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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. chet J. Flocko says:

    I recived my check for $600.00 with no added $300.00 for my daughter. Why is that? I did not make more than $75,000.00 but I did make at least $3000.00. Does the Gov't still owe me $300.00?

  2. Motown John says:

    The state of Arizona intercepted my ex-wife's tax refund back in March and forwarded it to me for back child support owed. She has since told me that they will also intercept her stimulus check in the amount of $1200, but that they were "going to hold it for 6 months". Has anyone heard of this process? Is there anyone in a similar situation that has received a redirected stimulus check? I cannot get any info, because I cannot provide her social security number/filing information. All the IRS tells me is, "we are behind and will continue to mail checks out through 12/31/08". Does anyone have more information for me than that? It's been well over 6 months and I haven't heard anything. Thanks. - MJ

  3. Ann says:

    I am filing the stimulus rebate for my mom and brother. My brother turned 18 in January 2008, he had previously been receiving social security checks but my mom had been the representative payee listed. For example "Jane Smith for John J. Smith". Whom should I file this stimulus rebate under my mom's name or my brother's?

  4. Capt Quahog says:

    When the so-called "stimulus check" arrived, I took a marker pen and crossed out the address. Wrote "REFUSED" on the envelope and dropped into a mail box. The corrupt scum in congress can go shove it.

    I for one want NOTHING from the federal government except to be left alone. My only self directed contact with the feds is each spring when the I.R.S. tax forms are filed. That's it!

    Too bad there isn't a mechanism of some type to officially refuse the insulting bribe of money stolen from the United States treasury by these vile thugs.

  5. Subha says:

    Hi,

    I came to US on dependant Visa on H4 and we (Me and my Husband) filed the tax return jointly. At that time I did not have SSN number and they filed it with my ITIN. Now, I got my SSN and can you pls. tell me how we can get the economic stimulus payment.

    Thanks

  6. Heath says:

    I was just told by my tax agent at hr block that stimulus tax checks if you recieved the full amount would be deducted from my return she says they just changed it is this true and if so how could they change it after saying it would no please get back to me

  7. Susi says:

    I have filed my 2007 return as 'married filing jointly' but with my spudew's ITIN #. In oct 2008, i have got the SSN for my wife. What is the procedure to get the tax rebate'? Do I need to amend the 2007 tax reutrn using my spuse' SSN number(instead of ITIN)? Or else, if i file my return in 2009(for year 2008) with my spose's SSN, will i be automatically receive the 2007 Tax rebate or do i need to fill any other special forms for claiming the tax rebate?
    Still not clear , will this rebate amount be deducted from our 2008 tax return or not?

  8. John says:

    Did not work in 2007 and started working in may of 2008 i average about one thousand seven hundred a month since i started working this yr. will i be able to qualify file for stimulis check. i claimed single and 1. since i am not working a full year this yr will this hinder me from getting this stimilus rebate check. thanks and how much will i get if i do get a check.

  9. tabitha says:

    Can you please tell me why the IRS tells me I will get no stimulus cheque? I am MFJ and our AGI was $5100. We paid over $200 in self-employment tax. Where does it say because my taxes were from self-employment that we are not entitled to these rebate cheques? Does self-employment income not count as 'earned income' and if so, why not? It looks like unless we worked for someone else so we had something to place on line 7 of the 1040, we are excluded. I don't get it. A married couple making only $5000 isn't suppose to get any help? Can we get any rebate next year?

  10. mphillips says:

    I am filing married this year and we now have all 4 children living in our home. Will the new stimulus package fall under these changes? Will my husbands ex wife recieve credit on the stimulus check even tough the children are in our home full time and have been since dec 5 2007?
    we now claim both of his children aas deductions and eic and 1 of mine as deduction and 2 for eic. What do we need to do and what will these changes fall under for the stimulus package?
    thanks you
    mphillips

  11. Bobby Williams says:

    Is it a way to find if I did receive the 2004 stimus check, and ifI didn't recieve it.How can I go about claiming it.

