The Federal economic stimulus package approved earlier this year means taxpayers will be seeing checks in their mailboxes later this spring. Most Americans will get at least $300 and many up to $600 per filer plus an additional $300 for qualifying children. Congress and the White House collaborated to rush tax rebates to most tax filers by spring, hoping they will spend the money just as quickly and jolt the ailing economy to life.
About two-thirds of the tax relief will go out in rebate checks to 117 million families beginning in May. The purpose of these one-time tax rebates is to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001.
According to the IRS, if you filed a tax return in 2007, you don't have to do anything else to ensure receipt of your payment. Around 35 million families who make at least $3,000, but don't pay taxes, will get $300 rebates. However, there are many who earn less than the threshold amount for filing taxes -- but make enough to qualify for the stimulus payment. People making $3,000 or more last year may be eligible, even if they normally would not file taxes, according to Carrie Anthony of LeMaster & Daniels in Omak. The only way to know for sure if an individual is eligible is by contacting the IRS or a local agency.
The rebates phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000. Contributions to IRA and 401(k) retirement accounts and health savings accounts do not count toward the income limit.
Who gets what?
How Americans in different financial situations fare under the rebate plan.
- An individual with $2,500 in earned income in 2007: Would be disqualified because income fell below the $3,000 threshold. No rebate.
- A married couple with no children, with adjusted gross income of $100,000 in 2007: Would qualify for the full amount for couples. A $1,200 rebate.
- A worker with one child, who earned $9,000 and owed no taxes in 2007: Would qualify for the $300 rebate available to individuals who pay no taxes but earned at least $3,000, plus an additional $300 for the child. A $600 rebate.
- A couple with income of $145,000 in 2007, with three children: Would qualify for the full $1,200 for couples, plus $300 for each child. A $2,100 rebate.
- A couple with income of $160,000 in 2007 with two children: Would qualify for a partial rebate, reduced by 5 percent for every $1,000 in income above the $150,000 threshold. An $1,800 rebate — $1,200 for the couple plus $300 per child — would go down by 50 percent for this family. A $900 rebate.
- A couple with income of $200,000 and four children: Would be disqualified because their income exceeded $174,000, the phase-out limit. No rebate.
- An individual with adjusted gross income of $23,000 and no dependents: Would get a rebate of $600.
- A couple with adjusted gross income of $160,000 and two children: Would get a rebate of $1,300.
- A couple with adjusted gross income of $184,000 and two children: Would get a $100 rebate.
According to Andrew DeSouza, public affairs specialist on tax and economic policy for the Department of Treasury in Washington, D.C., "The stimulus payments come from a one year reduction in the 10 percent tax rate, plus some additional appropriations. This is deficit financed, but is meant to have a minimal affect."
The Economic Stimulus Package has more than just rebates for individual taxpayers. Businesses have additional write-offs to help them boost their success, too. It allows $50 billion in incentives to invest in new plants and equipment.
For more information, please review The Fact Sheet from the IRS.
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