Tell Us: How will you spend your tax rebate?

Questions, answers on rebate checks under the economic rescue plan

WASHINGTON (AP) -- The checks aren't in the mail, but they will be soon.

President Bush signed legislation Wednesday to rush rebates ranging from $300 to $1,200 to millions of people, the centerpiece of government efforts to brace the wobbly economy. First, though, you must file your 2007 tax return.

More than 130 million people are expected to get the rebates, starting around May. Congress, Bush, the Federal Reserve and Wall Street are hoping the money will burn such a hole in people's pockets that they won't be able to resist spending it. And the spending is supposed to give an energizing jolt to a national economy that is in danger of toppling into a recession if it hasn't already.

Whether people actually spend the money remains to be seen. A recent Associated Press-Ipos poll indicates most people have other plans. Forty-five percent said they planned to pay off bills, while 32 percent said they would save or invest it. Only 19 percent said they would spend their rebates.

The measure Bush signed -- a $168 billion rescue package passed with lightning speed by Congress last week -- includes not only rebates for individuals but also tax breaks for businesses to spur investment in new plants and equipment. That, too, would help bolster U.S. economic activity. The package also contains provisions aimed at helping struggling homeowners clobbered by the housing collapse and the credit crunch refinance into more affordable mortgages.

The emergency plan marked a rare moment of cooperation among political rivals fearful that an ailing economy during an election year would invite voter retaliation.

Bush, who called the measure "a booster shot for our economy," praised the bipartisan cooperation. "We have come together on a single mission -- and that is to put the people's interests first," he said.

Who gets a rebate? Most people who pay taxes or earn at least $3,000, including through Social Security or veterans' disability benefits. Singles making more than $75,000 and couples with income topping $150,000, however, will get smaller checks, up to the top limits for any rebate: incomes of $87,000 for individuals and $174,000 for couples.

To get any rebate, you must file a 2007 tax return and have a valid Social Security number. If you already filed your 2007 return, the IRS says you don't need to do anything extra.

Most taxpayers will receive a check of up to $600 for individuals and $1,200 for couples, with an additional $300 for each child.

People earning too little to pay taxes but at least $3,000 -- including elderly people whose only income is from Social Security and veterans who live on disability payments -- will get $300 if single, or $600 if a couple.

The IRS will send out rebates -- by mail or by direct deposit into your bank account -- through the late spring and the summer. The rebates come in addition to any regular tax refund.

To pay for the rebates -- which are estimated to cost about $117 billion over the next two years -- the government will have to borrow more money, enlarging the budget deficit.

The Bush administration and some private economists are hopeful the rebates, tax breaks and aggressive interest rate reductions by the Federal Reserve will help the country narrowly dodge a recession. An increasing number of economists, however, believe the country has already fallen into its first recession since 2001, and they are simply hopeful the rescue package will limit the damage. Most people -- 61 percent -- say the economy is now in a recession, according to the AP-Ipsos poll.

"I do think this will give the economy a shot of adrenaline," said Stuart Hoffman, chief economist at PNC Financial Services Group.

The National Bureau of Economic Research, a private research organization, looked at what people did with their 2001 rebates. The study found that "households spent about 20 to 40 percent of their rebates on nondurable goods" -- which can include things like food and clothing -- in the first three months. They spent roughly another third in the following three months.

With the current stimulus, the economy will log growth in the range of 2.25 percent to 2.50 percent in the second half of this year -- roughly one full percentage point higher than without the bracing tonic, Hoffman estimated. That would be closer to a more normal rate of around 3 percent, he said.

That in turn should encourage businesses to step up hiring. Nervous employers cut 17,000 jobs in January, the first nationwide loss of jobs in more than four years.

Edward Lazear, chairman of the White House Council of Economic Advisers, predicted, "The stimulus will have the effect of increasing jobs by about half a million above the number that would have been the case in the absence of that."

Still, even with the rescue efforts, some analysts fear the economy could backslide and flirt with recession again in 2009.

To help the severely depressed housing market, the stimulus package would raise temporarily to $729,750 the limit on Federal Housing Administration loans and also raise the cap on loans that mortgage giants Fannie Mae and Freddie Mac can buy.

Raising those limits, should provide relief in the market for "jumbo" mortgages -- those exceeding $417,000. The credit crunch hit that market hard, making it very difficult, if not impossible, for people to get those loans. That has plunged the housing market even deeper into turmoil.

House Speaker Nancy Pelosi of California said the provisions will provide "families a second chance at the American dream of homeownership by helping them refinance their mortgages and avoid foreclosure."

(Copyright 2008 by The Associated Press. All Rights Reserved.)

I would like to have it to save my house. I would like to fix it up too. I know that it needs a lot of work to the house but it is worth it.I also woud like to pay off my car too.

I am buying gas to help the oil companies and their share holders rake in billions in profit. Someone said millions but it is actually in the billions. We would not want the poor oil company owners to go destitute.

I will use my check to pay bills and get gas. My driving has been VERY LIMITED due to the ungodly price in gas not to mention not using the ac to save on gas in my car. Buy a few things for my 2 year old son and put half of it up to save for my own home I hope to get soon.

by somefood for my home

I will spend the money on gas to get to work! they should have sent out gas vouchers instead.

We are planning on saving what we can but I don't know with these outragious gas prices.

SAVING FOR VACATION FOR NEXT YEAR

I plan to donate it to Dick Cheney. He needs a new shotgun. Or to President Bush to buy a book for his new library.

its the big 52inch LCD all the way here!!!!

Although the stimulus check was a bit of a stupid idea with us having a deficit, I can't complain about having extra money to put into my savings account to earn interest.

Make too much money and don't get one :(

Make too much and don't get one :(

With the economy in the horrific shape it is in it will take more than a drop in the bucket "STIMULUS" check to have any relief or be able to really enjoy it, like a vacation. It would be nice instead of or along with if the oil influenced president that we have would do something about the price of fuel but instead he is looking out for his best interest and continuing to make his bank account fat at the same time.

I donated my $1,200 to Barack Obama's campaign.

Thanks for Check!

Car tune up to save on gas, gas, gas, and did I say gas? I am seriously thinking of taking a lower paying job to have a shorter commute, and pay less in gas!

I will use it to buy gas to go back and forth to work.

well its a toss up between, paying a few bills, using part for groceries,and a 5 day visit with relatives in june get togeither. along with being on fix income. and the govn't back in 80's saying they were going to build two refineries. one on the west coast and another around in the southern states. on top of all this they knew way in advance that this time was coming and may even get worse. and they still play around with lets add a couple more mi. to the gall. and of course china is going to out due us in productivity with in the next l0yrs. as we give everything away. then they talk about the food prices, we had farmers in the past but shut them down to produce less to help the forign countries now we can't take care of our own country buniness! and its late and brain lock has set in again. and the family members thinks i have this conspiracy theory in the head.

I will be spending my rebate on bills because of the increase cost of living. Everything keeps going up except my salary. There should be away the goverment could figure out away to help everyone out with that.

I will first fill up the car with gas, pay a bill, buy pads for outside furniture and buy summer clothes.

How will you spend your tax rebate?