IRS began the transfer of economic stimulus payments from April 28, 2008. The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. The rebate payment will equal the amount of tax liability on the return (tax liability on the return Form 1040 line 46 or Form 1040A line 28) with a minimum amount of $300 and a maximum amount of $600 for individuals. The taxpayers who file a joint return and are found eligible for rebate will get a minimum amount of $600 and maximum amount of $1,200.
You must file their 2007 individual income tax return even if their income is below the filing requirement. It means that millions of people in this group who normally don’t file a tax return will need to do so this year in order to receive a stimulus payment. If you have missed the April 15, 2008 due date for filing thetax return, you must file your 2007 tax return on or before October 15, 2008 to get your stimulus rebate.
Stimulus payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns. Those you did not opt for direct deposit will get check in mail. However, taxpayers who use Refund Anticipation Loans (RALs) or enter into any other loan or financial agreement with their tax professional cannot receive their stimulus payments by direct deposit and instead will get a paper check.
IRS has begun to transfer of economic stimulus payments from April 28, 2008, so some of you will already see payments in their bank accounts. Early filers, who opted for direct deposit will be the first to get the rebate. Mailing of paper check will begin from May 16.
If the IRS finishes processing your return by April 15, you will most likely get your payment based on this schedule. For this initial batch of stimulus payments, the payment date will be based on the last two digits of your Social Security Number.
To be eligible, the taxpayer must have $3,000 or more in qualifying income. Individuals who have less than $3,000 of qualifying income are not eligible for the stimulus payment. 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, dividends, interest and capital gains income and 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).
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. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number. For child tax credit, the child must be under age 17 at the end on the year.
To be eligible for a stimulus payment, taxpayers must have valid Social Security numbers. Both individuals listed on a married filing jointly return must have valid Social Security numbers. The taxpayer without a valid Social Security number or with an ITIN, ATIN or any other identification number issued by the IRS is not eligible for this payment.
Eligibility for the stimulus payment is subject to maximum income limits. The payment, including the basic amount and the amount for qualifying children, will be reduced by 5 percent of the amount of income in excess of $75,000 for individuals and $150,000 for those with a Married Filing Jointly filing status.
Also ineligible are individuals who can be claimed as dependents on someone else’s return.
Special Circumstances for Recipients of Social Security, Railroad Retirement and Certain Veterans Benefits
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. The IRS has released a special version of a Form 1040A that highlights the simple, specific sections of the return that can be filled out by people in these categories to qualify for a stimulus payment.
Those who have already filed a 2007 return reflecting qualifying income of $3,000 or more do not have any additional filing requirements. Those who have already filed a 2007 return showing less than $3,000 in qualifying income and did not list their Social Security, Railroad Retirement or certain veterans benefits 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, certain Railroad Retirement and certain Veterans benefits 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. The form lines just mention Social Security, but use these lines even if your only benefits were Railroad Retirement or veterans’ benefits.
Filing Form 1040A
1. Write the words “Stimulus Payment” across the top of the form.
2. On Form 1040A line 7, include the self-employed or a partner income amount you would enter on Schedule SE, line 3.
3. On Form 1040A line 14a (Social security benefits) include social security, tier 1 railroad retirement, and veterans disability and death benefits.
Is my stimulus payment taxable or refundable?
No it is non-taxable income and you don’t have to refund it back. But you will report the amount you received in your 2008 tax return. If you did not receive full amount of $600 now, then you may get the balance amount when you file your 2008 return, and you become eligible for the tax rebate.
The 2008 tax instructions will include a worksheet to help those who did not qualify for a payment or those who received a reduced amount determine if they can obtain a benefit when they file their 2008 tax returns next year.
For more information on Stimulus Tax Rebate, read Frequently Asked Questions
List of Articles
Your Filing Status
1. Filing Status for Married
2. Filing Status: Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
1. Filing Requirement for a Dependent
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed
3. Filing W4 Employee’s Withholding Allowance Certificate
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Mandatory Reporting of Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Student Loan Interest Deduction
3. Itemized Deductions
Income Adjustments -- Retirement Plans
1. Trad IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
Status of Your Tax Refund
1. When will I get my tax refund?
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2008 Economics Stimulus Act
1. Are You Eligible for 2008 Stimulus Tax Rebate Payment?
2. 2008 Economics Stimulus Act -- Benefits to Businesses
Tax for Aliens
1. U.S. Tax Filing Requirements for Non-Residents
2. Substantial Presence Test
3. Social Security and Medicare (FICA) Taxes for Non-resident Exempt Individual
4. U.S. Tax Treaties for Professors, Teachers and Researchers
5. U.S. Tax Treaties for Students and Apprentices
6. The U.S. Visas
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