Tax Rebate Details
When, Who and How Much?
Congress passed the $170 billion economic stimulus bill, meaning the anticipated Tax Rebate Checks are on the way. We're still waiting for more details but here is what to expect so far about how the great 2008 tax rebate will work.
When Will the Checks be Mailed?
The Treasury Department said that the IRS will begin mailing rebate checks starting in early May. It should take about 10 weeks for all the checks to be mailed.
If you don't file your 2007 tax returns by April 15, 2008 and request a filing extension, don't plan to see a rebate check until as late as December.
Who Will Get Tax Rebate Checks?
Tax rebate checks will be mailed to about 117 million middle- and low-income taxpayers. In addition, 20 million retirees living on Social Security and 250,000 U.S. veterans receiving disability benefits will get checks, too.
Your adjusted gross income will determine your eligibility. Full rebates will go to single tax filers with adjusted gross incomes (AGI) less than $75,000 and couples filing jointly with AGIs less that $150,000.
Your AGI is your taxable income from all sources including wages, salaries, tips, interest, dividends, etc. minus IRS-allowed adjustments to income. However, it is more than your Taxable Income, which is AGI minus your itemized deductions and personal exemptions for dependents.
How Much Will You Get?
Single tax filers with AGI less than $75,000 will get rebates of up to $600. Married tax filers with combined AGI less than $150,000 will get rebates checks for up to $1,200. There is an additional $300 paid per dependent child, with no maximum on the number of eligible children.
Persons who don't owe income taxes, but earned at least $3,000 in income from Social Security and veterans disability, will receive rebate checks of $300 for individuals and $600 for couples.
What if Your Income is Higher?
For higher earners, you may still get a check but it will be reduced by 5% of the amount you earn above the AGI income caps of $75,000 for single filers and $150,000 for couples.
For example: A single filer with no children and an adjusted gross income of $80,000, or $5,000 over the maximum AGI, will have his or her rebate check reduced by $250 (5% of $5,000), and will get a check for $350, instead of $600.
A single filer with no children and an AGI of $87,000 would not get a rebate check because it would be reduced by the full $600 (5% of the $12,000 excess). A married couple without dependent children and an AGI of $174,000 would not get a check either because it would be reduced by the full $1,200 (5% of the $24,000 excess above $150,000).
How Do You Get a Check?
To get a rebate check, you must file a federal tax return for tax year 2007, either a form 1040 or 1040-EZ.
This will increase the number of tax returns filed, since those who do not normally not file tax returns, like lower income retirees and disabled veterans, must file their 2007 tax return to be eligible for a rebate check.
What About SSI?
Although it is not immediately clear from the language of the Economic Stimulus Bill (H.R. 5140) passed by Congress, persons with income from Supplemental Security Income (SSI) alone will not qualify for a tax rebate check.
The section authorizing the rebate checks specifically limits qualifying income from Social Security benefits to "any amount received by the taxpayer by reason of entitlement to - (A) a monthly benefit under title II of the Social Security Act, or (B) a tier 1 railroad retirement benefit."
The monthly benefit under title II of the Social Security Act refers to Social Security. It doesn't include SSI, since SSI is authorized under Title XVI of the Social Security Act, not Title II.
Unlike Social Security, SSI is needs based and is funded by general tax revenues instead of Social Security taxes. SSI assists aged, blind, and disabled people, who have demonstrated need based on their income and asset levels.
Call the IRS for More Information
The details of how the rebate will be handled are still being worked out and many questions remain. If you have specific questions, you may wish to contact the IRS. However, please keep in mind that the IRS is doing double duty this tax season...and if you bother them during this busy time it might just delay your own tax rebate check! If you must, you can call the IRS at: Toll-Free, 1-800-829-1040 Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).