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. Seng says:

    I owe unemployment money,will they take it from my stimulus check?

  2. Ramon says:

    I received a 300. dollar stimulus payment, but my wife has not received a payment, it was my understanding that veterans would received, a 1200, dollars for couple. my wife received SS under my number because she did not have the points required. let me know what to do

  3. kelly says:

    As a divorced parent, my ex & I share the dependant deductions on alternating years. He received the child credit for 2007 - Am I entitled to half of the stimulus rebate associated with our children?

  4. stephanie says:

    i want to know when my rebate check will be mailed. someone told me i could get online and see the list of dates according to ssn. Yet i cannot find this list anywhere. can someone help me please!

  5. Charlene says:

    I owe on 2004,2005 taxes, one state and the other federal this year my refund was applied to the state which cleared that up, will this check be applied to the feds?.

  6. Gabe says:

    My girlfriend has two children. She did not qualify for the rebate because her AGI was below the $3000 cutoff. Does that mean that she is automatically also not eligable for the $300 per child?

    Thanks,
    Gabe

  7. Sev says:

    I work overseas in Japan, but withdrew more than $3000 from an Ira on which I paid taxes.

    I'm married to a foreign non-resident, but filed as "married - filing separate" with "Non Resident Alient" printed in the spouse's SSN section.

    Do I still qualify for the Economic Stimulus payment? I've heard something about issues with non-resident alien spouses... not sure exactly.

  8. Michael AC says:

    I have been homeless for several years now. I am working at a minum wage job. I am also on public assistance (food stamps and medical). I do not make enouph to pay taxes. I was encureged by both the irs and my local welfair office to aply for the earned income credit. When I did I was informed by the irs that bouth my earned income credit and the economic stimuls payment would be offset for a old student loan. I their any way to get part or all of these payments considering my economic hardships. I was hoping to use this money to get into a rental situation (shared housing). The rent would be 100% of my income, so I could not pay first and last without these moneys. How could I make such a case to the irs. I have no money for a loyer and their is no legal assistance avalible to me, as I am not a minority (I have looked into this). I am 56 and it does not look like I will ever be able to pay on these loans.

  9. J.R. says:

    We are in a chapter 13 that does require TAX REFUNDS to be forwarded to
    the trustee, This year we had to pay taxes so there was no refund.
    Will we get the stimulus payment and have to forward it or is it automatically
    intercepted and sent to the trustee?

  10. Sue says:

    I live in Ohio. My boyfriend is on Disability and has custody of his daughter who is under age 17. He normally doesn't file a tax return but did so earlier this year for 2007 in order to get the Stimulus Payment. By all accounts, he should have received $600, $300 for himself (he get's over $3,000/year) and $300 for his daughter. He checked the calculator and the Where's My Stimulus Payment website. Every where he check it stated he should receive $600. He received his payment this past Friday (June 13) and he only got $300. He received a letter the same day and it stated that he did not have a qualifying dependent. Now, when he filled the "special" return for those on Disabilty that normally do not file a return, he made sure he put his daughters SSN on the form. Can anyone help explain why this happened. He has called numerous IRS phone numbers and he can't get to talk to a person ... Everything is all pre-recorded. With him on disability, he could REALLY use the extra $300 that he is entitled to. Any response will be GREATLY appreciated. THANKS!

  11. Sissy S. says:

    My husband and I have been in ch. 13 for three and a half years now. The money is taken out and paid to the trustee. We never see it. Our tax refund is sent to the trustee, then he sends it to us. Our rebate was sent to our trustee and they have it just sitting there waiting for the 'trustee' in Washington to let them know what to do with it. That is what they are telling us any way. Why won't they give it to us.

  12. robert comba says:

    I am trying to find out when the tax stimulous check would be mailed, I have not received one. Is this info available on line?

  13. Lisa says:

    Can anyone tell me if I will get a stimulus check or not? I cannot decypher this letter. Filed Chapter 13 in 2004 with 100% payback of debts. My income tax returns go toward the bankruptcy. Thank you.

    Dear Counsel for Debtors in Chapter 13
    This letter is written in response to inquiries regarding the processing of stimulus
    checks to be issued under the Economic Stimulus Act of 2008 ("ACT"). Under the ACT,
    the IRS will treat the stimulus payments like any other tax refund in that part or all of the
    payment can be used to pay past-due federal or state income taxes or non-tax federal
    debt (student loans, child support, etc). In Chapter 13 cases with an intercept order in
    effect the stimulus payments should be forwarded to the Chapter 13 Trustee for
    distribution in accordance with the plan. The checks that will be sent out (beginning in
    May) are advance refunds of a new credit. The credit is effective with the 2008 tax, but
    will be sent out in advance of the tax year. Unfortunately, the checks will in all likeliness
    be printed under a 2007 date which could be confusing to the debtors since the IRS
    advises that at present it is impossible to print the checks with a 2008 date. However, I
    anticipate that the checks will have some identifying language to enable me make the
    distinction between the 2007 tax refund and the 2008 stimulus refund or credit. Since
    the credit is for the 2008 taxes, I intend to apply them toward any 2008 tax refund in
    accordance with the plan provision.
    In other words, if the plan provision is for the debtor to retain $1500 in tax refunds and
    the stimulus payment under the ACT is $1200, the $1200 will be forwarded to the
    debtor and when the traditional 2008 refund comes in 2009, the debtor will be refunded
    up to an additional $300 and the balance, if any, will be applied to the plan. If upon the
    receipt of the stimulus payment the debtors are behind in their plan payments, then per
    the provisions of the standard plan the stimulus payment will be retained and applied to
    any plan arrearage. The stimulus payment will be refunded with a generic cover letter
    explaining the foregoing.
    If you have any further questions, please be sure to advise.

  14. Lin says:

    What do I do with a stimulus check for my mother in law who passed away in May 08? Am I required to return this to the IRS?

  15. Charles says:

    My wife and I were recently married. We filed our 2007 tax return Married/Jointly. I entered our last name on the return, but her maiden name is still registered w/ Social Security. This discrepancy caused a "non-eligible" status. I have since amended the return to include her maiden name to match with her SSN. Will this remedy the situation? What, if any, further action do I need to take in order to receive the rebate.

  16. max says:

    I recently came across this article about what people are doing with their plans.
    doesn't seem like its accomplishing much - (link)

  17. Paula says:

    I have a question. I am a single parent, who filed head of household. I made under $30,000.00. I claimed 2 children but only one is under 17 years old. I filed electronically. I received my check but I do not think it was right. I received $300 for myself and $300 for the one child. Shouldn't I have received $600 for myself and $300 for the one child? Others I have talked to got the $600 just for themselves. Please let me know. Thank you.

  18. Jordan says:

    I am an independent contractor.. I have to file a 1099. I made well over 3000 dollars last year and my tax rebate check came and it was only for 300 dollars... Why is that?

  19. natasha says:

    I filed a retuen and then I amended it twice to add dependants. I got the refund for all of the filings but I only got a stimulus check for my original return. Will I still get one for the dependants I claimed when I amended my return or do I have to wait and get it next year?

  20. self-employed says:

    I am self-employed, filed as single, and made over $20,000 last year but only got a $300 stimulus check. Why?

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