Tax relief checks

Tax relief checks

Tax relief checks are checks that the tax authorities send to taxpayers as a means of reducing their tax burden. They can also be refund checks received from the tax authorities for taxes paid in advance. After calculating the tax assessment for the current assessment year or for the previous year, the tax authorities send any overpaid tax back to the taxpayer.

Tax relief checks gained prominence recently with the passage of the Reconciling Economic Growth and Tax Relief Act of 2001, perhaps the nation’s first major tax relief program in two decades. The purpose of the legislation is to reduce the burden on taxpayers by paying out advance tax relief checks. The US Treasury Department mailed checks up to $300 for singles or $600 for couples in the summer of 2001, and the process is expected to be phased in over the coming years. Significantly, these tax relief checks heralded the move from the old 15 percent tax bracket to the new 10 percent tax bracket. The goal here was to give the highest priority to low- and moderate-income families by disbursing tax credit checks on time based on income tax burden.

The tax relief legislation also has provisions to ease the tax burden by allowing deductions for college tuition, deductions for student loan interest and tax breaks from state bonds that are issued specifically to construct public school buildings. The fact that the aid checks are being sent as refunds to taxpayers has drawn criticism from various sections of the population who believe the money should have been used directly for education. Also, an important aspect of tax credit checks that was brought to light is that these credit checks are not rebates or refunds of past tax overpayments, but an advance payment on future tax refunds to be filed.

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