Tax Rebate Checks 2008 - Details on Federal Income Tax Rebate Plan
Tax Rebate Checks 2008 - Details on Federal Income Tax Rebate Plan. Here you’ll learn information on tax rebate and returns.
What are 2008 tax rebates?
Because of a growing weakness in the American economy and concerns about a recession, the U.S. Congress recently passed, and President Bush has signed, legislation intended to stimulate the economy. The effects of this $152 billion economic stimulus package will not be seen for several months, but the government hopes that the elements of this legislative bill will encourage businesses, and especially individuals, to spend money in 2008 so as to improve the economy.
The legislation, as it applies to individuals, is focused on providing tax rebates to persons who filed federal (U.S. government) income tax returns in 2007. It is not necessary to have actually paid taxes in 2007 in order to receive a tax rebate in 2008, but it is a requirement to have filed a 2007 federal tax return.
Am I eligible?
Tax filers who are eligible for a full rebate from the federal government include:
Individuals (i.e., if your tax filing status is anything but “married filing jointly”):
Individuals with adjusted gross income of up to $75,000 and who paid federal income tax
Individuals who filed a tax return but who paid no income tax, provided they had at least $3,000 in qualifying income in 2007
Couples (i.e., if your tax filing status is “married filing jointly”):
Couples with joint adjusted gross income up to $150,000 who paid federal income tax
Couples who filed a tax return but who paid no income tax, provided they had at least $3,000 total in joint qualifying income in 2007
Seniors with at least $3,000 in social security income in 2007
Military veterans receiving disability payments in 2007
Tax filers who are eligible for a partial rebate include:
Individuals with incomes from $75,000 to $87,000 who paid federal income tax
Couples with joint income from $150,000 to $174,000 who paid federal income tax
Note: “Qualifying income,” for purposes of the 2008 tax rebates includes income from the following sources in 2007: earned income, social security income, Railroad Retirement benefits, veternan’s disability compensation, and pension or survivors’ benefits received from the Department of Veterans Affairs. However, Supplemental Security Income (SSI) does not count as qualifying income for the 2008 tax rebate.
According to the IRS, you will not receive a tax rebate if any of the following apply to you:
You did not (do not) file a 2007 federal tax return.
You did not pay taxes in 2007 and your qualifying income is less than $3,000.
You can be claimed as a dependent on someone else’s tax return (e.g. a student who can be claimed on a parent’s return).
You do not have a social security number.
You are a nonresident alien.
In 2007, you filed Form 1040NR, Form 1040NR-EZ, Form 1040PR, or Form 1040SS.
How much will I get?
For those who are eligible to receive a rebate (see above), the actual amount you can expect to receive is simple to determine for some people and more complicated for others. This is because the total rebate amount can consist of one, two, or three components, depending upon your situation.
The three components and how they add up are as follows:
Total Rebate = 1) “Individual” rebate +
2) Rebate for qualifying children (if applicable) -
3) Phase out reduction (if applicable).
Said in words: “Your total rebate is equal to your individual rebate amount plus your qualifying child rebate amount (if you have qualifying children) minus your phase out reduction amount (if you have high income that is in the phase out range*).”
If you do not have qualifying children and your income is not in the “phase-out” range, then only the first component applies to you.
If you do not have qualifying children and your income is in the “phase-out” range, then the first and third components apply to you.
If you do have qualifying children and your income is not in the phase-out range, then the first and second components apply to you.
If you do have qualifying children and your income is in the phase-out range, then all three components apply to you.
*Phase-out range: Adjusted gross income (AGI) of $75,000 - $87,000 for single or head of household tax filers; AGI of $150,000- $174,000 for married couples filing jointly.
Here is how to understand each of these three components:
A. Individual rebate:
A.1 Tax filers with “Single” or “Head of Household Status”:
Individuals with adjusted gross income of up to $75,000 who paid federal income tax will receive a $600 rebate.
Individuals who filed a tax return but who paid no income tax will receive a rebate of $300, provided they had at least $3,000 in qualifying income in 2007.
A.2 Married Couples filing a joint return:
Couples with joint adjusted gross income up to $150,000 who paid federal income will receive $1,200 total ($600 each).
Couples who filed a tax return but who paid no income tax will receive a rebate of $600 ($300 each) provided they had at least $3,000 total in joint qualifying income in 2007.
A.3 Seniors and disabled military veterans:
Seniors with at least $3,000 in social security income will receive a $300 rebate ($600 for couples).
