Thursday, February 28, 2008

The Tax Rebate in Plain English

So, Mr. Bush has signed the tax rebate (a.k.a. "economic stimulus package"). So what's been decided?

(To follow the story leading up to this see "Free Money is 'o8" and "Congress Approves Tax Rebate.")

In true "Tax Facts" fashion, here's the simple breakdown.

What is it?
The rebate, meaning a credit, shouldn't have any bearing on our '08 return. In fact, if you don't get the whole amount, you may be able to get the rest next year. This is a departure from 2001's rebate (and what I've previously blogged), which was an advance on the next filing season's refund. To be honest though, no one really knows how this rebate will affect the '08 return and we won't really know until the close of the year. In essence though, it seems as if the IRS is giving us a tax break (for once).

How Much Will I Get?
There are many rebate calculators calculating what your rebate will be. For individuals the max rebate is $600, married filing jointly $1,200, and $300 per qualifying child. However, I have it on good authority that your rebate will probably match your refund (max being the above values), thus the '08 "pre-bate" moniker. There are income caps, however: $75K for individuals and $150K for joint filers. Your rebate will be deducted 5 cents for every dollar you're over the cap.

What do I have to do?
File your 2007 return. That's about it. The IRS will handle the rest. And remember that the filing deadline is April 17th this year (because the 15th is a Sunday and the 16th is Emancipation Day)

What if I don't normally file?
(You must have at least $3,000 in Adjusted Gross Income to qualify for the rebate.) If you're an individual that doesn't usually file, such as receivers of Social Security income, certain Railroad Retirement plans, or a Veteran, then you must file a special form, 1040A to receive the rebate. See IRSMind for more info on these specials cases.

When will I get it?
The first rebate is set to go out in early May after the '08 filing season ends. If you file late, don't worry. The money will be sent out until December 31st, 2008. The IRS has a Refund Cycle Chart that will give you a better idea of when it will come. And if you paid/got your refund electronically, you'll receive the rebate electronically. If you paper filed and paid/got your refund in a paper check, your rebate will come by paper check.

Happy Pre-Bating!
~The Good Tax Helper

See what I think of the rebate here and here!
See here for how the rebate will be handled if you owe.
Want a more in-depth explanation? BabyBoomer has a great port with some nice resource links.

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