What Is the Difference Between a Tax Credit & a Stimulus Check?
For many consumers, taxes and government funds and refunds are a confusing topic. Although a tax credit and a stimulus check both mean more money in your pocket, there are some fundamental differences between the two.
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Facts
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A tax credit occurs when the Internal Revenue Service gives you credit for a certain amount you contributed toward your tax debt. A stimulus check is money sent to you by the government in the hope that you will spend the funds and help boost the economy.
Time Frame
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You will most likely qualify for tax credits each year. Stimulus checks were mailed out to qualifying individuals in 2008 and as of 2010 are not scheduled to be mailed out again.
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Amount
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Each person who qualified for the economic stimulus received a stimulus check in the amount of $600. A tax credit, however, can be for any amount, depending on the type of credit it is.
Benefits
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When applied to the taxes you owe, a tax credit can lessen your tax debt or even help you get a refund. Stimulus checks are "free money" that consumers may spend however they wish without having to ever repay the funds.
Considerations
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If you were not eligible for the 2008 stimulus check, you may have been able to claim a special tax credit, known as the "recovery rebate credit" on your 2009 tax return.
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References
Resources
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