Military veterans receiving disability payments will also receive a $300 rebate ($600 for couples).
Note: These guidelines are true for most tax filers. However, for some, there is an additional complication to the “individual” amount. For those tax filers who paid income tax in 2007, the amount you paid in tax must be higher than your rebate amount in order to get the full rebate. Otherwise, it will be equal to the amount you paid in tax (but not less than $300). So, for example, if you are filing a married joint tax return and have no children and you paid $1,000 in federal taxes in 2007, your individual rebate amount will be $1,000, not $1,200. In other words, the rebate you will receive is not going to exceed the amount of tax you paid in 2007. To understand this better and to see more examples, see the links to the IRS web site provided at the end of the next section titled “Examples…”.
B. Rebates for dependent children:
All tax filers who are eligible for an “individual” rebate and who declare one or more dependent children on their tax returns will receive an additional $300 per dependent child, with no limit on the number of child-based rebates. The child’s qualifications needed for this child-based rebate are the same as for the Child Tax Credit (e.g., under age 17 as of 12/31/07, child has own social security number, you claim child as a dependent, etc.).
C. Phase out reduction:
This last component only applies to individuals and couples with incomes in the rebate phaseout range: $75,000 - $87,000 for individuals; $150,000 -$174,000 for couples:
For single tax filers, the rebates is reduced by 5% for the amount of their AGI (adjusted gross income) over $75,000. For married couples, the rebate is reduced by 5% for the amount of their AGI over $150,000. To understand this better, if a single tax filer earned $87,000, his or her rebate would be reduced by 5% for the income amount over $75,000. In this case, this amount is $12,000 ($87,000 - $75,000). Since this would equal $600 ($12,000 x .05 = $600), this person would get $0 for a rebate; hence the upper limit of the phase out range. If a married couple with no childen had $170,000 in AGI, their expected $1,200 rebate would be reduced by $1,000 (.05 x ($170,000 - $150,000) leaving them with a $200 rebate. For a couple with the same joint income and one qualifying child, their rebate would be $500 ($200 + $300 for their child).
Note: This phase out reduction applies to the “individual” component of the rebate. If your income is in the “phase-out” range and you have qualifying children, in order to figure out what your total rebate amount should be, first determine your “individual” rebate amount (taking into account the reduction) and then add $300 per qualifying child. Even if you have qualifying children, your income needs to be below the phase out limit to get a rebate. Put a different way, if your income is above the limit you do not get a rebate: not for yourself nor for any children who would otherwise qualify if your income had been under the limit..
Example rebate check amounts
Examples:
Frank and Mary are married and live with their three children, ages 4, 6, and 9. Their adjusted gross income in 2007 for which they filed a married joint tax return was $85,400 and they paid income tax in the amount of $5,000. They will receive a tax rebate check totaling $2,100 ($1,200 + $300 for each of three dependent children).
Jim is a 28 year old single tax filer and has no children. He reported $37,000 in adjusted gross income on his federal tax return in 2007 and paid taxes in the amount of $900. He will receive a $600 tax rebate check.
Martha is divorced and lives with her 17 year old daughter Jane who goes to school and does not work. Martha earned $55,000 in 2007 and paid income tax. She will receive a $600 tax rebate check; but because her daughter is not eligible for the child tax credit (a child would need to be under age 17 on 12/31/2007 to be eligible for the child tax credit and Jane turned 17 in November, 2007), Martha would not receive an additional $300 child-based rebate for her daughter Jane. Jane does not receive her own rebate check as she does not file a tax return.
Fran is single and lives with her 2 year old son. Fran earned $8,000 in income and paid no federal income tax. She will receive a rebate of $300 for herself and an additional $300 for her child ($600 total).
Alice is a 78 year old widow who lives with her son and his family. She received $3,500 in social security income in 2007. She will receive a $300 tax rebate check provided she files a 2007 tax return.
More examples provided on the IRS web site:
Married with children.
Married without qualifying children.
Single (Head of Household) with children.
Single without qualifying children.
How do I apply?
Important:
No one needs to “apply” for an income tax rebate. Rebates will be based on the filing of 2007 federal tax returns. (For tax forms and filing information, visit the IRS web site Tax Information for Individuals.) The IRS will determine whether you qualify for a rebate and, if so, calculate the amount of your rebate.
If you do not typically file a federal tax return, but have at least $3,000 in income (e.g., social security, earned income, disability, etc.) you must file a 2007 return in order to receive a rebate.
