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2008 TAX REBATES
On February 13, 2008, President Bush signed into
law The Economic Stimulus Act of 2008. The Treasury will begin
sending economic stimulus payments to taxpayers in May and continue
sending payments throughout the summer to more than 130 million
individuals. The following information regarding economic stimulus
payments is provided by the IRS:
The vast majority of Americans who qualify for an economic stimulus
payment will not have to do anything other than file their 2007
individual income tax return to receive their payment this year.
They will not have to complete applications, file any extra forms
or call the Internal Revenue Service to request the payment, which
is automatic. The IRS will determine eligibility, figure the amount
and issue the payment.
Stimulus payments will be direct deposited for taxpayers selecting
that option when filing their 2007 tax returns. Taxpayers who
have already filed with direct deposit won't need to do anything
else to receive the stimulus payment. For taxpayers who haven't
filed their 2007 returns yet, the IRS reminds them that direct
deposit is the fastest way to get both regular refunds and stimulus
payments.
Basic Eligibility
The IRS will use the 2007 tax return to determine eligibility
and calculate the basic amount of the payment. In most cases,
the payment will equal the amount of tax liability on the return
with a maximum amount of $600 for individuals ($1,200 for taxpayers
who file a joint return) and a minimum of $300 for individuals
($600 for taxpayers who file a joint return).
Even those who have little or no tax liability may qualify for
a minimum payment of $300 ($600 if filing a joint return) if their
tax return reflects $3,000 or more in qualifying income. For the
purpose of the stimulus payments, qualifying income consists of
earned income such as wages and net self-employment income as
well as Social Security or certain Railroad Retirement benefits
and veterans' disability compensation, pension or survivors' benefits
received from the Department of Veterans Affairs in 2007. However,
Supplemental Security Income (SSI) does not count as qualifying
income for the stimulus payment.
Low-income workers who have earned income above $3,000 but do
not have a regular filing requirement must file a 2007 tax return
to receive the minimum stimulus payment. Similarly, Social Security
recipients, certain Railroad retirees, and those who receive the
veterans' benefits mentioned above must file a 2007 return in
order to notify the IRS of their qualifying income.
The IRS emphasized that people with no filing requirement who
turn in a tax return to qualify for the economic stimulus payment
will not get a tax bill. People in this category will not owe
money because of the stimulus payment.
Limitation
To be eligible for a stimulus payment, taxpayers must have valid
Social Security Numbers. Anyone who does not have a valid Social
Security Number, including those who file using an Individual
Taxpayer Identification Number (ITIN), an Adoption Taxpayer Identification
Number (ATIN) or any other identification number issued by the
IRS is not eligible for this payment. Both individuals listed
on a married filing jointly return must have valid Social Security
Numbers to qualify for a stimulus payment.
Additional Payments for Parents and Others with Qualifying
Children
Parents and anyone else eligible for a stimulus payment will
also receive an additional $300 for each qualifying child (subject
to income phase-outs). To qualify, a child must be eligible under
the Child Tax Credit and have a valid Social Security Number.
Anyone who is not eligible for the basic payment amount due to
the phase-out provision or any other exception will not be eligible
for this additional amount for children.
Special Circumstances for Recipients of Social Security
Individuals who receive Social Security benefits, Railroad Retirement
benefits and certain veterans' benefits may have to follow special
filing requirements in order to receive the basic amount:
- Those who have already filed a 2007 return reflecting qualifying
income of $3,000 or more do not have any additional filing requirements
and do not need to do anything more to receive their payment.
- Those who have already filed a 2007 return showing less than
$3,000 in qualifying income and did not list their Social Security
should file a Form 1040X to list those non-taxable benefits and
qualify for a payment.
- Those who are not required to file a 2007 return but whose total
qualifying income including Social Security would equal or exceed
$3,000 should file a return reporting these benefits on Line 14a
of Form 1040A or Line 20a of Form 1040 to establish their eligibility.
Please note the form lines just mention Social Security, but use
these lines even if your only benefits were Railroad Retirement
or veterans' benefits.
Notices
Most taxpayers will receive two notices from the IRS. The first
general notice from the IRS will explain the stimulus payment
program. The second notice will confirm the recipients' eligibility,
the payment amount and the approximate time table for the payment.
Taxpayers will need to save this notice to assist them when they
prepare their 2008 tax return next year.
Anyone who moves after they have filed their 2007 tax return
should notify the IRS by filing Form 8822, Change of Address,
and also notify the Post Office.
Exclusions
Also ineligible are individuals who can be claimed as dependents
on someone else's return.
Dividends, interest and capital gains income is not included
when determining qualifying income. Supplemental Security Income
(SSI) does not count as qualifying income for the stimulus payment.
Also not included in qualifying income are non-veterans or non-Social
Security pension income (such as those from Individual Retirement
Accounts).
Stimulus payments will be subject to offset against outstanding
tax and non-tax liabilities in the same fashion as regular tax
refunds.
In addition, the IRS emphasizes the stimulus payments will not
count toward or negatively impact any other income-based government
benefits, such as Social Security benefits, food stamps and other
programs.
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