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| Mar 24 2008, 7:21 AM EDT (current) | onlinetax | |
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2008 Tax Rebates and Economic Stimulus Plan.
What You Need to Know about the 2008 Tax Rebate Plan:
The first piece of tax legislation in 2008, the Economic Stimulus Act provides that the taxpayers will receive a one-time rebate in mid-2008. The rebates, or "stimulus payments" as they are being called by the IRS, will be mailed or sent via direct deposit to individuals who file a 2007 tax return and meet certain eligibility requirements. The IRS will calculate the amount of the rebate for you based on your 2007 income information.
What's the Maximum Stimulus Rebate Payment:
$600 for unmarried persons and $1,200 for married couples. Plus an additional $300 per qualifying child.
How Will the Rebate be Calculated:
The rebate is limited to the net tax liability. For many people, this amount will be the same as found on Form 1040 Line 57, Form 1040A Line 35, or Form 1040EZ Line 10. The rebate is reduced if the net tax liability is less than the maximum credit. The rebate will also be reduced for people with higher incomes. The stimulus rebate is reduced by 5 percent of the amount of income in excess of $75,000 (or $150,000 for married couples).
Who's Eligible for the Rebate:
Individuals who have at least $3,000 in qualifying income.
Who's Not Eligible for the Rebate:
Dependents, or people who could be claimed as dependents by another taxpayer, are not eligible. Also ineligible are non-resident aliens, anyone without a valid Social Security Number, and estates and trusts.
Qualifying Income:
Wages, self-employment, Social Security benefits, Railroad Retirement benefits, and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. Supplemental Security Income (SSI) does not qualify for the rebate.
Qualifying Children and Dependents:
Any child under age 17 who is related to the taxpayer by blood, marriage, adoption or foster arrangement and whom the taxpayer can claim as a dependent. Dependents age 17 and over do not qualify for the additional rebate. Dependents of any age do not qualify for the rebate in their own name even if they earn their own income.
Impact on 2008 Tax Returns:
The stimulus rebates will be calculated by the IRS using information on the 2007 tax returns. If taxpayers were entitled to a larger rebate based on their 2008 income, those taxpayers will be able to claim a tax credit for the additional amount. Taxpayers won't have to pay back the rebate, however, if using their 2008 income would result in a lower rebate amount.
How Rebates will be Processed:
The IRS will mail out two notices to taxpayers. The first notice will inform people about the rebate. The second notice will confirm the taxpayer's eligibility, amount of the rebate that the IRS has calculated, and when the taxpayer should receive the rebate payment. Rebates will be sent by direct deposit, if bank account information was provided on the 2007 tax return, or by paper check.
Filing a Return:
Individuals must file a 2007 tax return to receive the stimulus rebate payment. Even if the person does not have a filing requirement and does not have a tax liability, they will still need to file a return so that the IRS will know that the person qualifies for the rebate.
If you are filing a 2007 tax return solely for the purpose of claiming the stimulus rebate repayment, show your nontaxable Social Security benefits, veteran's disability pension, or Railroad Retirement benefits on Form 1040 Line 20a or Form 1040A Line 14a. This will let the IRS know that you have qualifying income for the purposes of the rebate, even if you have no taxable income.
Direct Deposit Issues:
The IRS wants to send out rebate payments via direct deposit. This means you need to make sure your direct deposit information is absolutely, 100% accurate. Any mistake here could result in losing your rebate forever.
The first piece of tax legislation in 2008, the Economic Stimulus Act provides that the taxpayers will receive a one-time rebate in mid-2008. The rebates, or "stimulus payments" as they are being called by the IRS, will be mailed or sent via direct deposit to individuals who file a 2007 tax return and meet certain eligibility requirements. The IRS will calculate the amount of the rebate for you based on your 2007 income information.
What's the Maximum Stimulus Rebate Payment:
$600 for unmarried persons and $1,200 for married couples. Plus an additional $300 per qualifying child.
How Will the Rebate be Calculated:
The rebate is limited to the net tax liability. For many people, this amount will be the same as found on Form 1040 Line 57, Form 1040A Line 35, or Form 1040EZ Line 10. The rebate is reduced if the net tax liability is less than the maximum credit. The rebate will also be reduced for people with higher incomes. The stimulus rebate is reduced by 5 percent of the amount of income in excess of $75,000 (or $150,000 for married couples).
Who's Eligible for the Rebate:
Individuals who have at least $3,000 in qualifying income.
Who's Not Eligible for the Rebate:
Dependents, or people who could be claimed as dependents by another taxpayer, are not eligible. Also ineligible are non-resident aliens, anyone without a valid Social Security Number, and estates and trusts.
Qualifying Income:
Wages, self-employment, Social Security benefits, Railroad Retirement benefits, and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. Supplemental Security Income (SSI) does not qualify for the rebate.
Qualifying Children and Dependents:
Any child under age 17 who is related to the taxpayer by blood, marriage, adoption or foster arrangement and whom the taxpayer can claim as a dependent. Dependents age 17 and over do not qualify for the additional rebate. Dependents of any age do not qualify for the rebate in their own name even if they earn their own income.
Impact on 2008 Tax Returns:
The stimulus rebates will be calculated by the IRS using information on the 2007 tax returns. If taxpayers were entitled to a larger rebate based on their 2008 income, those taxpayers will be able to claim a tax credit for the additional amount. Taxpayers won't have to pay back the rebate, however, if using their 2008 income would result in a lower rebate amount.