Rebate checks will be mailed out starting in early May, 2008 and extend for several weeks through the spring and summer. You can also receive a rebate via direct deposit into your checking account, provided you establish this with the Internal Revenue Service. Visit the Internal Revenue Service web site to better determine when to expect to receive your check.
If a 2007 tax return is filed late, this will likely delay receipt of a tax rebate for which an individual or couple is eligible to receive.
If you are entititled to receive both a tax refund for 2007 and a tax rebate, the two will be separate. In other words, you will receive two different checks (or two direct deposits).
Note: While the government hopes you will spend your rebate, there are no restrictions on what you can do with it. You can save all or part of your rebate, or use it to pay bills or other debts. For information about how to use your rebate wisely, see Managing Money.
Beware of rebate scams!
The IRS cautions people to be wary of individuals who are using the 2008 tax rebates to try to obtain private financial information in order to engage in identity theat or to steal money from your bank account. The IRS will not call you over the phone or send you an unsolicited e-mail. If you receive a phone call or an e-mail asking for personal financial information (e.g., “we need your bank account number so that your tax rebate can be direct deposited” or “you can get your tax rebate sooner if you let us help you”), you should definitely assume that the caller’s, or emailer’s, motives are fraudulent and not provide the information. If you have filed a 2007 tax return, the IRS knows where to send you the rebate. Also, the IRS does not make it their business to determine if you have cashed your rebate check or in what bank account. If you have instructed the IRS (on your tax return) to use direct deposit of refunds into your bank account then be especially cautious about answering questions from anyone about problems. If someone calls you indicating there is a problem, assume the worst and insist that they send you an official letter. The IRS does not gather information by telephone.
The IRS provides further information about rebate scams on its web site.
Frequently asked questions
1. Question: I’m eligible to receive a 2008 rebate, when can I expect to receive it?
Answer: Visit the Internal Revenue Service web site to better determine when to expect to receive your check. The payment schedule is determined by the last two digits of your social security number and whether you will receive it via direct deposit or by paper check through the mail. Of course, you will only receive the rebate through direct deposit to your bank account if you have previously set this up with the IRS.
2. Question: Do I have to pay taxes on the 2008 rebate?
Answer: No, the rebate is tax free.
3. Question: Will receiving the tax rebate negatively affect my eligibility for federal benefits/entitlements such as the earned income tax credit, food stamps, Medicaid, social security, etc.?
Answer: No, it will not.
4. Question: I don’t usually have to file a federal income tax; so, if I file a 2007 tax return in order to receive the rebate, will the IRS come back and tell me that I owe them taxes?
Answer: No, the IRS assures that this will not happen.
5. Question: I’ve recently moved. Will the IRS know where to mail my rebate check?
Answer: Unless you tell them otherwise, the IRS will mail your check to the address listed on your 2007 tax return. If you have since moved from that address, you should file Form 8822 with the IRS (and tell the post office to forward your mail to your new address).
6. Question: I owe the IRS taxes from a previous year. Will I receive a rebate?
Answer: If the rebate is more than the taxes you owe, you will receive the difference. If what you owe is more than the rebate, you will not receive any money.
7. Question: I’m expecting a refund for having overpaid my taxes in 2007. Will I get my refund together with my rebate?
Answer: No, your refund and your rebate will be mailed (or direct deposited) separately.
8. Question: I’m pregnant and am expecting a child in 2008. I qualify for a rebate but will I also be able to get a $300 rebate for my unborn child?
Answer: Yes, but not immediately. When you file your 2008 tax return, which you would do in 2009, you can indicate the birth of your child in 2008 and you will receive the $300 qualifying child rebate in 2009. Your infant child will need to have a social security number by the time you file your 2008 tax return.
Useful Information
The information is not part of Iflove. When you click on these links, you will leave our site. Click “Back” on your browser to return.
Internal Revenue Service (IRS) Information on Stimulus Package
Official federal government information about the 2008 tax rebates, including a warning about rebate scams.
Additional information from the IRS for Recipients of Social Security Benefits.
Additional information from the IRS for Recipients of Veteran’s Benefits.
Additional IRS Instructions for Low-Income Workers and Recipients of Social Security and Certain Veterans’ Benefits.
Tax Rebate Checks 2008 - Details on Federal Income Tax Rebate Plan. Here you’ll learn information on tax rebate and returns. Compiled by Jane Austine
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