Tax Rebates: Act of 2008

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Tax Rebates under the Economic Stimulus Act of 2008
Under the Economic Stimulus Act, over $100 billion will be spent by the government to provide over 120 million American households with tax rebate checks. The following discusses detailed information about the rebates and how they pertain to the Economic Stimulus Act of 2008.
Rebate Qualifications
To qualify for a tax rebate, a complete tax return must be filed by April 15, 2008.

A combination of earned income, Social Security, Railroad Retirement and certain veterans’ benefits must total a minimum of $3,000 in order to receive a rebate.

Qualifying taxpayers must also provide a valid social security number to the IRS. Taxpayers who file their tax returns using an Individual Taxpayer Identification Number (ITIN) or any number issued by the IRS are ineligible.

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Rebate Qualifying Income
Qualifying income to receive a rebate includes: 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) and non-veterans’ or non-Social Security pension incomes do not qualify for a rebate.

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Rebate Ineligibility
The following are ineligible to receive a tax rebate:
  • Dependents, or people who can be claimed as a dependent by another taxpayer
  • Non-resident aliens
  • Estates
  • Trusts
  • Individuals who pay no tax and who have less than $3,000 of qualifying income
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Rebate Limitations
An income limit of $75,000 for individuals and $150,000 for married couples filing a joint return will apply toward eligibility of rebates. Rebate amounts will be reduced by 5% of the amount over the income limit.
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Rebate Amount
Rebate amounts equal the amount owed to the IRS, with a rebate maximum of $600 for individual taxpayers and $1,200 for married couples filing a joint return.

For those who owe little or no taxes, a rebate minimum of $300 will be sent as long as the total qualifying income stated on their tax return is at least $3,000. Qualifying income for a rebate includes income from wages, Social Security, self-employment, and certain Railroad Retirement and veterans’ benefits.

All eligible taxpayers will receive an additional $300 for each child under 17 years old. There is no limit on the amount of children that can be claimed as long as the child is eligible under the Child Tax Credit and has a valid Social Security Number. Income limitations still apply to payments on qualifying children.

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Social Security, Railroad Retirement and Benefits Recipients
For those receiving Social Security, Railroad Retirement and certain veterans’ benefits, who normally don’t file a tax return, the IRS encourages them to do so if they generate enough qualifying income. Benefits should be reported on Line 14a of Form 1040A or Line 20a of Form 1040 or their tax return to receive a rebate.

Taxpayers who already have filed, but failed to report these benefits, can file a revised return by using Form 1040X.

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Rebate Issues
Rebates are subject to the same offset procedures of tax returns. If a taxpayer owes back taxes, has defaulted on a student loan, or owes past child support, their tax rebate will be applied to the outstanding debt.

Taxpayers who choose to file an extension can expect to face a delay in receiving their rebates. Rebate checks will not be issued after December 31.

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Rebate Notices
Two notices will be sent out to most taxpayers. The first will be a general notice explaining the stimulus payment program. The second notice will confirm the recipients’ eligibility, the payment amount and the approximate time table for the payment.
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Receiving a Rebate
Rebate checks will be sent out as early as the beginning of May 2008. Rebates will be issued in the form of a check, unless the direct deposit option was used when filing a tax return.
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How to Spend Your Rebate

Rebates are intended to stimulate the economy by putting money back into the hands of the people. It is encouraged to spend your rebate, preferable among American-made goods.

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