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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. kari says:

    i have a friend who's from jamaica and worked here the last 2 years. He was wondering if he filed his taxes if he would be gatting the rebate check? He did file his taxes for last year.

  2. joe says:

    My agi was just under $30,000 last year, paid taxes and I have one child. Which rebate am I entitled to.

  3. drew says:

    Based on the last 2 digits of my social security number, I was supposed to receive my rebate today. I went to the IRS website to research my stimulus, and learned that no information could be provided. Tha small print suggests that information regarding my stimulus would be available as early as one week prior to the issue date. My 2007 tax refund was direct deposited, but I did work with a tax service that took all of the processing fees out of my refund. Will my stimulus be sent to me as check instead?

  4. Ruth Gentry says:

    My husband & I both work & have 2 dependent children (both age 17) at home. We received $1,200, but I was expecting $1,800. Will I be getting the other $600 for each kid separately or did they screw up?

  5. Jan Schreiner says:

    I'm confused. I was under the assumption that we as a family would be receiving a 1200 rebate plus the extra for 1 child. However, we only received a rebate in the amount of 900. My husband is self employed, and due to the construction industry earned only an AGI of a little more than 16000. I am a stay at home mom. Self employment tax paid was 1176. My parents received the full 1200 rebate along with a few other people I know. Can you help me understand this?

  6. Melanie says:

    A comment about Chapter 13. We are in the last year of 5 in a chapter 13. It is stipulated that we make our payments of $$$ each month, and that any monies over the amount of that monthly total is ours to do with as we feel fit. We have since then always have received all government refunds. Our stimulus payment is being deposited in our account 5/12. The trustee has never taken a dime more than the prearranged agreement. Could it vary from state to state? I didnt owe the government anything at the time that we filed either.

  7. Arian Herbert says:

    I just recieved my rebate check and was surprised to learn my refund was $300.00. My income was $7609.00 for 2007 and i have two dependants that reside with me. I spoke to an I.R.S rep and was told i didnt qualify for a single payer $600.00 amount because i had no tax liability. Also confusing was my children not qualifying for aditional $300.00 because i recieved an earned income credit on my taxes. Did i only recieve that earned income credit because i'm low income? This tax stimulus seems to only be about how much in taxes you have already paid! Am i wrong?

  8. cindy says:

    same question that ruth gentry left. my husband works full time, but i'm a stay -at-home mom w/ 2young children. he makes around 57,000 a year. we only rec. 1200.00. where is the 600.00 for the children?

  9. Linda says:

    Well, looking at how many in this economy in our country are now filing bankruptcy and owe the IRS, etc....I don't think our govt really intends to give us rebates, only to a few. What do you think? I'm another (republican) who just filed chapter 7 this week & surrendered my home, (i.e. homeless with child) and now my rebate is supposed to be here and looks like the govt just takes it right back again, that will do a lot of good. I'm out of work 9 months now, no jobs, what about extended unemployment benefits, mine has run out? The goverment always just wants to sound good. They don't do anything for the American people in this economy they all created. Yet, they send billions overseas to feed the hungry....what about our own hungry? I've worked & paid tax dollars all my life, over 50 yrs now....and no work and now no home. Politicians, we will remember each one of you.

  10. Monica says:

    Hello,

    I sarted a new busiess last year. Did not go very well and had to shut it down, anyway, I was very naive and did not pay sales taxes, is not much but still. Will this in anyway affect my Tax rebate payment?
    Thank you!

  11. fjoe says:

    Hi,
    I am retired and am SSI recipient, received in 2007 from SS aproximately $9,000/yr ... and I don't work.
    Do I qualify for stimulus rebate check?

  12. Henry the Tow Truck Driver says:

    Mr. Raymond,

    I'm so damn hunky-dory dandy. I received $600 from the government. I feel like I won the lottery. Now I can send my kid, Billy to college and take my wife, Lue anne to on vacation to Omaha and some left over for some booze. I hit jackpot, man. Woooohooo!

  13. Wanda says:

    still waiting since May 2.... and waiting and waiting...

  14. Rebecca says:

    I have read all of your bankruptcy replies, and this is one question I haven't seen specifically answered. My Chapter 13 bankruptcy will be discharged in December of 2008. My tax rebate for 2007 which I received this year has to go to Bankruptcy, but my tax rebate check for 2008 which I will receive in 2009 won't have to because my bankruptcy will be over. If this rebate check is like you say a credit on the 2008 tax rebate but received in the present, then it seems they shouldn't be entitled to it. They are not entitled to my 2008 tax rebates so why should they be entitled to this rebate which is a credit towards that. I have already received my money, direct deposited into my bank account. I haven't received any notices or letters from my trustee or lawyer. Wouldn't they have mailed out something already if they wanted the money. I just don't think it is right for them to get it.

  15. Michelle says:

    My filing status is married filing joint, and our federal and state returns were
    e-filed on 04/10/08 using Turbotax. We were told we qualified for the $1200 stimulus rebate and we specified the account number to our checking acct. We paid Turbotax separately for using their premier software using a VISA checkcard. The acct number that corresponded to the VISA was utilized for direct deposit of the rebate. According to the IRS website, we were to have received the rebate by 05/09/08. Thus far, nothing has been deposited. I read that if you use the same account number for a tax payment for direct deposit or only specify the acct number from which to deduct tax payments, the rebate will be mailed. I did not specify the checking acct number for the tax payment only the stimulus. Contacted the IRS no info is available. Am I to assume that we will be receiving a paper check?

  16. Mia says:

    I owe money for a federal student loan and my wages are being garnished. My federal tax refund was also garnihsed. Can I still expect to receive a stimulus payment or will it be garnished as well?

  17. Ana says:

    I have a student loan and before I applied for a defferment I was current on my monthly payments and I was approved for a defferment and don't owe any payments until 2009 would the rebate check go toward the student loan that is in defferment?

  18. Delphina says:

    Well I just spoke with IRS Stimulus Hotline.....FYI.....if you filed using Direct Deposit and paid your fees UP FRONT you will receive your stimulus check direct deposit....now if you filed and had the fees taken out of the direct deposit you will receive a paper check. For the simple fact the direct deposit on your taxes went to whoever you filed with (Jackson Hewitt, H&R Block....etc) account to take the fees out then it was direct deposited into your account. This is a bummer because now we have to wait til the end of June to get anything back.....

    I hope President Bush don't run out of money by that time.......this really sucks.

  19. SHARON says:

    My husband and I will receive a $1,200.00 rebate check. Will we have to declare this $1,200.00 on our 2008 income tax and pay taxes on it as income? Thank you.

  20. David Perea says:

    I seem to have a very difficult time trying to get advice on the following: If a person's entire income for 2007 was received in the form of UNEMPLOYMENT benefits, will that person qualify for the stimulus check? (IRS taxes were still applied from the checks.) Thank you for a quick response.

    David Perea

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