CPA Resources
CPA Resources

Americans divided on plans for stimulus payments

NEW YORK, April 30, 2008 – Americans are divided about how they plan to use their economic stimulus tax rebates, with almost equal numbers saying they will save it, spend it or pay down debt with it, according to a survey by the American Institute of CPAs.

“How you use your rebate, if you qualify for one, depends on your own personal circumstances,” said Carl George, chair of the AICPA’s National CPA Financial Literacy Commission. “It’s important that you evaluate your situation appropriately. Discretionary spending should always be subordinate to obligations like paying down debt.”

Eligible taxpayers will receive rebates ranging from $300 for individuals to $1,200 for families over coming weeks. Twenty-eight percent of respondents in the poll conducted for the AICPA by Harris Interactive said they plan to save their rebates, followed by 27 percent who said they would spend it and 25 percent who would pay down debt.

AICPA member Doug Stives, CPA, PFS, a professor of accounting at Monmouth University in West Long Branch, N.J., offered this tip on how to put your rebate check into savings and earn additional tax benefits:

“If you are not currently contributing the maximum allowed into your retirement plan, such as a 401(K), take the rebate amount, divide it by the number of pay periods left in 2008 and have that amount withheld from each remaining paycheck and put into your retirement plan,” Stives said. “The tax saved by reducing your taxable income will provide a second windfall.”

The AICPA survey showed that those most likely to save their rebate are single, while retirees and married individuals seem to be the ones who will spend it.  Those most likely to use the rebate to pay down debt are working women with children.

Congress passed the Economic Stimulus Package in January as a means of countering slow economic growth in the wake of the subprime mortgage meltdown.           

To help Americans of all ages improve their financial literacy skills, the CPA profession launched 360 Degrees of Financial Literacy.  A related campaign, Feed the Pig, created with the Ad Council, is designed to help 25- to 34-year-olds prepare for long-term financial security.

Treasury OKs stimulus payment amounts for remaining territories

In the meantime, Treasury Secretary Henry M. Paulson Jr. has approved the stimulus distribution plan and payment amount for American Samoa, and payments amounts to Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands. 

As required by the Economic Stimulus Act of 2008, the Secretary of the Treasury had to approve distribution plans for "non-mirror code" territories (Puerto Rico and American Samoa), and payment amounts to territories with "mirror codes" (Guam, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana  Islands).  Puerto Rico's distribution plan was approved on April 16, 2008.