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Most students not eligible for rebates
BY CORY CLAESON
STATESMAN STAFF WRITER
iISSUE: 78/24
A lot of students hear about rebates in the news but are unaware that they may not receive it because of their parents’ financial support. The Economic Stimulus Act of 2008, signed by President Bush, will affect some students around UMD. The act is designed to create new economic activity by giving rebates back to tax payers and hoping that they spend that money to boost the economy. The rebates will be given to the students if their parents don’t claim them as a dependent. “For students not dependent on their parents, it’s great,” said Randy Skalberg, an assistant professor of Taxation and Business Law at UMD.
The new law provides most tax payers with a one-time rebate starting in May 2008. The tax also covers small businesses by allowing them to write off the costs of equipment, both new and old. “It’s supposed to add more and stimulate the economy,” said senior business school student Elyse Dornhecker. Students are not eligible for the rebate if they are the dependent of another taxpayer, such as a student’s parents. A dependent includes students under the age of 24 who receive more than half their support including tuition, fees, housing, food and clothing costs from their parents, according to Skalberg.
Students generally have not paid a lot in taxes, so they often don’t get tax refunds back, according to Mark Sellner, a professor and director of the Business Taxation Program at the Carlson school on the Twin Cities campus. If the students do not receive a rebate, then their parents will receive a tax exemption of $3,400 for every dependent. This means that for every dependent a parent lists, the dependent will be tax free, according to Sellner. Skalberg believes the tax will be distributed too late. He thinks that there should be a plan in place to distribute the rebate in a month. “I think it’s a very good idea but the money will be distributed way too slow,” said Skalberg.
The government wants people to spend the money from the rebate to jump-start the economy. Students generally tend to be more immediate spenders than most people, but sometimes put their money to unpaid debts. If students use the money for debts then it will not help the economy, because the money is not going into businesses, according to Skalberg. “No new money is going back into the system; students are going to use it to pay off debt,” said sophomore Joe Grover. There has been no announcement on whether or not the rebate will be taxed. Most previous payments were non-taxable. The general public is in favor of the rebate being tax-free, according to Skalberg.
Not all people think the rebate will work, however. “It’s borrowing now to pay the rebates, and it will be today’s students who will be tomorrow’s taxpayers having to cover the borrowing in higher taxes during their
careers,” said Sellner. The one-time tax rebate will begin in May 2008. A single taxpayer will typically receive $600. In addition to this tax benefit, students who receive scholarships will get them tax free.
“The government wants us to go out and spend money,” said Skalberg.
