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Breaking Down The Details Of The 2008 Economic Stimulus Plan and Your Tax Rebate Check

Published 2/12/08 (Modified 3/14/11)
By MoneyBlueBook

Update: Read About The Possibility Of A 2009 Second Stimulus Check

With both the U.S. House of Representatives and the Senate having nodded their respective approvals of the nearly $160 billion economic stimulus package (that's "B' as in Billion), the bill has finally been signed, sealed, and delivered to President Bush for final approval. The President has already indicated that he will quickly sign the economic aid into law - so I believe the rebate checks will soon be on their way to a mailbox or direct deposit account near you.

I shall try to explain how the 2008 economic stimulus package will work and how much you can expect to receive in the way of a rebate check.

1) Why Are We Getting A Tax Rebate Check?

The Tax Rebate Check is part of the U.S. government's emergency pro-growth economic stimulus plan to prevent the U.S. economy from stalling out and entering a period of prolonged recession. Due to the recent slowdown in the economy caused by housing bubble problems and subprime mortgage related issues, the federal government wants to keep the economy on the up and up by putting money into the hands of U.S. consumers to encourage increased consumer spending. Like jump starting a car, the government wants to hand consumers extra wads of cash to encourage increased business investment and consumer activity. Surveys have indicated that at least half of consumers intend to use the money to pay down existing debt, while the other half intends to either save or spent it on extra things. Personally, I plan to save my economic stimulus check if I qualify for one. While the stimulus plan also provides some business incentives, I will only focus on the consumer side tax rebate checks at this time.

2) How Does Qualifying For And Receiving A 2008 Tax Rebate Check Affect And Relate To My 2007 and 2008 Tax Returns?

The economic stimulus tax rebate is counted as a tax credit against your future 2008 tax bill. However, you are entitled to the full qualified rebate amount when you file your 2007 tax return by the April 15, 2008 deadline. Qualification to receiving it now will be based on your 2007 income information. Taxpayers should not be concerned that the tax rebate is only a mere future credit that has been accelerated into the present in terms of timetable. The economic stimulus tax rebate is a true credit for qualified taxpayers (free money essentially). The rebate amount that you receive now will not be used to offset any of your future income tax bill or any anticipated refund checks from filing your future 2008 tax return on April 15, 2009.

The economic stimulus plan is flexible and permits taxpayers to either file their tax return on April 15, 2008 and get their rebate checks now (the preferred route), or wait till April 15, 2009 to file their 2008 tax return and get their rebate checks then. Note that even if you file now and qualify for a rebate check, and your status changes and you become eligible for a larger rebate when you file your 2008 tax return next year, you can still claim the positive difference at that time. In addition, you will not have to give back any rebate money already received even if your status change causes you to later qualify for a lesser amount for tax year 2008 when you file in 2009.

3) Who Will Get A Tax Rebate Check and How Much Will I Receive?

The economic stimulus tax rebate checks are intended to go into the hands of low to middle income Americans (those who are supposedly more inclined to spend them immediately). Thus while most ordinary taxpayers will qualify for a stimulus check, those who make a lot of money are likely to be partially or fully phased out of receiving a rebate.

The amount of your tax rebate will be based on your 2007 federal income tax return's adjusted gross income (AGI), which is not just your annual salary. Your AGI includes all income sources including wages, salaries, tips, interest, alimony paid to you, and dividends, offset by any specific business, or capital gains or losses - but it does not include the personal exemption, or any standard or itemized deductions. You are entitled to receive the full rebate amount unless your adjusted gross income exceeds a certain threshold, in which case you will either receive a reduced rebate or be entirely excluded from receiving one at all if your income is simply too high. However, the economic stimulus package is intended to cover many people and nearly 130 million Americans are expected to qualify for at least part or all of their entitled tax rebate check.

