Where's my rebate?

If you took out one of these products and had your expected refund amount loaded onto a prepaid card, your economic stimulus check is going to be of the paper variety, not electronic. And that means you'll have to wait longer for your money.

A lot of folks got these cards this filing season, the most popular options being the ipower Visa card from Jackson Hewitt and the Emerald MasterCard via H&R Block. Now they are upset that they have to wait for paper delivery of their rebate money instead of having that amount added to the card.

The main complaint is that when they had their taxes done at these franchise offices, the marketing material reportedly referred to having refunds "directly deposited" onto the card accounts.

So why isn't the same direct deposit happening with the rebates? Account numbers were eneterd as they would have been had the money gone into a bank account. Why must these folks now wait for paper checks?

You can be mad all you want, but there's nothing you can do about it. And an H&R Block spokeswoman was quick to point out that the decision was not her company's (or their competitors'), but was made by the IRS.

The rebate deposit rule is that if you got a bank product, such as a refund anticipation loan or had your tax prep fees paid from the refund amount on the card, you will get a paper check. Period.

But, according to H&R Block, if the card simply was used as a vehicle for the direct deposit of the taxpayer's original refund amount and only that amount of money was loaded onto the card, then the stimulus rebate will go on the card, too.

So check your prepaid card terms.

Tracking your rebate online: You also can now go online to check the status of your rebate money.

The IRS has set up a new Internet tracking tool, modeled after it's popular Where's My Refund?

At the similarly named Where's My Rebate? you enter your Social Security number (if you filed a joint return, use the SSN of the spouse listed first on your 1040), your filing status and the number of exemptions you claimed on your 2007 return.

If, like silly, slow me, you've yet to file your return, after clicking "submit" you'll get a page that tells you, "We are sorry. Specific information about your Stimulus payment is not available."

Possible reasons for the unknown status, according to the IRS, are:

The IRS also urges patience (yeah, right!), saying, "Please allow 6 weeks after filing your tax return before checking on the status of your Stimulus Payment."

If you prefer a phone to online (which then raises the question, why are you here reading this?), you also can track your rebate via the IRS Rebate Hotline toll-free at (866) 234-2942. You'll need the same information that the online tracking system requires.

More rebate-related cards: Once you do get your rebate, retailers are using plastic to try to get you to spend it in their establishments.

Several national chains -- Sears, Kmart, Kroger, Home Depot and Staples, just to name a few -- are offering shoppers bonuses of up to 10 percent of their rebate amounts if they convert their rebates to store gift cards.

Details on the programs can be found in articles published at USA Today, BusinessWeek and MSNBC.

Rerouting rebate deposits

The latest instance where something thought to be a good thing turns out to be a pain is the delivery of the economic stimulus payment rebates.

Every year more of us are having our regular tax refunds directly deposited. The money shows up sooner and we don't have to worry about lost IRS checks.

So it was a no-brainer that folks who instructed the IRS to directly deposit their regular 2007 refunds should get their rebate money the same way.

But then the law of unintended consequences kicked in.

Another well-intention direct deposit measure, the ability to have your refund send directly to as many as three separate accounts, has complicated things.

It seems that some folks had their 2007 refunds go straight into their IRA, either Roth or traditional. So that's where the IRS is sending those folks' rebate checks, too.

And that's producing some problems.

First, you might not want your rebate to go into your IRA. If you do, that's fine. The money will go there and it will count as a 2008 contribution.

But if you needed the money to pay off a credit card or had promised the kids a trip to Disney World (or, here in Texas, one of the Six Flags amusement parks), you've got a problem, not to mention screaming kids!

And, of course, the president and members of Congress aren't too happy either. They didn't want your rebate to go into a retirement account. They want you to spend that money and get the sagging economy going again. My Bankrate colleague Barbara Whelehan takes a look at the merits and probabilities of such spending in her Boomer Bucks column "Spend, invest or pay off bills?"

So, suddenly faced with all those unintended IRA deposit consequences, the IRS has come up with a way you can get rebate money sent to retirement accounts back, tax- and penalty-free.

The IRS has announced that if your rebate money goes to your IRA and you don't want it there, you can withdraw it, either in full or just some of it, from the account and suffer no tax consequences.

That means if your $1,200 stimulus payment goes straight into your IRA, you can withdraw that full $1,200 or, if you decide to save a bit of the rebate, less. Whatever you decide, the IRS won't have an issue with the early distribution.

