|
On
February 13, 2008
, President George Bush signed a
multibillion-dollar economic rescue package that
means $300 to $1,200 for many American
households.
Rebates
are to go out beginning in May to taxpayers and
low-income people, including seniors living off
of Social Security and veterans who depend on
disability checks.
IRS
– Fact Sheet
FS-2008-15,
February 2008
Starting
in May, the Treasury will begin sending economic
stimulus payments to more than 130 million
individuals. The stimulus payments will
out through the late spring and summer.
The
vast majority of Americans who qualify for an
economic stimulus payment will not have to do
anything other than file their 2007 individual
income tax return to receive their payment this
year. They will not have to complete
applications, file any extra forms or call the
Internal Revenue Service to request the payment,
which is automatic. The IRS will determine
eligibility, figure the amount and issue the
payment.
Stimulus
payments will be direct deposited for taxpayers
selecting that option when filing their 2007 tax
returns. Taxpayers who have already filed
with direct deposit will not need to do anything
else to receive the stimulus payment. For
taxpayers who have not filed their 2007 returns
yet, the IRS reminds them that direct deposit is
the fastest way to get both regular refunds and
stimulus payments.
Basic
Eligibility
The
IRS will use the 2007 tax return to determine
eligibility and calculate the basic amount of
the payment. In most cases, the payment
will equal the amount of tax liability on the
return with a maximum amount of $600 for
individuals ($1,200 for taxpayers who file a
joint return) and a minimum of $300 for
individuals ($600 for taxpayers who file a joint
return).
Even
those who have little or no tax liability may
qualify for a minimum payment of $300 ($600 if
filing a joint return) if their tax return
reflects $3,000 or more in qualifying income.
For the purpose of the stimulus payments,
qualifying income consists of earned income such
as wages and net self-employment income as well
as Social Security or certain Railroad
Retirement benefits and veterans’ disability
compensation, pension or survivors’ benefits
received from the Department of Veterans’
Affairs in 2007. However, Supplemental
Security Income (SSI) does not count as
qualifying income for the stimulus payment.
Low-income
workers who have earned income above $3,000 but
do not have a regular filing requirement must
file a 2007 tax return to receive the minimum
stimulus payment. Similarly, Social
Security recipients, certain Railroad retirees,
and those who receive the veterans’ benefits
mentioned above must file a 2007 return in order
to notify the IRS of their qualifying income.
The
IRS emphasized that people with no filing
requirement who turn in a tax return to qualify
for the economic stimulus payment will not get a
tax bill. People in this category will not
owe money because of the stimulus payment.
Limitation
To
be eligible for a stimulus payment, taxpayers
must have valid Social Security Numbers.
Anyone who does not have a valid Social Security
Number, including those who file using an
Individual Taxpayer Identification Number (ITIN),
an adoption Taxpayer Identification Number (ATIN),
or any other identification number issued by the
IRS is not eligible for this payment. Both
individuals listed on a married filing jointly
return must have valid Social Security Numbers
to qualify for a stimulus payment.
Eligibility
for the advance payment is subject to maximum
income limits. The payment amount will be
reduced by 5 percent of the amount of income in
excess of $75,000 for individuals and $150,000
for those with a Married Filing Jointly filing
status.
Individuals
who pay no tax and who have less than $3,000 of
qualifying income will not be eligible for the
stimulus payment.
Additional
Payments for Parents and Others with Qualifying
Children
Parents
and anyone else eligible for a stimulus payment
will also receive an additional $300 for each
qualifying child (subject to income phase-outs).
To qualify, a child must be eligible under the
Child Tax Credit and have a valid Social
Security Number.
Anyone
who is not eligible for the basic payment amount
due to the phase-out provision or any other
exception will not be eligible for this
additional amount for children.
Special
Circumstances for Recipients of Social Security,
Railroad Retirement and Certain Veterans
Benefits
Individuals
who receive Social Security benefits, Railroad
Retirement benefits and certain veterans’
benefits may have to follow special filing
requirements in order to receive the basic
amount:
Those
who have already filed a 2007 return reflecting
qualifying income of $3,000 or more do not have
any additional filing requirements and do not
need to do anything more to receive their
payment.
Those
who have already filed a 2007 return showing
less than $3,000 in qualifying income and did
not list their Social Security, Railroad
Retirement or certain veterans benefits should
file a Form 1040X to list those non-taxable
benefits and qualify for a payment.
Those
who are not required to file a 2007 return but
whose total qualifying income including Social
Security, certain Railroad Retirement and
certain Veterans benefits would equal or exceed
$3,000 should file a return reporting these
benefits on Line 14a of Form 1040A or Line 20a
of Form 1040 to establish their eligibility.
Please note the form lines just mention Social
Security, but use these lines even if your only
benefits were Railroad Retirement or veterans’
benefits.