  12. sudish says:

    If married filing jointly, both taxpayers must have valid Social Security Numbers. If only one spouse has a valid Social Security Number and the other only has an ITIN, jointly, you will not get a stimulus payment.

    In my case, the above happened, since my wife did not have SSN, while we were filing 2007 tax return.But now she received SSN.So can I reclaim the $1200($600 +$600) economic stimulus, which I missed out last year- 2007 taxt return.

    If I can reclaim, when can that be done? when I file for 2008 Tax return or before that ?

  13. APRIL says:

    ME AND MY HUSBAND FILED FOR THE 2007 TAX REBATE WILL WE GET TO FILE THIS YEAR WE GET SSA AND IT IS 13704 A YEAR WILL WE STILL GET A REBATE ON US AN 3 KIDS UNDER 17 YEARS OF AGE AND HOW MUCH WILL WE GET BACK

  14. Karl says:

    My stimulus check was hijacked by the MISDU (Michigan child support police). I owed a small amount of back child support so I expected this to happen. However, my wife file an "injured spouse" form 8857 to protect her portion of the stimulus check so that it wouldn't all be sent to my ex wife. 5 months later I spoke with MISDU and they confirmed that half of the check would be sent to my wife and the other half to my ex. No problem, I thought. On December 18th 2008 the money was scheduled to be mailed. I called the MISDU yesterday to inquire as to where the check was. They informed me that they sent the entire amount to my ex. They were not able to give me any other information or an explanation as to why they did this. I then called the Friend of the Court in Macomb County Michigan. They had no idea as well and suggested that the MISDU acted alone in making the decision. Of course I called the MISDU back and they insisted that the decision was up to the Macomb County Friend of the Court. So neither branch of government seems to know what the other is doing and now my wife is out half her portion of the stimulus check.

    Is there anyone out there who can help? If so, email me at freedom_mold@yahoo.com

  15. Michael B. Carrier says:

    We can't figure out why we were penalized for using Turbo Tax. We presumed that we should have received $1200. in rebate last year, sent directly to our checking account. Because we used Turbo Tax, we received only $600. and it was a paper check. Let us know what you think, please.

  16. Michael B. Carrier says:

    We would like to know why we were penalized for using Turbo Tax. It seems to me that we should have received $1200 direct deposited. Instead, because we used a "tax service" (software) we received only $600. and it was a paper check. Any light you can shed will be appreciated.

  17. Terri says:

    I am a single mother with a daughter that turned 17 on December 31,2008. She is a Junior in High School. I don't underestand why I am losing the earned income credit on her and only being able to claim her as an dependent when I take care of her completely. I mean I make less than 25000.00 per year. If she was out of high school I might understand. THIS MAKES NO SENSE TO ME. SHE WAS 16 YEARS OLD ALL YEAR AND ONE DAY MAKES THE DIFFERENCE ON HOW I CAN CLAIM HER. SHE WON'T EVEN GRADUATE HIGH SCHOOL UNTIL SHE IS 18.

  18. Andy says:

    Looks like more tax rebates are in the works. $1000 bucks will be a nice little bonus when I do my taxes this year. Unfortunately my Capital losses are far more than $1000!

  19. Mike I says:

    I am in college and living with my girlfriend, no wife, but have aquired over 12,000$ in loans and another 8,000$ in grants & scholarships. No one else is clamining me as a dependent and I quilified for a 300$ check last year. Can I and what do I need to do to be eligable for a stimulus check?

  20. Alex says:

    Hi my wife filed hers separetly this year and I need do mine now. Here is my question. Do I need to file this year even though I did not work one single day of 2008? Or should we file thoghther? Is it possible to refile hers again with me?
    Do you know if she would ge more money make if she files it with me?
    Please help me.
    Thank you very much

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