How Rebates will be Processed:
The IRS will mail out two notices to taxpayers. The first notice will inform people about the rebate. The second notice will confirm the taxpayer's eligibility, amount of the rebate that the IRS has calculated, and when the taxpayer should receive the rebate payment. Rebates will be sent by direct deposit, if bank account information was provided on the 2007 tax return, or by paper check.
Filing a Return:
Individuals must file a 2007 tax return to receive the stimulus rebate payment. Even if the person does not have a filing requirement and does not have a tax liability, they will still need to file a return so that the IRS will know that the person qualifies for the rebate.
If you are filing a 2007 tax return solely for the purpose of claiming the stimulus rebate repayment, show your nontaxable Social Security benefits, veteran's disability pension, or Railroad Retirement benefits on Form 1040 Line 20a or Form 1040A Line 14a. This will let the IRS know that you have qualifying income for the purposes of the rebate, even if you have no taxable income.
Direct Deposit Issues:
The IRS wants to send out rebate payments via direct deposit. This means you need to make sure your direct deposit information is absolutely, 100% accurate. Any mistake here could result in losing your rebate forever.
Income Tax Energy Rebate Can Now Be Reported On IRS ''Short Form''
In order to make it easier for residents of New Mexico to report the Income Tax Energy Rebate check amounts on their 2005 federal income tax returns, the Internal Revenue Service today adjusted its tax return procedures to allow the rebate to be reported on the short-form federal tax returns.
Taxpayers who would normally use a short-form IRS Form 1040EZ or Form 1040A may now report the rebate on either of these forms, rather than having to use the long-form IRS Form 1040 solely because of the rebate.
Although this procedural change comes after many have already filed their tax returns, more than 60 percent of taxpayers still have yet to file, says IRS spokesman Bill Brunson. We wanted to do what we could, as soon as it was possible, to make the process easier for those still working on their taxes.
Under these special procedures, short-form filers should report these rebate payments on the line normally designated for reporting unemployment compensation.
For Form 1040EZ filers, this is line 3.
For Form 1040A filers, this is line 13.
No special identification or notation needs to be written on either form.
Taxpayers who also received unemployment compensation during 2005 should add the amount of the rebate to the amount of unemployment compensation received and then enter the combined amount on the appropriate line of whichever short form is used.
Taxpayers who must file using IRS Form 1040 for other reasons should report the amount of the rebate received as other income on line 21.
Taxpayers who would otherwise have filed a short-form 1040EZ or 1040A but instead have already filed the long-form 1040 to report the rebate on line 21 should not re-file on a short form.
These instructions apply to rebate payments only and do not affect how other income is reported.
For federal tax purposes, the income tax energy rebate has previously been determined to be taxable to each recipient.
Taxpayers who would normally use a short-form IRS Form 1040EZ or Form 1040A may now report the rebate on either of these forms, rather than having to use the long-form IRS Form 1040 solely because of the rebate.
Although this procedural change comes after many have already filed their tax returns, more than 60 percent of taxpayers still have yet to file, says IRS spokesman Bill Brunson. We wanted to do what we could, as soon as it was possible, to make the process easier for those still working on their taxes.
Under these special procedures, short-form filers should report these rebate payments on the line normally designated for reporting unemployment compensation.
For Form 1040EZ filers, this is line 3.
For Form 1040A filers, this is line 13.
No special identification or notation needs to be written on either form.
Taxpayers who also received unemployment compensation during 2005 should add the amount of the rebate to the amount of unemployment compensation received and then enter the combined amount on the appropriate line of whichever short form is used.
Taxpayers who must file using IRS Form 1040 for other reasons should report the amount of the rebate received as other income on line 21.
Taxpayers who would otherwise have filed a short-form 1040EZ or 1040A but instead have already filed the long-form 1040 to report the rebate on line 21 should not re-file on a short form.
These instructions apply to rebate payments only and do not affect how other income is reported.
For federal tax purposes, the income tax energy rebate has previously been determined to be taxable to each recipient.
Source : irs.gov
Special Economic Stimulus Letters Reach Mailboxes in March
The mailings by the IRS will begin the first week in March and continue throughout the month. The informational notice, titled Economic Stimulus Payment Notice, alerts people that they may be eligible for a one-time stimulus payment of up to $600 ($1,200 married filing jointly) starting in May. There also is a $300 per child payment for qualifying children younger than 17.
“These special letters remind people that they won’t need to do anything more than file a 2007 tax return in order to put the stimulus payment process in motion,” Acting IRS Commissioner Linda Stiff said.
The notice is informational and does not seek any financial information. The main mailings, which will take place in three weekly batches, will go to taxpayers who filed a tax return last year.
“To receive a payment in 2008, individuals who qualify will not have to do anything more than file a 2007 tax return. The IRS will determine eligibility, figure the amount and send the payment,” the notice states. “This payment should not be confused with any 2007 income tax refund that is owed to you by the federal government. Income tax refunds for 2007 will be made separately from this one-time payment.”
However, some people must take an extra step this year to receive a stimulus payment. In late March, the IRS will send a special mailing to certain recipients of Social Security and Veterans Affairs benefits. Generally, those benefits are nontaxable and recipients do not file tax returns. In order to receive a stimulus payment, people in this group need to file a tax return if they have at least $3,000 from a combination of certain Social Security benefits, Veterans benefits and earned income. The minimum stimulus payment for these people is $300 ($600 for married filing jointly).
The IRS has created a sample of Form 1040A with information on how to fill out a few lines that will enable eligible people who do not normally file a tax return to receive the stimulus payment.
More details on the special mailings for recipients of Social Security and veterans benefits will be available soon.
Source : irs.gov