Notices
Most
taxpayers will receive two notices from the IRS.
The first general notice from the IRS will
explain the stimulus payment program. The
second notice will confirm the recipients’
eligibility, the payment amount and the
approximate time table for the payment.
Taxpayers will need to save this notice to
assist them when they prepare their 2008 tax
return next year.
Anyone
who moves after they have filed their 2007 tax
return should notify the IRS by filing Form
8822, Change of Address, and also notify the
Post Office.
Exclusions
Individuals
who file Form 1040NR, 1040PR, or 1040SS are not
eligible for the stimulus payments. These
returns are normally filed by Nonresident
Aliens, residents of Puerto Rico and residents
of the
U.S.
Virgin Islands,
Guam
,
American Samoa
and the Commonwealth of the
Northern Mariana Islands
(CNMI). Residents of
U.S.
possessions will be receiving their rebates
directly from the possessions.
Also
ineligible are individuals who can be claimed as
dependents on someone else’s return.
Dividends,
interest and capital gains income is not
included when determining qualifying income.
Supplemental Security Income (SSI) does not
count as qualifying income for the stimulus
payment. Also not included in qualifying
income are non-veterans or non-Social Security
pension income (such as those from Individual
Retirement Accounts).
Stimulus
payments will be subject to offset against
outstanding tax and non-tax liabilities in the
same fashion as regular tax refunds.
In
addition, the IRS emphasizes the stimulus
payments will not count toward or negatively
impact any other income-based government
benefits, such as Social Security benefits, food
stamps and other programs.
IRS
Fact Sheet
FS-2008-16,
February 2008
Some
low-income workers and recipients of Social
Security, certain veterans’ benefits and
certain Railroad Retirement benefits may qualify
for economic stimulus payments this year from
the federal government.
In
most cases, payments will range from $300 to
$600 for individuals and $600 to $1,200 for
joint filers. Taxpayers may receive $300
for each qualifying child.
Most
taxpayers do not need to take any extra steps to
receive the payment beginning in early May.
But
there are some exceptions:
Individuals
who might not otherwise be required to file a
2007 tax return will need to file a return this
year to receive the stimulus payment. The
return must show at least $3,000 in qualifying
income.
In
other words, low-income workers who had at least
$3,000 in earned income in 2007 but do not
otherwise earn enough to be required to file a
federal tax return need to file a return in
order to get the stimulus payment.
Likewise, Social Security recipients, veterans
and retired railroad workers who might not
otherwise need to file a tax return must do so
to receive the economic stimulus payment.
Certain
Benefits Count toward Qualifying Income
Normally,
certain Social Security, Railroad Retirement
benefits and certain veterans’ payments are
not subject to income tax. However, the
economic stimulus law passed in February
contains a special provision allowing Social
Security recipients and recipients of certain
veterans’ benefits and certain Railroad
Retirement benefits to count those benefits
toward the qualifying income requirement of
$3,000 and thereby qualify for the stimulus
payment.
This
means a taxpayer who had, for example, $500 in
earned income and $2,500 in any combination of
the benefits described above can count those
benefit payments toward his or her qualifying
income to reach the $3,000 earned income
requirement, even though the individual would
not otherwise owe taxes on such income.
For
purposes of meeting the qualifying income
requirement, the following benefits need to be
reported in any combination on Line 20a of Form
1040 or Line 14a of the Form 1040A.
Social
Security benefits reported on the 2007 Form
1099-SSA, which people would have received in
January 2008. People who do not have a
Form 1099 may estimate their annual Social
Security benefit by taking their monthly
benefit, multiplying it by the number of months
during the year they received the benefits, and
entering the number on Line 20a of Form 1040 or
Line 14a of the Form 1040A.
Railroad
Retirement benefits reported on the 2007 Form
1099-RRB, which recipients would have received
in January 2008.
The
sum of veterans’ disability compensation,
pension or survivors’ benefits received from
the Department of Veterans’ Affairs in 2007.
People are allowed to estimate their annual
benefit by taking their monthly annual
veterans’ benefit, multiplying it by the
number of months during the year they received
benefits, and entering the number on Line 20a of
Form 1040 or Line 14a of the Form 1040A.
People
should note that Line 20a of Form 1040 and Line
14a of the Form 1040A are designated for Social
Security. To qualify for the economic
stimulus payments, these lines should also be
used to include any qualifying Railroad
Retirement or veterans’ benefits.
For
Those Who Have Already Filed
Some
recipients of the benefits described above may
have filed a 2007 tax return reporting at least
$3,000 in qualifying income. They do not
need to do anything else. They will begin
receiving their stimulus payments in early May.
