About Economic Stimulus Payments

Economic stimulus payments can come in handy if you are short on cash or behind on car payments, rent, credit card payments or other bills. Getting an economic stimulus payment is like getting a Christmas gift of free cash in the mail. However, paying your bills is not exactly how the government envisions economic stimulus payments being spent.

History

The 2008 economic stimulus payments emerged as a result of a struggling economy. The economy seemed to stall out in the late spring and early summer of 2008, largely due to high gas prices. The average family could not afford to buy gas for their vehicles so that they could get to work and pay for groceries, which were also spiking due to the price of gas, and other necessities and entertainment. As a result, entertainment and non-essential spending took a backseat as families struggled to provide both food and gasoline. The federal government issued an economic stimulus package that would give money back to taxpayers who filed their 2007 taxes, in an effort to encourage those people to go out and spend their money on luxury items.

Function

Millions of economic stimulus payments were sent to taxpayers in 2008 who filed their 2007 taxes. Taxpayers typically got their stimulus payments 8 to 12 weeks after they filed their tax returns. There was an October 15, 2008 deadline to file taxes in order to get the payments, however, if tax payers missed that deadline, they could still receive the stimulus payments in 2009. The amount of money a family got varied. Single tax payers were slated to get $600, while married couples filing jointly qualified for $1,200. Another $300 was added on to the payments for each eligible child.

Benefits

Economic stimulus payments are one way to give the economy a jump-start if they are used in the manner for which they were intended. In order for the economy to benefit from these payments at all, the recipients must go out to stores and spend their money. The stimulus payments that were given to tax payers in 2008 came right around the time that school was starting, so many families spent the money on school clothes and school supplies. It seemed a win/win situation because families get to purchase things they need and the economy is also being stimulated.

Identification

Many people qualified for the 2008 economic stimulus payment. There were certain guidelines that had to be met. The most important guideline was that a person must have file their taxes for the previous year. In addition, if any person had a 2007 net income tax liability, they could also qualify. If a family had a child under the age of 17, they could also qualify for extra money.
Individuals who had a higher income could receive a reduced payment or perhaps no stimulus payment at all.

Misconceptions

In 2008, government officials did not take into account that a lot of American families were already struggling to make their rent or mortgage payments, or perhaps their vehicle payments. They also did not take into account that some families might be behind on their utilities. Because of the state of the nation at the time the payments were released, many families chose to use their payments to catch up on bills instead of buying things that they did not need. Because of cases like that, the economy didn't benefit in the ways that the government thought that it would. Instead of spending their money frivolously, a lot of families spent the extra money on things that they really needed.