This is the real answer:
The refund checks are supposed to be for 2001, but will be computed on your 2000 income tax filing. That in itself is going to cause a lot of confusion. How about those folks who had very low income in 2000, but have much higher income in 2001? Will they miss out on part of their refund checks? Nope. They'll receive a rate-reduction credit when they file their 2001 tax return. So while they might have to wait a little longer for their full refund, the credit system worked into the 2001 tax forms will still give the full benefit of the rate reduction.
Can't quite see how this works? Well then let's take Shirley, a single person. In 2000 she had $4,000 of taxable income and paid $600 in tax. In October 2001, she receives a rate-reduction refund check for $200 (5% of $4,000), rather than the "normal" $300. But in 2001 Shirley's prospects picked up. She had $20,000 of taxable income. She will be entitled to a $100 rate-reduction credit on her 2001 return (5% of the first $6,000 of income for 2001, less $200 rate-reduction refund) when she actually files it in early 2002.
Seems reasonable so far, eh? Then think about this: What will happen to those people who had taxable income in 2000, but dropped off of the income radar screen in 2001? They likely received the full refund check, based on their 2000 income. Will they be forced to repay this refund to Uncle Sammy? The law says no. And the same holds true for any folks who find that their rebate check, based on their 2000 tax return, was greater than what would have been allowed based upon actual 2001 income. Consider the person who passes away in early 2001, having no taxable income for 2001. But that person had plenty of taxable income in 2000. Would that person have to repay the refund check that they actually received? Not at all. It's another harsh (but legal) way of beating the system.
So if you receive the maximum refund check allowed by law, enjoy it. Regardless of what happens to your 2001 income, you won't have to give it back. But if you receive a refund check in an amount less that the law allows (or receive NO refund check), make sure that you complete the worksheets that will be provided with your 2001 tax forms and instructions to see if you can get some or all of your remaining refund in the form of a rate-reduction credit on your 2001 tax return.
Don't just assume that Uncle Sam was correct in giving you a refund check of $50 when you were expecting $300. It's quite possible that Uncle Sam was correct based upon the 2000 tax year data, but your situation has changed and you now get the remainder of your refund in a 2001 refund credit.
[b]The short answer is that the refund will not affect 2001 taxes in any way.[/b]