Your Upcoming US Tax Rebate and What To Do With It.
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US lawmakers have just approved a $170 billion plan to spur the slowing US economy. The centerpiece of this plan is a “tax rebate”.
Who qualifies?
One-time rebates will be sent to at least 117 million low and middle-income households, 20 million senior citizens living off of Social Security, and 250,000 disabled veterans.
How do I qualify?
To be eligible for the full rebate, a single tax filer must have his/her 2007 adjusted gross income (AGI) below $75,000 and joint filers must have AGI below $150,000. You must also file a federal tax return for 2007.
What will I receive?
Single filers with AGI below $75,000 will get rebates of as much as $600. Couples with AGI below $150,000 will receive rebates of up to $1,200. In addition, parents will also receive $300 rebates per child under 17; there is no cap on the number of qualifying children eligible.
When will I receive the rebate?
Treasury Secretary Henry Paulson said it should take about 10 weeks to issue all the checks. As a result, you could see the money sometime between May and early July.
What is the smartest thing I can do with my rebate?
It would be real easy to just go on a shopping spree and spend all the money on new clothes, the latest gadgets, or whatever your heart desires. But there is surely a better way; As income investors we want to steadily grow our passive income streams over time. What better way to grow your passive income then to put more money to work for you. So instead of blowing this extra money on a one time gratification, why not put it to work for you by putting it into your online savings account, adding some more shares to a high yielding stock or fund or perhaps investing it in personal loans by adding it to your Prosper.com account. (More on investing on Prosper.com HERE) Let’s look at a working example: if investing the $600 in a high yielding security such as ADVDX at an average 15% return over the next 30 years and reinvesting the dividends this $600 will turn into $39,727 earning you an additional income of $432 every month. Not bad for just putting it away and forgetting about it.
Whatever you choose to do with this ‘free money’ from your uncle Sam make sure it is right for your financial situation. If for example you have high interest credit card debt you are better off paying down your debt then investing it at a lower rate.
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