Will I Get a $300-$600 Rebate Check?
by Damon Carr
Answers about The Economic Stimulus Act of 2008
In an effort to stave off a recession, interest rates on short-term loans were reduced and The Economic Stimulus Act of 2008 has been approved. Beginning in May 2008 and ending in December 2008, more than 130 million individuals will receive extra money to spend from "Uncle Sam." How do I determine if I'm eligible for a rebate check? How much money will I receive? How do I claim my rebate check? When will I get my money? These are the questions that have crossed my desk in the past couple of days. Here are the answers:
If you have income from wages, salary, tips, self-employment, Social Security, certain Rail Road Retirement benefit and/or certain Veterans' benefit of at least $3,000, you may be eligible for a rebate. Supplemental Security Income is not a qualifying income for the rebate. The rebate will range from $300 to $600 for individuals and from $600 to $1,200 for married couples filing a joint tax return. If you claim dependent children on your return that are under the age of 17, you'll get an extra $300 for each child.
Information to determine the amount of your rebate will be gathered from your 2007 tax return. The amount of the refund is based on your "net tax liability," which is the amount of taxes you owe before subtracting various "refundable credits" such as the earned income credit and the child tax credit. Individuals whose net tax liability is $600 or more, you'll get $600 plus an additional $300 for each qualifying child. If your net tax liability is $599 or lower, you'll get an amount equal to your net tax liability but no less than $300 plus an additional $300 for each qualifying child. Married filing jointly taxpayers whose net tax liability is $1,200 or more, you'll get $1,200 plus an additional $300 for each qualifying child. If your net tax liability is $1,199 or lower, you'll get an amount equal to your net tax liability but no less than $600 plus an additional $300 for each qualifying child.
There are income restrictions on the rebate. For single filers whose adjusted gross income is above $75,000 and married filing jointly filers whose adjusted gross income is above $150,000, the rebate will be reduced by $50 for every $1,000 that exceeds $75,000 for single filers and $150,000 for married filing jointly filers. The credit will phase out completely for single filers with no children whose adjusted gross income is more than $87,000 and married filing jointly with no children whose adjusted gross income is more than $174,000.
In order to receive a rebate, you must file a tax return for tax year 2007. If you do not file a tax return for 2007, you will not receive a tax rebate. Low income workers, recipients of Social Security, certain Veterans Benefit and Railroad Retirement Benefit who are generally not required to file taxes because they don't have a tax liability must file a tax return this year in order to receive the rebate. People who fit this group will not incur a tax liability nor will other government benefit they currently receive be negatively impacted.
This is worth repeating! People who are low income and/or whose sole source of income is from Social Security, Veterans Benefit or Rail Road Retirement, as long as you have qualifying income of at least $3,000 and you usually don't file a tax return, you must file a tax return for tax year 2007 in order to receive a rebate.
Don't delay in filing your tax return for tax year 2007. The sooner you file your tax return, the sooner you receive your tax rebate check when the rebate checks starts rolling out in May 2008. Those who file their tax return closer to the April 15th deadline will receive their tax rebate later in the year. Your tax rebate check will be issued to you in the same way you received your tax refund. If your tax refund was direct deposited to your personal banking account, the tax rebate will be direct deposited into the same account. If your tax refund was mailed to you, your tax rebate will be mailed to you. Just like the tax refund, you'll receive your rebate faster if the money is directly deposited into your personal banking account.
The IRS will mail two informational notices to taxpayers advising them of the rebate. Be on the lookout for identity thieves posing as the IRS via phone calls and e-mails seeking to obtain your personal information. Do not give your personal information to anyone unless you initiated the phone call to the IRS.
What do you plan on doing with your rebate money? The government is hoping you spend your rebate to help fuel the economy and thwart recession. Despite an Associated Press Poll, which suggested 45 percent will use their rebate to pay off bills, 32 percent will save or invest the rebate and only 19 percent will spend their rebate, I believe that most peoplewill spend their rebate.
There's an old joke among economists that states, "A recession is when your neighbor loses his job. A depression is when you lose your job." I work in personal finance. I'm more interested in helping you recession-proof your personal economy than I am in helping stave off a recession involving the global economy.
If there's a hint of recession in the air, the best thing you can do to recession-proof your personal economy is to save your rebate and whatever extra money you can save. You'll need extra cash on hand to help eat, keep the lights, gas and water flowing through the house and keep a roof over your head should you become victim to a reduction in personal household income as a result of a recession.
Mortgage and Money Coach Damon Carr is owner of ACE Financial.
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