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In Washington DC
442 Cannon House
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202-225-6316 Phone
202-225-4975 Fax
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Albuquerque, NM
87102
505-346-6781 Phone
505-346-6723 Fax

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Congresswoman Heather Wilson, First Congressional District of New Mexico


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Frequently Asked Questions About The Economic Stimulus Bill... February 19, 2008
 

 

 
President Bush signs the economic stimulus bill passed by Congress. The IRS will begin sending rebates to those who qualify as early as May 2008.

Who qualifies for rebates: More than 130 million American households will begin receiving payments automatically from the IRS in early May.  You must file a 2007 federal tax return in order to receive the rebate. Those who qualify will receive a minimum $300 payment, as long as you had a minimum of $3,000 earned income in 2007. Citizens paying income taxes may receive rebates up to $600 per individual or up to $1,200 for couples.  Some people who do not normally file should file in 2007 in order to receive their $300 rebate, including low -income earners, recipients of Social Security, recipients of disablity payments from the Department of Veterans Affairs and recipients of Railroad Retirement benefits


Families with children will receive an additional $300 per child. The full rebate is limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less, but a partial rebate would go to individuals earning up to $87,000 and couples earning up to $174,000. The caps are higher for people with children. Illegal immigrants are disqualified.

Housing rescue: This plan will allow more subprime mortgage holders to refinance into federally insured loans by raising the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas. Increase the availability of mortgages by providing a one-year boost to the cap on loans Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

More Questions: You may have questions regarding eligibility and this economic stimulus plan will affect your family. The IRS has a complete list of frequently asked question's regarding qualification status. If you don't find the answer to your general tax question there, also check Tax Topics and Tax Trails. If you still don't find the answer to your question, please call the IRS toll-free tax assistance line at 1-800-829-1040 for individual tax questions or 1-800-829-4933 for business tax questions. 
   

Frequently asked Questions & Answers:


1. Question: How are the checks calculated? / How much will I get?

Answer: Rebate checks will be calculated based on 2007 tax returns and will be the sum of two separate calculations:

(1) A base amount and; and

(2) A per child bonus.

 

2. Question: What is the base amount?

Answer: The base amount is whichever is greater between two options:

(1) Option A – Federal income tax paid in 2007, with a maximum of $600 for single filers ($1,200 for married filing jointly) or


(2) Option B – Flat amount of $300 for single filers ($600 for married couples filing jointly), but only if the filer’s “qualifying income” in 2007 was at least $3,000, or the filer paid at least some federal income taxes in 2007.

For this purpose, “qualifying income” includes earned income (i.e., salary, wages, etc); Social Security benefits (including Social Security disability payments); and certain payments made by the VA to disabled veterans and their surviving spouses.

3. Question: What is the per child bonus?

Answer: Anyone qualifying for the base amount (because they had at least $3,000 in “qualifying income” or paid at least some federal income taxes in 2007) also receives an additional $300 per child, with no limit on the number of children.

 
 In order to receive an economic stimulus rebate you must file a 2007 tax -return  

4. Question: Will there be any income limits on the checks?

Answer: Checks will be phased-out for single filers with adjusted gross incomes (AGI) above $75,000 ($150,000 for married couples filing jointly) by $50 for every $1,000 of AGI over $75,000 ($150,000 for married couples filing jointly).

Here are two examples of how the phase out works:

· An individual with AGI of $80,000 and federal income tax liability in excess of $600 would qualify for a basic rebate of $600. Because this individual’s AGI exceeds $75,000, however, her rebate is reduced by $250 (the credit is reduced by $50 for every $1,000 of AGI over $75,000). The taxpayer thus will receive a check for $350.

· A married couple with two children, AGI of $160,000 and federal income tax liability before the child tax credit exceeding $1,200 qualifies for a basic rebate of $1,200 and an additional per child credit of $600, for a total rebate of $1,800. But because the couple’s AGI exceeds $150,000, their rebate is reduced by $500 ($50 for each $1,000 by which AGI exceeded $150,000). The couple will receive a check for $1,300.

5. Question: I know some people won’t get a stimulus payment. How do I know if I’m one of them?

Answer: You will not receive a stimulus payment in 2008, if any of the following apply to you:

· You do not file a 2007 tax return.

· Your net income tax liability is zero and your qualifying income is less than $3,000.

· You can be claimed as a dependent on someone else’s return (i.e., students who can be claimed on a parent’s tax return are not eligible).

· You do not have a valid Social Security Number. If you are married filing jointly and your spouse does not have a valid Social Security Number, you are also not eligible for a check. Similarly, the $300 per child bonus is only available for children for whom the parents provide a valid Social Security Number.

· You are a nonresident alien.

6. Question: When will I receive my stimulus payment?

Answer: The Treasury Department will start sending out payments in early May. A schedule for when they will be delivered has not yet been announced.

7. Question: I have moved since filing my 2007 tax return. How will my payment reach me?

Answer: You should file a Form 8822 with the IRS and a change of address notice with the U.S. Postal Service. This will ensure your check is sent to your new address. Without your current address, the check could be returned to the IRS as undeliverable.

 
 You can file your  2007 tax-return electronically online.

8. Question: Will my stimulus payment be included in my regular tax refund? Will the checks or direct deposits come at the same time?

Answer: No and no. Taxpayers who over-withheld their taxes during 2007 will receive two separate payments. The first will be a repayment of the over-payment of taxes from 2007. The second payment, which will come later, will be a separate stimulus payment.

9. Question: I have not yet filed my 2007 tax return. Can I still qualify for a stimulus payment in 2008?

Answer: Yes, but you must file a 2007 tax return. Although the IRS has yet to announce a schedule for delivery of the stimulus payments, those who file after April 15 – either with or without a tax-filing extension -- are likely to receive their stimulus payments later than those who file by April 15.

10. Question: Is my stimulus payment taxable?

Answer: No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. You will need to know this amount next year when you fill out your 2008 return.

11. Question: I don’t qualify for a stimulus payment based on my 2007 return. But my tax situation will be different in 2008. Will I qualify for any of the benefit when I file those taxes in 2009?

Answer: Depending on your situation. The 2008 tax instructions will include a worksheet to help those who did not qualify for a payment or those who received a reduced amount determine if they can obtain a benefit when they file their 2008 tax returns next year.

12. Question: What if someone would receive a higher benefit based on 2008 income rather than their 2007 income?

Answer: That taxpayer can receive the benefits of the stimulus bill changes on her 2008 income when filing a tax return in April of 2009. So, for example, a couple who had a child in 2008 and meets other income tests could receive the benefit of the $300 per child bonus when filling out their 2008 tax return.

Note that this “true-up” operates only in the taxpayer’s favor. Someone who retires in 2007 and who has no qualifying income in 2008 and who pays no federal income taxes in 2008 does not have to give back the amount of a check that was paid this year and calculated based on 2007 income.

13. Question: I'm eligible for a payment but I still owe federal income tax from a prior year. Will my payment be reduced?

Answer: Yes. For this purpose, the stimulus payment is treated like any other tax refund. This means that part or all of your payment can be used to pay past-due federal or state income taxes or non-tax federal debt such as student loans and child support. If this occurs, you will receive a letter explaining how the stimulus payment was applied.

These answers are based on distributed Ways & Means materials and the website of the Internal Revenue Service.



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