Confused? Your guide to the tax rebate
Posted
Feb 14 2008, 01:35 PM
by
Karen Datko
Rating:
Lots of readers have told us they're confused about how the tax rebate will work, so we'll try to shed a little light on the matter.
The rebates -- tax blogger Kay Bell dubbed them "prebates" -- are an advance on a tax credit you would have gotten when you filed your 2008 tax return. You're just getting it a year early, says Bell, of Don't Mess With Taxes. The amount will be based on your 2007 tax return and range from $300 to $600 per adult, up to $1,200 for married couples who file jointly, and $300 per child under 17 years of age.
You're eligible if you have at least $3,000 in qualifying income. To see a government document for details about how much you can expect to get, click here.
Kay notes: "Folks who don't usually file a return because their only income is Social Security, certain Railroad Retirement or certain veterans' benefits, or they don't make enough earned income to file, must -- repeat, must -- file a 2007 return to get a rebate." (Supplemental Security Income (SSI) can't be counted as qualifying income, the IRS says.)
Here are some other things you should know:
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No special paperwork is required for most people. Just file a 2007 tax return, and the IRS will figure out the amount of your rebate.
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Checks will start showing up in May. The money will be direct-deposited into your bank account if you select that option on your tax return.
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You have to have a valid Social Security number to get a rebate.
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Once you file your 2008 tax return and it ends up you should have gotten a bigger advance payment, you'll get the extra money in 2009. If it turns out you should have gotten less, consider it a bonus. You won't have to pay back the difference.
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The rebate is tax-free. You won't have to count it as income on your 2008 taxes. You will have to note it on your 2008 tax return so the government doesn't pay you the money again.
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Also, 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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Who won't get a rebate? This list includes college students who can be claimed as dependants, and people whose adjusted gross income is $87,000 or more ($174,000 for married couples who file jointly). The rebate will be reduced by $50 for every $1,000 you earn above $75,000 ($150,000 for married couples filing jointly).
For more details, click here to read an article Kay wrote about the rebate for Bankrate.com. Also, visit the IRS Web site.
