Tax Rebate Fact Sheet
A tax rebate is an amount of money paid to taxpayers regardless of the amount of tax they owe the government. Generally, you must report any rebate you receive on your tax returns.
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How is a Tax Rebate Different than a Tax Credit?
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A tax credit generally will only offset taxes that you owe dollar for dollar, so if you have no income and you don't owe any taxes, you will not receive a tax credit.
What's in a Name?
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Though there is a technical difference between a tax rebate and a tax credit, the distinction is often lost on lawmakers. Many initiatives are deceptively named. For example, the Earned Income Tax Credit actually operates as a rebate allowing low-income individuals to receive money from the government without regard to the amount of taxes they owe. The first-time home buyer's credit is classified as a refundable tax credit meaning that taxpayers can get the full amount of the credit even if they owe less taxes than the maximum credit.
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Recent Tax Rebates
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In 2008, as part of the economic stimulus package, Congress gave eligible taxpayers economic stimulus payments. Some taxpayers did not receive their stimulus payments, so the government made corrections through the recovery rebate credit in 2009.
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