Tax Refund 2001
The check may be in the mail
Was your taxable income more than $6,000 in 2000? If so, you may soon receive a check for $300 from the U.S. Treasury, all thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001. Starting in July, Uncle Sam will spend three months (and millions of dollars) sending "advanced tax credit" checks to eligible U.S. citizens. Here is a quick guide to the refund and other new tax cuts.
The skinny on your refund check
Tax payers will receive 5% of their taxable income up to $300 dollars. If you filed singly, and had a taxable income of over $6,000, you can look forward to a check for $300. Heads of households with a taxable income of over $10,000 will receive 500 dollars while married couples who filed jointly with a taxable income of over $12,000 will receive $600.
And that's not all!
In June President Bush signed into law over 400 changes in the tax code. Along with the refunds, you will notice an increase in your take home pay this month, as federal withholdings have been reduced. Other changes include an increase in the Child Tax Credit to $1,000 by 2010, a phaseout of the "marriage penalty" by 2009 and estate taxes by 2010, substantial pension reform, and education-related tax reductions that will reach $29 billion over the next ten years.
When will you get your check?
The total cost
The IRS spent over $33 million to send tax payers advance notice of the refund. 92 million checks totaling $38 billion will be distributed by the end of September, 2001. The total cost of the 11-year tax cut is $1.35 trillion.
Where will you spend your refund?
The GOP may think that Americans will spend their refunds, infusing the economy with much needed cash. But history and polling leads to an opposing view. According to Lehman Brothers, the last time the U.S. Government sent out refund checks (in 1975) 75% of the money was deposited into savings accounts. An NBC-Wall Street Journal poll conducted in June showed 40% of the money going to bills and 29% going to savings.
And finally . . . will you be taxed on your tax refund?
The federal government will not tax this refund, but your state might. Check with your state department of revenue.
Source: Internal Revenue Service