Tax Planning and the Stimulus

[Mel in Hawaii]

I was just wondering if you all are taking into account the effect that the Stimulus payment will have on people's withholding for next year?

Are you just ignoring it, or have you actually discussed it's effects with your clients?

Take the example of the taxpayer who had one time transactions in 2007 that put their income over the limit to get a stimulus check, yet will otherwise qualify next year. Are you going to suggest temporarily reducing their withholding assuming no more 'one time' transactions or are you more afraid that they would 'forget' to correct their withholding at the end of the year?

I know most of you champion having your withholding work out as close to the tax liability as possible as they have the use of their money now, but in this case is the benefit of getting that money now worth the risk that they will forget to correct it again at the end of the year?

Why am I asking? I was checking out the various withholding calculators that I have found online, and not one of them seem to even mention the stimulus payments effects.

[Lion EA]

I don't like to bring up changing withholding for a single year event for many clients for all the reasons you're worrying about. But, if a client has questions or has shown a tendency to be on top of his situation and to follow my directions.... I have only a couple who actually increase their withholding when I tell them to, though. And, I have a lot of high earners that won't see a benefit this year or next year either. So, for most of my clientele, I won't be bringing up the subject.

[kcjenkins]

I too am not going to bring that up. Frankly, most either got it already, or they may not get it next year for the same reasons. And I find that while they are likely to reduce withholding if it is advised, they seldom 'remember' to increase it back later. Plus, if they get it over time, as a reduction in withholding, they don't remember, or feel like, that they did actually get it. So it would not have any real 'stimulus' effect, right? ;~)