Taxes on Tax Relief Check
02-22-2008 | 04:11 PM
#2
Administrator
Joined: May 2006
Posts: 8,025
Likes: 0
From: C-172
In Layman's Terms
Hope this helps.
Under HR5140, the Economic Stimulus Act of 2008, most working people will get $600 if they are single or $1,200 if they file a joint return, assuming they paid at least that much in federal income tax in 2007.
To help people who earn little or nothing - and might be more likely to spend their rebates - Congress said that anyone who had at least $3,000 in income from a job, self-employment, Social Security and/or certain veterans benefits would get a flat rebate of $300 if single or $600 if married filing jointly, even if they don't owe income tax.
If your 2007 federal tax liability is between $300 and $600 (single) or $600 and $1,200 (married), your rebate will be equal to whatever you paid in tax.
Anyone who gets a rebate of any size will get an additional $300 for each child eligible for the child tax credit in 2008. To qualify, the child must be younger than 17 on Dec. 31, 2008.
Higher-income people won't get anything.
The rebates - including the $300 rebate for kids - start to shrink when your adjusted gross income hits $75,000 (single) or $150,000 (married). Adjusted gross income includes income from all sources, but before most deductions and exemptions have been subtracted.
The rebate is reduced by $50 for every $1,000 you earn above the income limit. It disappears at some point which varies depending on your family size.
Singles with more than $87,000 in gross income and couples with more than $174,000 get no rebate if they have no children.
Those with children can earn a bit more before losing their rebate because it's bigger to start out with. A married couple with two kids, for example, get no rebate when their income exceeds $186,000, says Mark Luscombe, principal tax analyst with CCH.
Rebates will not be sent to nonresident aliens (you must have a Social Security number to get a rebate), estates, trusts or people who are or could be claimed as a dependent on someone else's tax return. That means most high school and many college students won't get a rebate even if they earn more than $3,000 or pay taxes.
The Internal Revenue Service will start issuing rebates - via check or possibly direct deposit - in early May.
The rebates represent a 2008 tax cut. But instead of getting the tax cut next year, when you file your 2008 return, you'll get it this year.
The IRS, however, will use your 2007 tax return to determine who gets a rebate and how much.
If it turns out that you would have gotten a bigger tax rebate based on your 2008 tax return, the IRS will refund you the difference. For example, a middle-income family that has a baby born in 2008 should be able to reap an extra $300 when they file their tax return next year, Luscombe says.
On the other hand, if you would have gotten a smaller rebate based on your 2008 return, you won't have to pay back the difference, says Bob Scharin, RIA Senior Tax Analyst from Thomson Tax & Accounting.
Most rebates will be out by the summer, but if you don't file your 2007 taxes until the extended Oct. 15 deadline, you won't get yours until year end, CCH reports.
Unlike the 2001 rebates, which went only to people who paid tax, the 2008 rebates will go to many people who don't file tax returns.
The IRS says it will work with the Social Security Administration and Department of Veterans Affairs to make sure all eligible individuals know how to get a rebate.
Tax advisers are encouraging people who had more than $3,000 in income from a job or self-employment in 2007 to file a tax return even if they don't owe tax so the IRS knows how to find them.
The IRS has been warning taxpayers not to fall for telephone or e-mail scams that use the rebate as bait. The perpetrators try to trick people into revealing personal information they use to steal their identities. The IRS never sends unsolicited e-mails.
Also be wary of banks and loan companies that offer refund anticipation loans that include the anticipated rebates when a 2007 return is filed. While apparently legal, these loans can be extremely costly.
To help people who earn little or nothing - and might be more likely to spend their rebates - Congress said that anyone who had at least $3,000 in income from a job, self-employment, Social Security and/or certain veterans benefits would get a flat rebate of $300 if single or $600 if married filing jointly, even if they don't owe income tax.
If your 2007 federal tax liability is between $300 and $600 (single) or $600 and $1,200 (married), your rebate will be equal to whatever you paid in tax.
Anyone who gets a rebate of any size will get an additional $300 for each child eligible for the child tax credit in 2008. To qualify, the child must be younger than 17 on Dec. 31, 2008.
Higher-income people won't get anything.
The rebates - including the $300 rebate for kids - start to shrink when your adjusted gross income hits $75,000 (single) or $150,000 (married). Adjusted gross income includes income from all sources, but before most deductions and exemptions have been subtracted.
The rebate is reduced by $50 for every $1,000 you earn above the income limit. It disappears at some point which varies depending on your family size.
Singles with more than $87,000 in gross income and couples with more than $174,000 get no rebate if they have no children.
Those with children can earn a bit more before losing their rebate because it's bigger to start out with. A married couple with two kids, for example, get no rebate when their income exceeds $186,000, says Mark Luscombe, principal tax analyst with CCH.
Rebates will not be sent to nonresident aliens (you must have a Social Security number to get a rebate), estates, trusts or people who are or could be claimed as a dependent on someone else's tax return. That means most high school and many college students won't get a rebate even if they earn more than $3,000 or pay taxes.
The Internal Revenue Service will start issuing rebates - via check or possibly direct deposit - in early May.
The rebates represent a 2008 tax cut. But instead of getting the tax cut next year, when you file your 2008 return, you'll get it this year.
The IRS, however, will use your 2007 tax return to determine who gets a rebate and how much.
If it turns out that you would have gotten a bigger tax rebate based on your 2008 tax return, the IRS will refund you the difference. For example, a middle-income family that has a baby born in 2008 should be able to reap an extra $300 when they file their tax return next year, Luscombe says.
On the other hand, if you would have gotten a smaller rebate based on your 2008 return, you won't have to pay back the difference, says Bob Scharin, RIA Senior Tax Analyst from Thomson Tax & Accounting.
Most rebates will be out by the summer, but if you don't file your 2007 taxes until the extended Oct. 15 deadline, you won't get yours until year end, CCH reports.
Unlike the 2001 rebates, which went only to people who paid tax, the 2008 rebates will go to many people who don't file tax returns.
The IRS says it will work with the Social Security Administration and Department of Veterans Affairs to make sure all eligible individuals know how to get a rebate.
Tax advisers are encouraging people who had more than $3,000 in income from a job or self-employment in 2007 to file a tax return even if they don't owe tax so the IRS knows how to find them.
The IRS has been warning taxpayers not to fall for telephone or e-mail scams that use the rebate as bait. The perpetrators try to trick people into revealing personal information they use to steal their identities. The IRS never sends unsolicited e-mails.
Also be wary of banks and loan companies that offer refund anticipation loans that include the anticipated rebates when a 2007 return is filed. While apparently legal, these loans can be extremely costly.
Thread
Thread Starter
Forum
Replies
Last Post