The proposed plan that is expected to be approved will provide one time check rebates of up to $600 for individuals or $1,200 for couples, along with an additional $300 for each child (classified as dependents under the age of 17). Low income people, including retirees on Social Security or Veterans disability benefits who earned at least $3,000 will receive checks of $300. Low to middle income people including retirees who made enough to pay taxes will receive higher tax rebates up to their net tax liability, limited only by their AGI. But so long as you paid taxes and made ($3,000 or more a year but less than $75,000 as a single individual), or ($3,000 or more, but less than $150,000 a year as a married couple), you will be entitled to the full tax rebate check.

If you exceed the adjusted income threshold, you may still get a rebate, but it will be reduced by 5 percent of the amount you earned above the adjusted gross income limits of $75,000 for single filers and $150,000 for couples. Thus for example: A single filer with no children and an adjusted gross income of $80,000 ($5,000 over the limit), will see his or her rebate check reduced by $250 (5% of $5,000), and will receive a check for $350, instead of the full $600. Rebate checks will phase out completely for single filers who earn over $87,000 and for couples who earn over $174,000.

Single Individuals (AGI)
Qualify For A Rebate Check?
Less Than $3,000 (must be earned income)
No
($3,000 - $75,000), but DID NOT pay taxes Yes - $300, plus extra for each child
($3,000 - $75,000), but DID pay taxes Yes - $600, plus extra for each child
(Over $75,000 - $87,000) Yes - But for income that exceeds $75,000, your rebate will be reduced by 5% (in $1,000 increments), plus extra for each child
Over $87,000 income Maybe - You have been phased out, but can still get rebates for your child
For Each Child You Have Additional - $300 per child
Married Couples (AGI)
Qualify For A Rebate Check?
Less Than $3,000 (must be earned income)
No
(3,000 - $150,000), but DID NOT pay taxes Yes - $600, plus extra for each child
($3,000 - $150,000), but DID pay taxes Yes - $1,200, plus extra for each child
(Over $150,000 - $174,000) Yes - But for income that exceeds $150,000, the rebate is reduced by 5% (in $1,000 increments), plus extra for each child
Over $174,000 income Maybe - As a couple, you've both been phased out, but can still get rebates for your child
For Each Child You Have Additional - $300 per child

4) Who Is Excluded From Receiving An Economic Stimulus Rebate Check?

If you are a single individual who earned more than $87,000, or if you are a married couple that earned over $174,000 for the year, you are likely excluded from receiving a rebate check, unless you can otherwise claim any extra child rebates. Keep in mind that the child rebates can also be phased depending on how much your adjusted gross income exceeds the income threshold.

If you're a young college student who had earned income for 2007 but are claimed as a dependent under your parent's tax return, you are ineligible for the tax rebate as well.

Under the Senate approved proposal, illegal immigrants will also not be eligible to receive tax rebate checks for obvious reasons.

5) What Do I Have To Do To Get My Tax Rebate Check?

To get your tax rebate check now, you must file your 2007 federal tax return (either a form 1040 or 1040 EZ) by the April 15, 2008 filing deadline. Or you can wait until April 15, 2009 to file your 2008 tax return and obtain it then (although, why would you want to wait until then?). I recommend using a low cost online tax preparation program such as Turbo Tax or Tax Cut to assist you (both are reasonably priced and provide accurate results). Even if you don't usually file a tax return because you don't earn enough to owe taxes like some retirees or veterans on disability, you will still need to file a 2007 tax return in order to receive the economic stimulus check.

6) When Can I Expect To Receive My Tax Rebate Check?

The Internal Revenue Service (IRS) intends to start issuing the rebate checks starting May 2008 to qualified recipients who properly and timely submit their tax returns by the April 15, 2008 filing deadline. If you miss the annual tax filing deadline or request a filing extension, it is possible you won't receive your rebate check until the end of the year (thus I suggest you file by April 15, 2008 - mark it on your calendar and circle it!)

7) Where Can I Get More Information About The Tax Rebate?

