For two years, Tom Chamberlains paychecks have followed a short, circular course.
The 22-year-old loves the outdoors and works for Scheels All Sports in Rimrock Mall where he buys a lot of clothes, gear and gadgets.
His federal income tax refund check will likely meet the same fate as his paychecks.
I pretty much watch my paycheck come right back to this dang store, said Chamberlain, a marketing and management major at Montana State University-Billings.
For other workers receiving their cut of the $1.35 trillion tax rebate, the choices of where to spend the money are endless: a new TV, an appliance, back-to-school clothes, a gun with a scope, a new fly rod or a vacation.
Some are spending the checks, up to $600, paying for this years 13 percent increase in tuition for Montanas University System.
Eva Schaff, a Lavina resident who teaches first grade in Broadview, is splitting her $600 between debt reduction and spending.
Im paying off some credit card bills and buying a new dryer and a freezer, so its gone, Schaff said.
Larry Thorne, a goldsmith at Jensen Jewelers, just got back from a weeks vacation and his $600 is going toward the next getaway in October.
Ill put it in the bank. Ill save it and use some of it for a vacation or something, Thorne said.
A new arrival in the family convinced Craig Kehrwald, 27, to conserve his $600 when the check comes the week of Aug. 20.
Were going to pay off some bills and put the rest in savings because I have a baby. Hes 6 months old now, Kehrwald said. And theres going to be more things coming up with him, so Im not thinking of things I need now.
People like Schaff and Kehrwald are following sound financial advice by saving all or part of their rebate checks, according to one Billings certified public accountant.
Greg Popp of Colberg Fasching Mrackek & Co., said most of his firms clients are business owners who are getting a lot more money back than the one-time rebate.
Popp advises people who owe money to use the rebate to pay down their highest balances.
With $600 at 18 percent interest, youd save more than $100 in interest just the first year, he said.
Pushing for new peddlesCary Smith, store manager of Sears Roebuck and Co., said hes talked to 30 or 40 customers and found that the tax rebate probably will follow the same pattern as spring tax refunds.
I think if you throw that much cash out into the world, thats going to help, he said. We see each spring that people come in and spend money when they get their tax refund. Thats just part of the way people are.
Smith said Sears would accept the rebate checks when customers buy something and give the balance back in cash.
Wal-Mart, Home Depot and other stores are offering the same deal.
Smaller businesses are welcoming the extra sales as well.
A letter to a Billings woman saying she would receive a $600 rebate check was enough incentive for her to rush down to The Spoke Shop and take care of a desire.
Shed just gotten a notice that her rebate was coming and said, I might as well buy the bike Im wanting. The check is going to be in the mail. said Spoke Shop owner Jim Downs.
Downs said the woman bought the same bike her husband bought earlier this year a very, very nice mountain bike costing $1,400.
Jim Day, western regional director for business development for accounting firm Eide Bailly, said he and his wife, Katie, a third-grade teacher at Shephard, are going to pay off their five-year loan on their Toyota 4-Runner. Day said some of his friends told him they would spend their money finishing off house projects, saving the rebate or even buying some lottery tickets to try to really get rich.
Rather than give the money back to the government through the lottery, investing the funds in a conservative mutual fund with an average yearly return of 7 percent is a safer bet.
Billings accountant Ed Thurner said $300 invested at 7 percent for 15 years would grow to $855 and $600 invested under the same terms would yield $1,709 by the year 2016.
Not all checks are equalThe way the federal rebate program is set up, individual taxpayers may receive up to $300. Married couples may get up to $600. College students whose parents claim them as dependents wont get rebates.
And lower-income people who pay less in federal income taxes will receive smaller rebates. Thats been a shock for some, according to Bob Theis, branch director for Consumer Credit Counseling Service.
For Theis, the advice he gives to clients already in trouble with credit is simple: use your rebate check to pay down debt.
But he said 10 to 15 people using Credit Counseling were surprised when the IRS letters arrived stating how much of a refund was coming.
What people thought they were getting and what they actually are getting are different, Theis said. They said, We were expecting $600 and we only got $200. What do we do?
Some charities are asking people to donate their rebates. However, since the checks have just started arriving, the effect of that plea cannot be measured yet.
No, we havent seen any increase, Darlene Johnson, business administrator at the Salvation Army in Billings.
In any case, Montanans who itemize their state income taxes will have to give back some of their federal rebate to the state next year.
Montanans receiving a $300 federal refund would owe the state between $6 and $33 next year. Taxpayers receiving $600 would owe Montana between $12 and $66, depending upon their income tax bracket.
Curt Riemann, who has owned Curts Saloon in Laurel for 23 years, said the rebate would help the economy some, but hes not getting too excited about it and neither are his customers.
It will just help them take the kinks out of the summer. Its not a big enough amount of money to do much, Riemann said. Maybe buy some amenities. Maybe a pizza for them and the kids and maybe some school clothes or a trip to the water slide.
Jan Falstad can be contacted at (406) 657-1306 or at firstname.lastname@example.org