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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. eddy says:

    Our 21 year old son is a full time student: who made $15,000 last year. We are married and made about $67,000. We checked with our tax guy to determine the most beneficial way for the "family" to file 07 returns. He suggested that we claim Blake as a dependent; so our 2007 return was married/(3) dependents and Blake's return showed single/(1) dependent.

    We paid Blake the difference$600 (which he would have gotten had we not claimed him) We also paid him $500; since we thought our stimuli check would be $1500.

    The "catch 22" is that our rebate check was only for $1200, should it have been the $1500? Blake did not receive a stimuli check (which according to other comments on your site, is correct because we claimed his as a dependent).

    My tax guy commented, (however, I don't think this affects my question to him):

    Stimulus Rebate Issues

    Several members have informed NATP that their client's stimulus rebates are arriving late or are not the same amount they were expecting. The IRS has acknowledged a programming error with regard to the calculation of the additional $300 for a qualifying child. Apparently when taxpayers are not eligible for the child tax credit on their 2007 return because of the income limitations, they are not receiving the additional $300 in their stimulus rebate. The IRS has indicated that the stimulus amount is based on the information reported on the 2007 return and that they reference the child tax credit line on the return. At this point they are unsure how they will correct this issue. Presumably, affected taxpayers will receive the difference when they file their 2008 return.

    Do you think we qualify for the additional $300? Is the 1040x a correction for our taxes?

  2. eddy coots says:

    I sent prior email regarding student/dependent. Our tax guy said to file married/3 (which included him). His tax filing showed single/0. MY PRIOR EMAIL WAS INCORRECT-IT INDICATED HE FILED AS SINGLE/1.

    We only got $1200, should we have gotten an extra $300 for him?

    Could we file an amendment to change our filing to married/2 and he could change his original filing to single/0, which would allow him the $600 credit, right?

  3. Lynne says:

    OMG, I cannot believe some of the things I'm reading in here. Deadbeats not filing their taxes to avoid the stimulus checks getting intercepted? You have to file sooner or later, and from what I've read on the IRS website, even if you file late, that will generate a late stimulus check to you and bad news deadbeats....it will be intercepted. What pigs! Just pay your damn child support and shut up. Your kids can benefit from the money bore than you anyhow!

  4. Carolyn says:

    i claimed my mother and son who is a college student and over 18, how much will my stimulus check be

  5. Becky says:

    I filed a joint tax return with my husband in Feb. of 08, I have 2 children from a previous marriage so me and my current husband claimed one of my children, I had cancer and did not work the only income I had was 12,000. in child support and my husbands income, the irs took our tax return due to new judgement for child support on his end I was not aware of this, since my husband and I split and the irs will probably take the stimulas check as well, I don't think that is fair because if my husband did not claim me and my child he wouldn't of received a tax return, is there anything that can be done?

  6. ashley says:

    hi my husbands has an offset for back child support i was wondering if they can take my kids part of the money for that?i did not file that 8397 i think its called because i did not work last year. can i still file it to get my kids eic back and or there 300 on that other check?

  7. Wyatt says:

    Will i recieve a rebate if i am 18 years old and fell within the 3k to 75k earnings? I filed my taxes with my mom and my refund was put into her account....will this affect where and if i get the money?

  8. Lisa says:

    I made at least 4, 000 last year. Most of which was from unemployment, so why did irs say i don't qualify?

  9. Amanda says:

    I would like to know who can garnish these tax rebates? I owe some to Unemployment Security, will I still receive this?

  10. Tony says:

    I hope i can get an answer for my question.


    I have filed my 2007 tax returns in March and got the returns already. The return has been filed as "Married Filing Jointly" with ITIN for my wife. My daughter and I both have SSN's. After filing I have realized that I am not eligible for Stimulus payment as my wife didn't have SSN.

    My wife has now received her SSN. And I would like to file 1040X to replace my wife's ITIN with her SSN. But I am not sure if I can do this. I highly appreciate if you can give me some inputs in this regard. Can I file 1040X to replace ITIN with SSN? if yes, what precautions should I take? Will I get Stimulus payment if I can file 1040X? Do I need to file 1040X for state as well (I live in Massachusetts)?

  11. Sheila says:

    I will thankyou in advance for answering my questions. I am a single mother of 3 children . Their father owes quite a bit of money in back child support. Up until this year I have never received any form of an intercepted tax return. I received @500.00 in May, for arrears. Will I also intercept his rebate check? I know that my rebate will be $1500.00. Will this matter if he owes child support?

  12. Dori says:

    I am a single mother of two who made roughly $50,000 last year. I filed my taxes yet I have not received my stimulus check yet.

    I filed an amended tax return last month for a child care cost form that I received after I had already filed my taxes. I also use AllKids for insurance for my children. Could either if these two things be holding up my return or do I just not qualify because of the insurance?

  13. Jill says:

    I filed head of household and claimed one daughter and I only received 600... I thought I would be getting 900, 600/300, but I didn't... I don't make that much, and I do meet the requirements so I am not sure why I was shorted 300... does anyone know?

  14. Sabrina says:

    I am with you Jill...
    I am in the same boat,, i thought i was suppose to get 300 for my son i claimed.., i meet all the requirments as well. I have called the 866 number and got nowhere..
    Please help us understand why we did not get the extra child money?
    I mean this is great and all, but if they say they will give so much then they should.

  15. JO FRAZIER says:


  16. Kalub says:

    I heard that if you have state Fines for traffic tickets that you will not get you check. Is this true?

  17. Howard Huxley says:

    If I claim my son as a dependent and he is going to school full time and working, as a 22 year old, why doesn't the parents receice $300 for claiming him as a dependent.

  18. Kim says:

    I just got a letter from the child support agency that the IRS knows about back support owed to me, our CS case was just finalized in courts last month. Im too late for a tax intercept for this year for child support, does that mean i miss out on the stimulus intercept? or can I still get that?

  19. Lindall says:

    My student loans are currently in forbearance...Do you think I will get my stimulus check?

  20. suzi says:

    I owed and already sent the IRS my payment in full. But when I received my stimulus information it showed that they took it for my taxes owed. Who do I call cause the check has been cashed for my payment. How do I get my money back. They have both taxes paid and stimuluse check?

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