To get official answers to your tax rebate concerns and queries, you should check the official IRS website link on the subject. Please take a look at my post on obtaining official Answers To 2008 Economic Stimulus Questions. For an unofficial response however, you can try posting your comments or questions here.

Updated Note: The IRS has released the official Economic Stimulus Payment Schedule.

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405 Responses to “Breaking Down The Details Of The 2008 Economic Stimulus Plan and Your Tax Rebate Check” 

  1. Microbrew Fan says:

    It's amusing to look back (of course, hindsight is 20/20) and see what little this economic stimulus plan accomplished. I have no doubt that the current plans will fail just as miserably. Sometimes you just have to let economic cycles run their course.

  2. Sue says:

    I was expecting the entire stimulus payment from my ex due to child support arrears. I spoke with him a couple of months ago and he told me he hasn't received the stimulus payment and neither have I. he was due to recive early july 2008 and he does file a joint return with his spouse. i was under the impression that if the spouse doesn't file an injured spouse claim, the money would be turned over to me in six months. it has been seven months and the stimulus payment isno where to be found. i contacted the state several times and was told they don't have it. What happended to the payment? I've always received child support payments directly and have recieved all of my ex's tax refunds for the past four years. I really though the stimulus payment would be turned over to my by now. it's way past six months.

  3. Cherie says:

    HI,
    I'm so confused! My husband and I did our taxes on turbo last night and owe a ton of money. We made $85k combined and when we added our $1200 rebate into our tax return it upped what we owe from $1375 to $2800. Do we esentially have to pay the government back for this money? It we don't claim the rebate (which I know we have to), we owe $1200 less!

    HELP?

    THANKS!

  4. Jeremey Thrush says:

    I received $300 for the rebate check but am now finding that I should have received the full $600. Can I now claim that on my 2008 return?

  5. Brehan says:

    Hi. my boyfriend tried claiming my kids on turbo tax and it gave him the child credit but when he tried to get the earned income credit it said the children were not elligable. he made approximately $20,000 last year. Is the stimulus causing this problem?

  6. Monica W says:

    I am 19 year old female i have one child and filed head of household and im not married my income was over 3000 and i filed my taxes in 2008 and in feb.2009 i didnt get a stimulus check last year does this mean ima get 1 this year and how much will it be??

  7. Jackie says:

    Why do we the americans need the estimulos package for all the americans?

  8. John says:

    Let me start off by saying that I am an American but we as Americans are selfish brats.

    We want anything that someone offers to give us.

    The government needs to stop giving away money that does not belong to them, this is the tax payers money.

    Don't bail out businesses because they are in trouble and yes I understand that this was not in their control. Do you think the Federal Government would bail a small business, No they would let it fail.

    I understand their reasoning behind the bail outs but this country is so far in debt and they still keep gicing away money.

    Oboma has stated he intends to decrease the deficite by half before the end of his first term in office which I do not beleive this is possible.

    This recession started under Clinton and Clinton claims he knows how to fix it but can anyone really fix this, I think the answer is no.

    We have to let it run it's course unfortunatly and hope that we the Americans are all ok once it is over.

    I appologize for my rant but glad to get it off my chest.

  9. Lynn Farnham says:

    so, the people that areon ssi and ss. will get a check also? How much and when can they expect to get it?

  10. Lynn Farnham says:

    just thought I would ask so I can let the people who are asking me know(like myself)

  11. Cheryl says:

    Just sit back and wait folks and see what else is to come with this Obama nation! The worst is yet to come....Oh and it's coming! America has forgotten it's creator and trusts in Muslim crooks like Obama. Look at all the exposure of corruption scandel in the headlines news eveyday! Much more to come so keep a watchful eye out...Oh and don't forget to pay special attention to the exposure of Hollywood and the untimely sudden deaths around the world....Wake - up America!

