About Our Economic Stimulus Payments

About Our Economic Stimulus Payments

  

What everyone needs to know. Information thanks to IRS (http://www.irs.gov/irs/article/0,,id=177937,00.html).

How Much And When

Most taxpayers will receive two notices from the IRS; one explaining the stimulus payment program and another confirming the recipients’ eligibility, the amount and the approximate time table for the payment. While ‘schedules’ based on the last two digits of your social security number have been making the rounds, these schedules are from a 2001 mailing. At this time what is officially know is that payments will begin to be mailed in May.

Basic Information on the Stimulus Payments

What is it? It’s an economic stimulus payment that more than 130 million households will receive starting in May. It’s not taxable, and it won’t reduce your 2007 or 2008 refund or increase the amount you owe when you file your 2008 return.

Are you eligible? You’re eligible if you have a valid Social Security Number (SSN) and show qualifying income of at least $3,000 on your federal tax return. Both people listed on a “married filing jointly” return must have valid SSNs to qualify for the payment — if only one has a valid SSN, neither can receive the payment.

Can you use an ITIN instead of an SSN? Taxpayers with an Individual Taxpayer Identification Number (ITIN) instead of an SSN are not eligible to receive a stimulus payment. Both people listed on a “married filing jointly” return must have valid SSNs to qualify for the payment — if only one has a valid SSN, neither can receive the payment.

How do you get it? Just file a federal tax return for 2007, even if you normally don’t have to because your income usually doesn’t meet the filing threshold. You can’t get it if you don’t file.

How much will you get? The actual amount depends on the information contained on your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number. The payments phase out at certain income levels, so those with higher incomes may receive a reduced payment or even no payment.

Phase Out of the Stimulus Payment: The stimulus payment begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.

What if some or all of your income consists of Social Security, veterans’ or other benefits? The economic stimulus law allows Social Security recipients and recipients of certain veterans’ benefits and Railroad Retirement benefits to count those benefits towards the qualifying income requirement of $3,000. Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment. Normally, certain Social Security payments are not subject to income tax. However, the economic stimulus law passed in February contains a special provision allowing Social Security recipients to count those benefits toward the qualifying income requirement of $3,000 and thereby qualify for the stimulus payment. Social Security benefits are reported on the 2007 Form SSA-1099, 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. Similarly, certain veterans’ payments are not subject to income tax. However, the economic stimulus law passed in February contains a special provision allowing recipients of certain veterans’ benefits to count those benefits toward the qualifying income requirement of $3,000 and thereby qualify for the stimulus payment. 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. In both cases (non-taxable SSI and veterans’ payments), you should enter the amount on Line 20a of Form 1040 or Line 14a of the Form 1040A. Please note that Line 14a of the Form 1040A and Line 20a of Form 1040 are designated for Social Security. However, these lines should also be used to include any veterans’ benefits.

An Example of a Form 1040A