earning more than $87,000. Rebates for couples filing jointly with adjusted gross income of less than $150,000 would be $1,200. After $174,000, a couple would get nothing.
That said, I wouldn't bank on these figures. Details of Washington's economic stimulus package are still being negotiated, especially now that the Senate is weighing in with its ideas. Despite strong signs of bipartisan accord, the bill will not only change in coming weeks, but it could still fail. I'd hold off counting on the rebate money until President Bush signs the final economic stimulus bill.
More importantly, I'd like to suggest what to do with the rebate, assuming the check comes in late spring or early summer. Washington is eager to get some of your tax money back into your hands on the theory that you'll go out any buy an iPhone, a flat-panel TV, pay for a delayed car repair, and the like. The rebate is supposed to fight the forces of recession by boosting consumer spending.
But I'd rather people use the money to shore up their finances. I'd put the money toward paying down debt, especially high-interest credit card debt, or add it to an emergency savings stash.
Chris Farrell of St. Paul is economics editor for American Public Media's "Marketplace Money," which is heard each week on public radio. Send personal finance questions to firstname.lastname@example.org or email@example.com and put "Your Money" in the subject line.