  12. Charlton says:

    so, I'm single,independent , poor, and made less than 3,000.... So I get nothing..... How does that make sense?

  13. ELIZABETH says:

    I THINK WE SHOULD GET A STIMULAS CHECK THIS YEAY BUT SHOUL BE A LITTLE BIT MORE ME AND MY HUSBAND HAVE BEEN MARRIED FOR 10 YEARS WITH THREE CHILDREN AND I WORK ALL THE TIME AND HE HAS BEEN DIABLED SINCE 1997 AND WE STILL LIVE PAY CHECK TO PAY CHECK AND WE PAY ALOT OUT FOR MEDS. AND I CANT HARDLEY AFORD TO BY MY CHILDREN CLOTHS OR ANY THING ELSE SOCIAL SECURITY WONT EVEN LET MY CHILDREN DRAW A CHECK FROM THERE DAD AND THEY ONLY ALLOW ME TO MAK 800.00 A MONTH OR THEY WILL TAKE HIS MONEY AND MAKE HIM PAY IT BACK IF I GO OVER AND WE CAT LIVE ON THAT ALL THE TIME WE DONT EVEN ONE NEW CARS OR TRUCKS MY MOM LEFT ME MINE IN HER WILL WE DONT EVEN OWN A NEW HOUSE OR TRAILER WAS GIVED TO US AND WE EVEN HAD TO DO WORK IN IT TO LIVE IN IT BUT MY MOM HELPED WITH ALL THAT AND THEN A FEW MONTS LATER SHE DIED. SO I THINK WE SHOULD GET A STIMULAS CHECK IT DONT MATTER HOW MUCH EVERY LITTLE BIT HELPS ITS TOUGH TO BE POOR ALL THE TIME.

  14. Wednesday says:

    Is there going to be a stimulus check for 2009, like there was last year?

  15. Raymond says:

    Well Congress and President Obama have already passed a 2009 economic stimulus package...one that did not include a second round of stimulus checks for consumers. However, if this second economic stimulus plan doesn't do the trick, I wouldn't be surprised if Obama decides to inject more forced spending into the economy via second stimulus checks. As things currently stand however, it doesn't seem likely anytime soon that an Obama stimulus check is in the works. Check here for more discussion and consumer chatter regarding the matter - 2009 Stimulus Check Discussion Thread

  16. angie says:

    We filed chapter 13 in 2006 and have made every payment. We did recieve our stimulas rebate in 2008. But the trustee is keeping our tax refund for 2008. In the filing of chapter 13 we were to get any thing under 1500.00 back from our tax refund. Which our tax refund is less that 1500.00 for 2008.Is this legal, becaue the rebate is not actually a tax refund?
    What fustrates me if you file chapter 7 wipe out your debit. You still get all your refunds and accure new debit after discharge of chapter 7. You get punished for filing chapter 13 and try to pay what you owe. I know that not all people that file chapter 7 do that, but allot do. UNFAIR

  17. Angelina says:

    If wasa dependent of my parent last year, so they claimed for me (2008). This year they did not claim me, i filed my own taxes, i worked and made more than $3000, (I'm 19yrs old). Would I qualify to recieve it this year (2009)?

  18. beverly mazur says:

    i was wondering if my son who is 5 was aproved for disabily in 2007 but my question is we dont recieve no funds for him cause they said my husband makes to much money believe me we live check to check with one incomethey go by your grossnot take home but my question is since he was aproved for disabily well he get a stimules check yes or no

  19. Sam says:

    I am on a payment plan with the IRS for back taxes. Will they still intercept my rebate if I'm on a payment plan?

  20. becky says:

    i am currently in default on my student loans and do not get income taxes or stimulus checks back. i am pregnant and will have a baby before the end of the year. i am also engaged to be married. if we get married i do not want his income tax return to also be intercepted. if we file seperately he will not get the child income credit, is that correct? is there any way around both of our taxes being intercepted? can we still get the child credit?

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