Filing your annual tax return with the IRS can be a pain. But this year, the pain will be worth it – even if a person does not have enough income to necessitate filing. That is because if you make under $75,000 as an individual, $150,000 if you file jointly or if you reported no income but received Social Security or Veterans Disability payments, you are eligible for a tax rebate check.
The economic stimulus package — passed by Congress and signed into law last week — includes a tax rebate of $600 for every American making under $75,000 and $1,200 for couples earning up to $150,000. In addition, it also includes $300 per child. The credit phases out for those taxpayers with an adjusted gross income of $75,000 ($150,000 for a joint return) or more, generally at a rate of $50 dollars per $1,000 of adjusted gross income above $75,000 ($150,000 for a joint return). This means people making between $75,000 and $87,000 and those filing jointly with an income between $150,000 and $174,000 will receive some rebate.
For senior citizens and veterans who didn’t earn any income in 2007, they can also receive a rebate. A $300 check is available as long as the individual received at least $3,000 in Social Security benefits, Railroad Retirement benefits, or Veterans Disability benefits last year.
For these individuals, however, it is imperative that they file an income tax return with the IRS. If you have a relative, neighbor or friend you believe falls into this category, I encourage you to make them aware of the need to file a return this year. The IRS will be distributing the tax rebates and must have a tax return for the previous year on file in order to issue a rebate. It is expected that for early filers, the first checks will be reaching mailboxes in mid-May.
Another question that comes up frequently is “Will the tax rebate checks be counted towards your income for next year’s tax filing and will the rebate cut into next year’s refund?” The answer to both is no, according to IRS officials.
Leading economists believe our economy is likely to hit a recession — we may even already be in one. The objective of this stimulus package is to provide a targeted, short-term boost to the economy, putting money directly in the hands of those most likely to use it in order to avoid or at least soften the impact of a recession.
Congress acted with uncommon speed in a bipartisan manner together with the White House to pass this legislation. That is a hopeful sign — when the economy is in trouble and the path to positive change clear, the legislative process works well.