Others
may need to amend a previously filed tax return
to include benefits to reach the $3,000
qualifying income level. Adding these
benefits on an amended tax return will not
increase an individual’s tax liability but
will establish eligibility for the stimulus
payment. Taxpayers can use IRS Form 1040X
to amend a tax return in order to qualify for
the stimulus payment.
IRS
News Release
Washington
,
DC
IR-2008-18,
February 13, 2008
The
Internal Revenue Service today advised taxpayers
that in most cases they will not have to do
anything extra this year to get the economic
stimulus payments beginning in May.
The
IRS will begin sending taxpayers their payments
in early May after the current tax season
concludes. Payments to more than 130
million taxpayers will continue over several
weeks during the spring and summer. A
payment schedule for taxpayers will be announced
in the near future.
To
accommodate taxpayers who file tax returns later
in the year, the IRS will continue sending
payments until
December 31, 2008
. The IRS also cautions taxpayers that if
they file their 2007 tax return and then more
their residence that they should file a change
of address card with the
U.S.
Postal Service.
The
IRS will mail two informational notices to
taxpayers advising them of the stimulus
payments. However, taxpayers should be
alert for tax rebate scams such as telephone
calls or emails claiming to be from the IRS and
asking for sensitive financial information.
The IRS will not call or email taxpayers about
these payments nor will it ask for financial
information. Scam emails and information
about scam calls should be forwarded to phishing@irs.net.
Senate Vote
February 7, 2008 ... The
Senate voted in favor of an amended version of H.R. 5140
that included low-income senior citizens and disabled
veterans among recipients of tax rebate checks.
The House quickly followed suit approving the bill.
President Bush has indicated he will sign the
legislation into law. Treasury Secretary
Henry Paulson has said the IRS would be able to begin
sending checks by early May.
Individuals: There are two
components.
1. The minimum rebate amount is
$300 ($600 for married filing jointly) ... The
taxpayer will receive this amount if he has at least $1
of tax liability or $3,000 in qualifying income, defined
as the sum of net self employment income, veterans’
disability payments (including payments to survivors of
disabled veterans), and social security benefits. This
payment is refundable, meaning the recipient gets the
full amount.
The maximum rebate amount is $600
($1,200 for married filing jointly). The
taxpayer’s rebate under this credit will be equal to
the minimum of his tax liability or 10% of the first
$6,000 of taxable income ($12,000 if married filing
jointly). This credit is not refundable.
2. Qualifying Child Credit ... If
a taxpayer receives $1 of the income tax rebate and the
taxpayer has children, the taxpayer will also receive
$300 per child. The payment is refundable,
meaning the recipient is entitled to the full child
credit without regard to income tax liability.
The amount of the credit (including
both the basic credit and the qualifying child credit)
is phased out at a rate of 5% of adjusted gross income
beginning at $75,000 ($150,000 in the case of joint
returns). Residents of the
U.S.
possessions will also receive the benefit, but the
provision denies the basic credit and the qualifying
child credit to individuals if the tax return does not
include valid identification numbers for all persons
listed on the return. Safeguards to
ensure that illegal immigrants do not obtain rebates or
bonus payments remain in the final agreement.
Business Tax Provisions:
1. The Bill increases the expensing
limit under §179 to $250,000 and the phase-out to
$800,000 for 2008. This is an increase from the
scheduled expensing limit of $128,000 and the phase-out
threshold of $510,000.
2. The Bill also allows a trade
or business to depreciate an additional 50 percent of
the cost of an asset acquired and placed into service in
2008. The types of property eligible for bonus
depreciation will be the same as included in previous
depreciation packages:
a. Tangible
property that has a recovery period not exceeding 20
years,
b. Purchased computer software,
c. Water utility property, and
d. Qualified leasehold improvement property.
The bonus depreciation will be allowed
under the AMT. The proposal is effective for
calendar year 2008 beginning after the date of first
Committee action.
Other Provisions:
The remaining provisions of the Bill
include provisions temporarily increasing conforming
loan limits for the Federal Housing Authority.
The proposal raises FHA’s loan
limit, the dollar amount of a mortgage that FHA can
insure, for its single-family program from 87 percent of
the conforming loan amount to as high as 175 percent
(effectively $362,790 to $729,750) of the conforming
loan limit in certain geographic regions where the cost
of housing is very high and from 48 percent to 65
percent (effectively $200,160 to $271,050) of the
conforming loan limit in less expensive markets.
FHA would also have the authority to
raise those loan limits by up to an additional $100,000
if market conditions warrant such increases.
This proposal expires on
December 31, 2008
.
None of the provisions of this bill
have any affect on tax return preparation for 2007;
however the returns submitted for 2007 will generate the
refunds distributed to taxpayers. It is
anticipated that many more taxpayers will seek to have
their returns prepared earlier rather than later in
order to participate quickly in the refund program.
|
