In an effort to energize the nation’s economy, the Economic Stimulus Act of 2008 was recently approved, setting forth a plan for more than 130 million Americans to begin receiving nontaxable rebate checks as early as May. These rebate checks will not reduce your refund.
What you receive from the rebate is determined by three factors. The first is based on your filing status – whether you’re married, single or head of household. The next is your total adjusted gross income (AGI) for 2007. The third factor is whether or not you have dependent.
A taxpayer will receive a rebate if:
- There is a net tax liability. If there is, they will receive up to a maximum of $600 ($1,200 for a joint return); or
- The taxpayer has at least $3,000 of qualifying income. Qualifying income includes:
- Earned income,
- Veteran’s disability payments (including payments to survivors), and
- Social security benets
Taxpayers who receive at least $1 of the rebate will receive an additional $300 for each qualifying child. A qualifying child is generally a dependent who is under age 17 at the end of the year.
Rebates begin to phase out at $75,000 of adjusted gross income (AGI) for individuals and $150,000 of AGI for married couples filing jointly. The rebates phase out at five percent of the amount exceeding the applicable AGI threshold.
How do seniors collect the rebate?
Seniors with at least $3,000 in qualifying income will be eligible to receive a rebate, but they do need to file a return. Seniors should do the following:
- Report income including Social Security benefits, veteran’s disability payments, and railroad retirement benefits, on
- Line 20a on Form 1040, or
- Line 14a on Form 1040A
- Fill out name, address and Social Security number on the form and write the words “Stimulus Payment” on the top of the form.
- Mail to IRS address provided on form.
Seniors who have already filed a tax return reporting less than $3,000 qualifying income may want to file an amended return if they are now eligible because of the additional qualifying wages that come with this rebate program.