Your IRA manager will go ahead and report the rebate deposit and distribution to you and the IRS in the usual manner. But in next year's Form 1040 instructions, you'll find information on how to report the distribution so that it's not subject to existing tax or penalties.

This rule applies to all tax-favored accounts into which rebates might have been sent: an IRA, a health savings account, or HSA, an Archer Medical Savings Account, or MSA, a Coverdell education savings account, or CESA, or a qualified tuition program account (QTP or 529 program).

A couple of exceptions: There are a couple of other instances where direct deposit instructions on your 2007 tax refund will affect your rebate delivery method.

If you've opted to have your refund directly deposited into more than one account, the IRS is going to send you a paper rebate check instead of trying to decide how to parcel out this additional money into accounts.

If you do find your rebate ends up in your IRA, you don't have to immediately take it out. The IRS says any withdrawal of rebate money deposited to a tax-deferred account can be made as late as April 15, 2009, the due date of your 2008 return, or Oct. 15, 2009, if you get a filing extension next year.

And what if you had your regular refund sent to your IRA and now would like that money back? Sorry. It's got to stay in your retirement fund. This new withdrawal rule applies only to rebate money sent to tax-deferred accounts.

Revised rebate delivery schedule

"On Monday (April 28), the Treasury Department will begin delivering the first of these tax rebates by direct deposit," Bush said. "During the first week alone, nearly 7.7 million Americans will receive their tax rebates electronically. Then on May 9, the IRS will begin mailing checks to millions more across America."

The IRS is no doubt frantically working to update their official delivery schedule Web page; it still shows the original dates that the checks were to be issued.

But here at Bankrate, we've already tweaked our calendar for you based on the president's promise that the checks will be in the mail, both snail and electronic, sooner than expected:

Direct deposit payments

Paper check

Is it just coincidence that the last of the checks to be delivered by the U.S. Postal Service will go out Independence Day week? Nah.

Treasury spokesman Andrew DeSouza said the payments are able to go out ahead of schedule because of a new computer program that updates records daily, much faster than an older program that updates weekly.

Remember, this delivery schedule applies only if you've filed your 2007 return. If you got an extension, you won't get your rebate until you file your Form 1040.

Tennessee tax holiday

At 12:01 a.m. today, the Volunteer State kicked off a special spring tax-holiday weekend. From now until 11:59 p.m., Sunday, April 27, shoppers won't have to pay sales taxes of 9.25 percent (7 percent to the state, 2.26 to local governments) on select purchases.

As with the state's regular sales tax holiday the first weekend of each August, this event offers savings on school supplies, art supplies and clothing priced at $100 or less per item, and computers priced $1,500 or less.

The state's department of revenue has put together a comprehensive list of exactly what is and isn't tax free at this special Web page. Check it out in case you haven't already made your mall run or are planning more purchases in the next 48 or so hours.

In fact, you don't actually have to get out of your house. Save some gas and buy eligible items via mail, telephone, e-mail or the Internet. As long as you order and pay for the products and the seller accepts the order for immediate shipment during the tax holiday period, those goods are sales-tax free, too, even if they've delivered after the holiday ends.

Tennessee tax officials say that last year's sales tax holidays (the state had a spring event last year, too) amounted to tax savings of almost $10 million to the state's shoppers. Of course, that's $10 million the state lost.

Paying the piper somehow: But here's something to think about Tennesseans. Just how will state officials make up that lost sales tax money? You might want to consider that as you're filling up your shopping bags.

In fact, most tax experts and economists think that tax holidays are horrible tax policy. Of course, they don't write tax laws; politicians do.

The Tax Foundation, a nonpartisan tax research group based in Washington, has long argued against the events, calling them politically expedient but poor tax policy.

Jonathan Williams, an economist at the Tax Foundation, writes, "Supporters of sales tax holidays claim the holidays deliver real savings to consumers and boost sales for retailers. The evidence suggests otherwise."

Williams cites data from the New York State Department of Taxation and Finance that shows the Empire State's first sales tax holiday did increase sales during that period, but sales for the full year were virtually unchanged. In other words, says Williams, shoppers didn't buy more; they just shifted the timing of their purchases.

And sales holidays could, in fact, end up costing the bargain hunting shoppers more. Other studies have indicated that retailers often raise item prices during the tax holiday, negating most of the advertised tax savings. "As it turns out," says Williams, "sales tax holidays are more hype than anything."

But we Americans love the idea of getting a bargain. One that's at the expense of the tax collector is just that much more appealing. So as long as shoppers vote for tax holidays by cramming the malls, politicians, seeking consumer votes each November, will continue to OK sales tax holidays.