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. bull.flag says:

    kittie,

    you will be getting 1200 + 300

  2. Sheila says:

    I guess Im still confused. My husband and I filed married filing jointly. We were both working (although I am now a stay at home mom) and we made together about 45000. We did recieve a refund though. I have heard since we recieved a refund we will only get 600 for being married plus 300 for each child is this true or will we still get 1200 for being married and 300 for each child.

  3. bull.flag says:

    Sheila,

    You shall receive 1200 and 300 for each child (doesnt matter if you worked or not, or if you owe or get a tax refund) as long as you filed as married filing jointly.

  4. MARIE says:

    AS OF TODAY, MY EX-HUSBAND IS $700.00 IN ARREARS WITH CHILD SUPPORT. THERE WAS NO INTERCEPTION ORDERED AGAINST HIS 2007 TAXES BECAUSE HE FELL INTO ARREARS OVER THE LAST FEW MONTHS OF 2008, BUT HIS UNEMPLOYMENT CHECK DOES GET INTERCEPTED. WILL HIS REBATE BE INTERCEPTED FOR CHILD SUPPORT?

  5. Darlinda says:

    I would like to know if I will still receive a rebate check if my children receive Survivor Benefits? They are twins, both 16 years of age. I am the head of househould and the representative payee for their social security benefits. I am on SSI disability and i know that my income does not qualify for the stimulus payment. Will we qualify for a rebate check? I did file on April 16th because I had to wait for a proof of their benefits to come in the mail. I did apply for direct deposit. Will i still receive a payment in the month of May, or later in the year?

  6. Lori says:

    My husband recieves social security disablity benefits That exceeded over $3000.00 He also worked for a few weeks this year and was unable to continue to do it so only made a gross amount of $1497.00 So this amount was taxable But under $3000.00 But both together equalled approx. $9600.00 For both the work and his social security benefits ) We filed married filing jointly( i had no income ~I am disabled but not recieving any type of benefits.) We have 3 children under the age of 17 that were claimed as dependents.Also all 3 of our children recieve a small $37.00 Check monthly under my husbands social security.)
    Do u know what our stimulus check amount would be?
    Oh, we did file taxes and got a rebate check for I think close to $600.00 Earned income credit. and $3.00 on state .Thanks for your help

  7. Lori says:

    When I said this year I meant 2007~So I am not confusing.

  8. sherri says:

    I have a question that I have not seen anywhere else. I had my tax refund directly deposited onto an h&r block emerald card, deposited within 12 hours after filing. My question: will I be receiving a paper check in the mail, or will my stimulus payment be directly deposited onto my emerald card? I am inclined to think that it will more than likely be a paper check, but I would like to know for sure. Anyone know anything about this?

  9. Charlene says:

    My husband and I sold a rental home in 2007 and had major capital gains, thus inflating our AGI. Will the capital gains count or will they deduct them when figuring out if we qualify. Thanks

  10. maureen says:

    i filed an amendment on my 2007 taxes will this affect my rebate

  11. Rick says:

    My wife and I filed 2007 as MFJ and our divorce was finalized in April of 2008, thus we will each file our 2008 return as single. I assume we will receive the full stimulus package payment as the IRS believes we are still married. How will the payment be treated when we each file as singles in 2008? Will the entire amount be counted towards the person who received the direct deposit? Or will one half be credited to each of us? Thanks for the help.

  12. Sandy says:

    My husband and I filed bankruptcy in July 2007 and received a discharge in November2007. We received a partial amount of our 2007 tax refund. Will we receive the economic stimulus rebate or would it go to the bankruptcy estate

  13. puddlesmom says:

    My husband and I owe back taxes to the Commonwealth of Virginia and for the past 2 years they have taken our federal income tax rebate, will we lose our stimulus payment to our back taxes also?

  14. chris mathews says:

    im happy to qualify its about time the country rewards us for something!

  15. Rachel says:

    I have a student loan that I am behind on about two months (not in default). Is this amount guaranteed to be deducted from my refund and will I then get the difference?

  16. rambette says:

    According to your article "The economic stimulus tax rebate is counted as a tax credit against your future 2008 tax bill." If this is true when I am expected to pay it back, how much of it would I have to pay back, and when and how will I be notified of amount owed back to the IRS. Will this be on top of whatever I will have to pay on my 2008 taxes? This is the first time I hear about this estimulus check been a credit against my future 2008 tax bill. Talking with some of my coworkers, they were as astonished as I was when I read the article. Can I refuse the stimulus check? Thank you for your reply.

  17. Raymond says:

    Rambette,

    The tax rebate is a 2008 credit that has been accelerated into the present. You will not have to pay any amount you receive now back to the IRS. As I indicated above, the stimulus rebate received now will not be used to offset any refunds you may be entitled to in future years.

  18. Crystal says:

    I have a student loan that I am behind on payments, but am not in default on -- I got behind for about 3 months a year ago and although I am now making my monthly payments, I have not been able to make up the late amount -- my refund checks last year and this year were not taken to pay this debt. Will I receive a stimulus check?

  19. Meg says:

    Raymond,

    My husband and I filed married filing jointly. He filed Chapter 7 and has had his trustee hearing, but the discharge probably won't happen until early- to mid-June. We are scheduled to receive our rebate electronically around May 16. Do you know if the trustee will take this rebate as an offset? If so, do you know how that works when I an the one who made the majority of the income?

    Many thanks.

  20. Stacy V says:

    I was just wondering if the IRS has decided what they are going to do with the stimulus checks for the people who have intercepted tax refunds. My ex husband is over $50,000 behind in child support and he gets his tax checks intercepted (well is suppose to except he claims married and 7, so I don't get anything) Will they be intercepting his stimulus check? And if they are is there going to be a 6 month hold on it like they do for regular tax refunds before I get it?

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