Although distribution of tax rebates (estimated at $ 106.7 billion) only began in the 2nd quarter of 2008, 1st quarter statistics from the US Bureau of Economic Analysis showed improvements in the US economy.

Gross Domestic Product grew 1.0% in the 1st quarter of 2008 versus only 0.6% in the 4th quarter of 2007. Profits of financial corporations increased by $ 14. billion against a $74.4 billion decrease in the preceding quarter –indicating some recovery from the subprime crisis. Overall corporate profits decreased by only $5.2 billion in the 1st quarter of 2008 versus a $ 52.9 billion decrease in the 4th quarter of 2007.

What about Fannie Mae & Freddie Mac? (in the next posts) 

image from Microsoft Clipart, graphics by Ren Garcia

Estimated rebates for 2008 provided by the Economic Stimulus Act of 2008 total $ 106.7 billion, distributed on a weekly basis from 28 April through mid-July. Statistics from the US Bureau of Economic Analysis show improvements in Personal Incomes of US Residents.

The 5% savings rate indicate that a significant share of the tax rebates did not all go to consumption –although Personal Consumption Expenditures did go up by 0.8% (current dollars). If the Personal Consumption Expenditures are adjusted (i.e., 2000 dollars), the increase is only 0.4% –so some of the increase can be accounted for by the increase in prices.

Is the Economic Stimulus Act working for you? What did you do with your tax rebate? Spent it? Paid down debt? Saved it?

image from Microsoft Clipart, graphics by Ren Garcia

Estimated rebates for 2008 provided by the Economic Stimulus Act of 2008 total $ 106.7 billion, distributed on a weekly basis from 28 April through mid-July.

Statistics from the US Bureau of Economic Analysis show improvements in Personal Incomes of US Residents:

It looks like, on a national basis, the tax rebates are working. A significant statistic is the Savings figure of 5% of Disposable Personal Income. Despite the increase in oil and foodprices, US residents have managed to maintain a good savings rate.

Is the Economic Stimulus Act working for you?

graphics by Ren Garcia

Estimated rebates for 2008 provided by the Economic Stimulus Act of 2008 total $ 106.7 billion, distributed on a weekly basis from 28 April through mid-July.

The amount of rebate is based on:

2007 tax filings
filing status
level of adjusted gross income
number of qualifying children.

Do you feel the Economic Stimulus Act working for you?

info source: US Bureau of Economic Analysis, image from Microsoft Clipart reconstructed by Ren Garcia

Having just gone through the annual drudgery of filing your tax returns, you should examine your conscience and ask yourself the question: Have I optimized my tax return (tax avoidance) or have I put myself at risk (tax evasion)?

Tax avoidance is an ex ante (before the fact) situation. It is legal and is good business practice. You need a good Tax Lawyer and an experienced accountant. Both can do tax planning for you or your business, e.g., income recognition & reporting, applicable tax rates, allowable deductions & postponements, tax shields, preferential areas of business where tax breaks are given in the early years of the business, etc.

Tax evasion is an ex post (after the fact) situation. It is a crime, lands you in jail, and is not good citizenship. Wittingly or unwittingly, you have broken the law (ignorance of the law is not an acceptable excuse). You need two lawyers: a Tax Lawyer and a Trial Lawyer. Your accountant probably needs a Lawyer too, because he will be impleaded.

images from Microsoft Clipart

It is the day after the deadline for filing tax returns. It is also the best time to prepare for the 2009 filing. Your filing woes, “should have done this & that,” misplaced documents, unreceived / unretrieved forms, are still fresh in your mind.

Learn from these and remember them and do not let history repeat itself again and again and again . . .

Organize your files and folders of supporting documents (Jennifer Hofmann of My Organized Biz can tell you how). Remember you have to keep supporting documents for taxes for 10 years (ask Kelly Erb of TaxGirl).

images from Microsoft Clipart