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Will You Be Getting a Cash Rebate
from the IRS Under the
New Economic Stimulus Act of 2008?
You have probably heard that Congress and President Bush
agreed to a new stimulus package that will provide cash rebates to certain individuals. However, the devil is in the detail
of who will get what, when, and how. Like most tax rules, it can get quite complex and confusing. I received many follow-up
emails from the prior email so hopefully this will answer those nagging questions.
First, let’s start with who will NOT be getting
a rebate credit check:
1.
If you file your 2007 individual income
tax return timely and your adjusted gross income (AGI) is above $150,000 for married couples filing jointly and $75,000 for
all others, you begin to lose the availability of the credit rebate. At what point the credit rebate is totally lost is not
easy to generalize; however, for a family of four, the credit is lost with AGI of approximately $186,000. A lower limit would
apply if you had no dependent children, and a higher limit would apply with more children.
2.
If a child can be claimed as a dependent
on another taxpayer’s return, that child is not eligible for a rebate credit.
Example: Chris, a college junior, works part-time after
school and full-time in the summers, with taxable income of $10,000. He will not be entitled to a rebate credit since he can
be claimed as a dependent on his parents’ tax return.
Now, let’s discuss who CAN get the rebate credit
check, and for how much:
1.
If your AGI is below the limits discussed
above, you will be getting a check from the IRS in the spring as a credit rebate equal to the greater of your net income tax
liability for 2007 up to a maximum of $600 ($1,200 for a joint return).
- AND -
2.
You can get an additional $300 credit
rebate for each child who is under 17-years-old and who lived with you for more than half the year so that you can claim a
dependency exemption for the child.
- OR -
3.
You can get a credit rebate of $300
($600 for a joint return) if you are a lower-income taxpayer and have qualifying income of at least $3,000. Qualifying income
includes earned income, social security benefits, and veterans’ disability payments (even if paid to the veteran’s
survivor).
Example: A retired couple with $12,000 of social security income and $1,000 of interest income would qualify
for a $600 credit rebate even though they have no tax liability.
- OR -
- You can get a credit rebate of $300 ($600 for a joint return) if you have a net income tax liability of at least
$1 and gross income greater than the standard deduction and one personal exemption (two personal exemptions on a joint return).
As confusing as this might seem, it is even more complicated
than it first appears, due to the fact that this rebate credit is really an advance on 2008 income but is computed on the
2007 tax return filed.
The good news, though, is that you don’t have to
do anything. If you qualify, the IRS will compute this for you and send you a check or direct deposit it in your account.
It is expected that the money will start to be sent out in May. The key is to get your tax return filed as soon as possible
so you can get your rebate more quickly. Beware of holding off on filing your return, because the IRS will only issue rebate
checks until December 31, 2008.
Please contact us for further information.
Wendy Ezell, CPA
dawezell@verizon.net
(817) 481-3784
Please feel free to forward this email to business associates
who might benefit from this information.
This information
is of a general nature. It may omit many details and special rules and is current only as of its published date.
Please
contact us for more information and how it pertains to your specific tax or financial situation.
Pursuant
to US Treasury Regulations, we must advise you that any tax advice included in this communication is not intended or written
to be used, and cannot be used, by a recipient for avoiding penalties that may be imposed on the recipient by any governmental
taxing authority or agency.
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