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Economic Stimulus Package Rebate 08 Facts To Date

Guest Author - Kate Woods

The first fact is that the facts are confusing related to the Economic Stimulus Package Rebates for 2008. Like many things in life these days even good things come with baggage; in this case confusion is the name for the baggage attached to the 2008 Economic Stimulus Package rebates – that and the name so for the rest of this article this writer will be referring to said rebate as the ESP08 Rebate. Somewhat overlooked additional items that are part of the package are business incentives and help for homeowners facing foreclosure. But by far the rebates and how they will work are receiving the most attention. So, I’ll give you a summarized list of some of the facts that I’ve uncovered to date and where I found them. I hope they’re helpful.

• You must file a 2007 tax return to be eligible to receive a rebate as the 2007 returns will be used to determine eligibility for rebate calculations. It is important to note that if your income is too low to require you to file a return, in all cases, to be eligible to be considered for and to receive a rebate you must file a 2007 tax return.
• The IRS is scheduled to begin sending out the payments as early as May and will continue according to a schedule over several weeks.
• If you extend your 2007 tax return you will not receive your rebate until after you file your return. Rebates will continue to be mailed through December 31, 2008 to accommodate those who file extensions.
• If you elect to have direct deposit of a refund on your 2007 return your rebate will be direct deposited to the same account you designated on your 2007 return. If you received a RAL from your preparer you will not be eligible to receive your refund by direct deposit. You will be mailed a paper check.
• In most cases the rebate will be determined by the amount of the liability on the 2007 return up to the maximums for each filing status of $600 for individuals and $1,200 for married filing jointly status. Rebates of $300 ($600 for joint return filers) will also be given to taxpayers with no tax liabilities such as low-income workers and some recipients of social security benefits or veterans’ disability compensation, and pension survivors’ benefits received from the Department of Veterans Affairs in 2007 if they had at least $3,000 of qualifying income.
• Eligible recipients with children will receive an additional $300 rebate per child under age 17 provided the child qualified for a child tax credit.
• Rebates for higher income taxpayers are subject to phase out. The stimulus payment – the basic component and the additional funds for qualifying children – begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds. The $600 credit for individuals phases out completely at $87,000 of AGI and the $1,200 credit for joint filers phases out completely at $174,000 of AGI.
• A person must have a Social Security Number to qualify for the rebate. A child must have a Social Security Number to be qualified for the $300/child credit. You cannot qualify for the rebate if you have an ITIN or an ATIN.
• You cannot qualify for the rebate if you are claimed as a dependent by someone else.
• Individuals who pay no tax and have under $3000 of income will not be eligible for the refund.
• Non-resident aliens and individuals who file Form 1040NR, 1040PR or 1040SS are not eligible for the stimulus payments. Business entities, estates and trusts are not eligible for the payments.
• Individuals who have already filed their 2007 returns and excluded their non-taxable qualifying social security, railroad retirement or veterans benefits will have to file a 1040X amended return to qualify for the rebate.
• The stimulus payments will not have any effect on eligibility for federal benefits.
• According to the information posted by the IRS the refund will not be includible as taxable income on the 2008 returns.
• According to the information posted by the IRS the stimulus payment will not reduce or increase your refund when you file your 2008 return.
• According to outside analysts it does appear that the actual refund will be recalculated on the 2008 return and compared to the advance refund received. If the refund received should have been higher a credit will be given on the 2008 return against the taxes due but if the refund received should have been lower the difference will not have to be repaid. At this point the analysis does not indicate that any negative effect is expected. However this information is not verified in the IRS information available at this time and therefore is being presented only as a possibility and to make readers aware that they should pay close attention to how this is handled when it is time for preparation of 2008 returns.
• If you do not qualify for the advance rebate based on the information on your 2007 return you may still be eligible for the rebate on your 2008 return. There will be a worksheet included in the 2008 return related to this issue.
• If you owe back taxes to the IRS the rebate will be treated the same as any other federal tax refund and it will be first applied to the back taxes owed. You will receive documentation from the IRS indicating how your refund was applied.
• There are several sources of free tax help. It is available to low- and moderate-income workers, including veterans through the VITA program. Call 1-800-906-9887 to locate the nearest VITA site; It is also available through the TCE Program to people age 60 and older. As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. To find an AARP Tax Aide site, call 1-888-227-7669 or visit the AARP Web site.
• The most detailed and best most reliable source for information related to the ESP08 is the IRS web site at www.irs.gov The most current information posted indicated that a tool will soon be available at their site that will allow taxpayers to calculate their advance payment as well as to check on the status of advance payments.

The above information was all compiled from detailed information provided by the IRS, CCH Tax Briefing, and RIA Federal Taxes Weekly Alert. This information is in no way all inclusive and certainly does not answer all questions related to the rebates but hopefully will answer some questions for most taxpayers. I will continue to monitor the information related to the rebates and post any corrections or additional information if it is deemed of significance.

Don't forget no matter how you feel about the economy it's important that you make your opinion known - Speak Your Mind - Vote!

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As always I hope you are enjoying Tax Facts on the Taxing Subject of Taxes!

Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.

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Content copyright © 2013 by Kate Woods. All rights reserved.
This content was written by Kate Woods. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.

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