State CPAs have advice on economic stimulus payments
Whether by check or direct deposit, Wisconsinites are getting their economic stimulus payments, and the Wisconsin Institute of Certified Public Accounts has some advice on what to do with the cash.
"The rebate is free money from the government. There are no strings attached to the money, so the choice of how to spend it is up to the taxpayer," said Katie Rivett, CPA, assurance senior manager with Clifton Gunderson LLP.
"However, taxpayers should think about their options before they spend it," she added.
The Internal Revenue Service began issuing the payments in early May to all U.S. citizens who filed income taxes.
According to the IRS Web site, the maximum payment ranges from $600 for singles to $1,200 for married couples.
Parents will also get around $300 for each qualifying child.
Taxpayers can find out what they'll get back by using the payment calculator on the IRS Web site (www.irs.gov).
The WICPA suggests that individuals who get a rebate should invest the money in their 401(K) or another savings program.
They also suggest that the money be used to build an emergency fund.
The group also suggests that Wisconsinites pay down debt such as a credit card which normally carries a high interest rate.
"Your minimum monthly payment may include a large amount of interest," Rivett said.
"Use your rebate check to pay off your balance or bring it down so you are not paying so much in finance charges each month," she suggested.
Making an additional mortgage payment is another idea from the group.
According to WICPA, an extra mortgage payment goes toward paying down the principle balance of the mortgage, thereby shortening the length of the loan.
Another idea from the group is to use the money for a home improvement which, according to the group, will help increase the home's resale value.
A spokesman for the Wisconsin Department of Agriculture, Trade and Consumer Protection said that there haven't been any major scams reported in the state involving the economic stimulus payments.
"However, there are some out there," said Glen Loyd.
"The IRS says that people are receiving calls and e-mails from individuals who say they are from the IRS asking about the economic stimulus payments and then asking for personal information such as Social Security numbers, bank account numbers and other personal information," he added.
Loyd said that the IRS never contacts individuals by telephone, but sends out a letter first and that individuals should be suspicious anytime they receive a telephone call from someone claiming to be from the government.