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.

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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.

This entry was posted on 2/12/08 (Modified on 3/14/11) and is filed under Economy , Financial Planning , Tax . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response.

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

kevin says:
April 25, 2008 at 2:08 pm
yes i got a refund of 2474 and now i receieved a letter saying i owe 2619 but nothing else has arrived yet 30 day letter or anything else yet. the calcualtor is saying ill get a reabte check of 900 will i still get this rebate check even though i have not received anything else from the irs. the only thing i have gotten is a paper and telling me my refund i got and now i owe so will i still receive my rebate check please let me know or email me thanks
Raymond says:
April 25, 2008 at 2:30 pm
Kevin,

Generally, the IRS has to provide you notice and time to respond to the tax liability claim. In this case though, the IRS is being pressured to dish out these stimulus rebates quickly and it's already getting down to crunch time. I would make an educated wager that it's more likely you'll still receive your stimulus rebate at this point.
Brandy says:
April 25, 2008 at 3:19 pm
I am currently on a installment plan for repayment of 2006 taxes. I am assuming the IRS will intercept my rebate and apply towards my balance. Am I correct?
Raymond says:
April 25, 2008 at 6:00 pm
Brandy,

Yes, you are correct. Unfortunately, Under Form 9465 Installment Agreement Request, there is a condition that states: "Any refund due you
in a future year will be applied against the amount you owe."
Rebecca says:
April 25, 2008 at 10:58 pm
We filed Chapter 13 bankruptcy last week, the first meeting with the trustee isn't until May 9th to present the proposed plan. Will we have to turn it over to the court or payback any that we spend since our plan hasn't even been approved yet? Left a message for our attorney but he hasn't gotten back to us. Thanks.
Raymond says:
April 25, 2008 at 11:02 pm
Rebecca,

That's hard for me to say for sure. Trustee mindset regarding what to treat as income and asset exempt or not exempt from their control is somewhat subjective. But if you received your tax rebate or tax refund and already spent it prior to filing for Chapter 13 bankruptcy, in my opinion, it's unlikely the trustee will force you to compensate. Receiving the refund or stimulus rebate after filing for Chapter 13 may be a different matter.
Rhonda says:
April 25, 2008 at 11:42 pm
I am single, self employed. I made about $2900 income from wages from a part time job and I got about $9000 in alimony. However, because I had huge losses in my business, my AGI was in the negative. I had paid taxes on the part time job. Will I get anything? THANKS and GREAT site to happen upon!
Raymond says:
April 26, 2008 at 12:01 am
Rhonda,

I'm a bit confused as to your situation. Why would you end up having to pay taxes on your part time job if your total adjusted gross income was in the negative due to business losses?

But looking generally at your numbers, based on what I have, I presume you exceed the $3,000 necessary to qualify for the stimulus rebate. In your situation, you should still receive a $300 stimulus rebate.
Maria Koehne says:
April 26, 2008 at 7:38 am
My husband pays child support for another child other than ours will they (child support) get that or will we get all of if it cause we made between 25000 and 30000
Raymond says:
April 26, 2008 at 9:00 am
Maria Koehne,

If you submitted your tax rebate as married filing jointly, the stimulus rebate will get applied to the unpaid child support. That is, unless you had successfully filed an injured spouse claim so that the qualified portion of your tax rebate will not go to him.
Angela says:
April 26, 2008 at 2:44 pm
My husband and I filed for Chapter 7 Bankruptcy in January 2008. We filed our tax return as married filing jointly. The Bankruptcy Trustee took our 2007 return. Will they also take the stimulus check? They have not said anything about it to us.

Thanks
Raymond says:
April 26, 2008 at 11:33 pm
Angela,

I'm inclined to say no for several reasons. The stimulus rebate was not even passed as law yet in January 2008 when you filed for Chapter 7 and the stimulus rebate is not entirely akin to a tax refund, which is an overpayment of taxes.
Sheri R Burton says:
April 27, 2008 at 6:14 am
I live with my bf he claimed me on his taxes ,I recieve SSI now He wont get any rebate for me just himself ...am I right? Also if you filed with H&R block and got the rapid refund ....is that considered a paper check ....he had his put on a H&R block credit card...If paper his SS# ends in 75 when can he expect his check....Also my daughter filed on the internet and got a paper check will she gets hers same timeas all paper checks?
arlyssa says:
April 27, 2008 at 12:41 pm
I filed taxes as a dependent back in februrary($12,000),my dad just filed his on April 15th. Will i receive a check.
Nancy says:
April 27, 2008 at 3:14 pm
I am havaing sucha hard time trying to understand why (as of 4/11/08) taxable pensions from employers is not being considered as part of the tax stimulus package. Is there some reasoning behind this? It is all just so inconsistent. People that haven't paid taxes, and people that make a trememndous amount of money (compared with my paltry pension) earned income and unearned income people will get rebates. Why are pensions excluded as of 4-11-08 ?????
michael shephard says:
April 27, 2008 at 6:08 pm
I was in Iraq from Nov. 06 until Feb 08. I did not pay state or federal taxes for in 2007. Will I recieve a rebate check? If so, how much should I expect to recieve?
Glenna says:
April 27, 2008 at 7:49 pm
My sister draws (SSI) Social Security Disability. She received approx. 7,500.00 last year. She had no other income, earned or otherwise. Is she entitled to the Stimulas Rebate? And if so, how much?

Thanks.
bull.flag says:
April 27, 2008 at 10:13 pm
According to IRS guidelines, I am not eligible to get the rebate this year as I dont have SSN and filied my taxes using ITIN.

I hope to be eligible for an SSN sometime in 2009. So lets say I get my SSN in May 2009 and my AGI for 2008 is below 75000.
If I file my 2008 taxes after I get my SSN in May 2009, then do I qualify for the rebate OR does the SSN have to be issued in 2008?
michelle says:
April 27, 2008 at 10:26 pm
My boyfriend owes the IRS it not a lot but he still owes he has set up a payment plan and will start paying in may of 08. Will he be able to receive the 08 tax rebate? If so how much? Thank you
kittie says:
April 27, 2008 at 11:23 pm
I was a homemaker in 2007, my husband and I have 1 daughter. My husband was the working party, and made about $22,000. We filed "Married Filing Jointly". Does this mean we're going to get the $1,200 + $300 for our daughter? Or $600 + $300 for our daughter?