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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)
($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)
(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. Kathy Keach says:

    My ex owes back child support. His tax refund is intercepted every year. He qualifies for a stimulus refund of $600.00 going out on June 13th 2008. How long should it take if it gets intercepted? I have direct deposit for my child support, but I haven't recieved any intercepted money as of yet(June 30th, 2008). How can I find out if it's coming to me or not??

  2. sylvia says:

    why haven't i recieved my stimulus check yet when i filed before april 15, filed as independent and made over 3000?

  3. J says:

    I uderstand that children UNDER 17 are not eligible for the rebate ($300). But what if they are 17 and legally disabled? Parents need the extra money for caring for age 17 and up that are dependents and disabled as much as younger children.

  4. Elle says:

    I've owed taxes since 2005, but I'm currently on a payment plan. My 2006 and 2007 taxes were taken to pay on the taxes that I owed. I owe about $2,000 right now. I'm a student and recieved a letter that I would be getting $600 and the check will be mailed out on July 4th. I haven't received a follow up letter stateing that they are going to apply it to my old taxes. Should I be expecting to be stimulated or are my hopes just high?? Also July 4th was a holiday so they said they will send July 5th. Is the IRS open on Saturday's?? Should I expect it on Wednesday??

  5. Mia says:

    Hey Elle - I owe money for a student loan. They sent me a letter (getting my hopes up) that I was entitled to a stimulus check on July 5th. I received a letter in the mail yesterday saying that the payment was applied to my Loan...so I dont think you'll be getting a check if you have an open balance...sorry..but good luck

  6. Rosy says:

    My case is a peculiar one. We had to file the 2007 tax return form (MFJ) using my(not primary) ITIN even though I had my valid SSN(got the no in 2007 itself) coz e-filing was rejecting my SSN . We have a child(has SSN). My husband has valid SSN too.Our AGI is 70,000.
    What do we do now to get the stimulus rebate.

  7. David Sand says:

    Are you sure this is FREE MONEY? Are you sure we will never have to pay this back some time after 2008 tax year? Where did this money come from? Isn't this just corporate welfare? Won't the gas companies get a large share of this FREE MONEY in the long run? There is something really rotten in Denmark? Nothing in this world is free - and if it is - it ain't worth much. These are not rhetorical questions.

  8. raj singhal says:

    I filed for an extension april 13,08 how long I can wait to file for tax return and get rebate

  9. Jim says:

    my parents claimed me this year, i am 20, but i made enough to qualify for the $600 check. does this mean i will not recieve one because they claimed me?

  10. Laura says:

    I have a question My husband and my children have social security but, I only have ITIN. We filed the 2007 taxes already. Do we qualify for stimulus check

  11. leiss says:

    hello, in refereence to the economic stimulus payment and the filing of bankruptcy, on page 4,5, of the H.R. 5140 BILL OF THE 110TH CONGRESS section 2(d) refunds disregarded in the administration of federal programs and federal assisted programs,further the bill states that the funds will not be applied as an offset to determine eligibily towards benifits or assistance under any federal program or under any state or local programs financed in whole or in part with federal funds. does this help all you bankruptcy filers?hope this information will shed some light on the issues.not sure why the congress would give free money and then let trustees take the funds the people well deserve for being a cooperative citizen, this is a serious contract between the people and the president of the us. thank you for reading this well informed information.

  12. Julie says:

    I'm confused. I've had people tell me different things. If you are a single parent with a 12 yr. old child, how much should you receive? I was told 300 for parent 300 for child, then I was told 300 for child 600 for parent. Please help!! I already received 600. My friend was sent a letter stating there was a miscalculation and she is to get 300 ore on top of her 600. I don't know how she filed though. Can you explain to me exactly how it's figured?

  13. red says:

    My stimulus check was just garnished for an old federal student loan. I have received Social Security for some years now. Will they now start to garnish y monthly payments as well?

  14. Thomas D says:

    My wife changed her last name from her maiden name to my last name. However, the IRS records did not show that so we did not receive the stimulus check that would have been $1,500 (with 1 child). I spent hours talking to the IRS where they told me there is nothing I can do, I am not eligible for the rebate. Finally I went down to the local IRS office, where they told me I should not worry, as long as the social security office fixes the problem and sends the correct infor to IRS before my 2008 tax fileing date (4/15/2009) I should get full refund in 2009. Sounds good. Should I believe it? What else can I do to make sure I wiull get the monbey. (I wrote to my congresman and senator already)>

  15. Karmela says:

    Hello... I was reading a previous comment with "Jim" and you stated that if you were not eligible for the stimulus check this year, that you would be able to be reconsidered for the 2008->2009 tax season. My mother claimed be "dependent" for this previous tax season because I was still in college for the first half of the year (I did have income from a part time job), then I began working at my fulltime professional job 2 weeks following graduation. I understand that I am not eligible for this stimulus check (grr unfortunately!!), but is my understanding correct that I will be eligible next year given my situation? Thank you so much, this was a great help by the way!!

  16. Holly says:

    MY husband and I were married in September 2007- we ended up filing jointly as I didn't pay enough taxes last year and that was our best bet for this tax season. I have been making installment payments for tax year 2006 (had nothing to do with my husband) and still owed $1200- they have taken my stimulus check, and his too. I filled out and sent in a Form 8379 with our 2007 W-2's and haven't received a response or a check for my husband. I have spent hours on the line waiting for someone at the IRS to pick up the phone..............and haven't been able to speak with anyone- trying get some sort of answer as when we can expect to see this? And when I can expect to start up my payments again? I'd appreciate any help. Thanks!

  17. Dennis Hughes says:

    I filed my tax return in January 2008 prior to receiving anyn information of the qualifications. I received a notice that earned income must excied $3000. plus Social Security benifits. This would qualifiy myself and wife for the stimulus check. After not receiving the check I contacted the recordint that stated I did not earn enough twared the $3000.and would not receive a check. They did not give us credit for our Social Security income. My wife and I are both 75 yrs old, on a fixed income that puts in the very low income bracket. I find thei program to be ludicrous to give the funds to those who are able to work and not providing for those who need it. If you can offer any advice as what I can do about this, I would appreciate your comments.

  18. Kenneth Riderhagen says:

    Yes I recevied a letetr that a signutre was required and after sending that in. i have have recieved Nothing. I am looking vegeruousely to find this Though It very small compared to whwt i owe the government for my inncomectince.

  19. faith says:

    there are other people from other countries that comes to america to work legally and tier taxes have been filed before April 15 are they entitled to tax rebate.

  20. faith says:

    I am from Jamaica and i came on one of the h2b programmes to work.I filed my taxes before the 15th April am i entitled to a tax rebate

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