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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. td says:

    My wife and I have an AGI of $90, 741 with two kids, one being born in '07. we received a refund check back in Feb. Will we still receive a ES Refund? Thanks for any help

  2. Forrest says:

    received my stimulus "check" as a direct deposit. My wife is a "homemaker" and we have two children, though my rebate was only 1200.00. We were expecting 1800.00. I am unsure about whether or not she will be paid (non-working), or if they will send another three 600.00 when her number comes up. Either way we are waiting for the letter so we can ask the gov. Has anyone who does not have a working spouse received the entire 1200.00??
    Who do i contact to ask about the "short" refund??

  3. Anthony says:

    My wife and I filed jointly. We have to pay in alittle over $2000.00. Will the govn. keep the $1200 towards the debt or would we still get it?

  4. gmar says:

    I owe driver responsiblity fees to the state will they take my stimulus check? Also if i owe any money (period) to the state will I not recieve my check?

  5. sherri says:

    I have a question. How is the question I posted a few days ago answered?
    Still waiting.....

  6. day says:

    If you owe back state taxes but have filed an ammendment,because the employerpaid the state you worked in not the state you lived in ,so NY state owes me 4,346 dollars but I owe Pa 4,123 dollars will I still get a rebate check,we just found out about this in jan.and have filed papperwork on this matter,now we did get our fed refund this year.I called H&R block who did our taxes and they THINK we should get a rebate check,but we should have gotten our rebate on fri,may 2 and have not yet???

  7. day says:

    I forgot to say this is all over the fact I am a truckdriver

  8. amber says:

    My husband and I filed our taxes married filing jointly. We have 2 children and paid taxes but recieved all we paid in back due to our exemptions. Should we expectr $600 plus $300 for each child or $1200 plus $300 for each child. This is one thing that I have never understood.

  9. Windy says:

    Im wondering about child support. My husbands tax return was given to his ex for back child suport. Will the stimulous check go to her to?

  10. Steve says:

    How do I know if my rebate check will be deposited or mailed to me? Will it depend upon whether or not you had your 2007 tax refund sent to you by direct deposit or mailed?

  11. D.D says:

    My husband and I filed married filing jointly.He's the only one in our house that works,I stay at home with the 2 kids.His AGI is $30,209.I was wondering what our rebate would be? Thanks!!

  12. Nancy says:

    My husband and I owed about $400.00 in taxes for 2207. We sent in an request for an installment agreement. We then received a notice from the IRS that said we owe $800.00 from 2006 year. We have to sign a form if we agree and send it back. We have not actually received a bill for either years. Will we still receive our stimulus check of $1200.00? They are suppose to be mailing us the check on or about May 16th? I can't imagine them having enough time to intercept this stimulus check.

  13. jill says:

    I defaulted on student loans about a year ago and they took my 2007 tax refund and when I asked them why they said that I would have had to set up payments before october 2007 for them not to take the refund. As of January 2008 though I have been making payments(they are directly taken from bank account) to DCS which is kind of like the credit collectors for the student loans. In 9 months my credit will be back to normal with their credit rehab program that I am currently in. I have seen this question so many times on other boards and I was just wondering if anyone had a positive answer? Are you in this situation and DID or DID NOT get your check? I recieved that paper in the mail a few months back that said that I was eligible for the rebate and when I do the "Where's My CHeck?" thing on the IRS page it tells me that I will be getting it deposited on Friday May 9. Please Help?

  14. TRICIA says:

    If I am married but file MFS - my husband works for him self and has yet to file his taxes. We have one child. Will I qualify for the stimulus check?

  15. Julie says:

    We filed taxes in March 2007. Our return was processed that day. We owed taxes and mailed in a check to pay for them, which has cleared the bank already. We filed using turbotax and chose direct deposit for the rebate. Are we going to be waiting longer due to mailing our payment in? Our last two digits are 29, so we should receive DD by Friday, but my sister already received her DD and their last two digits are 36?

  16. Jennifer says:

    I'm ignorant when it comes to tax season and my husband usually handles all that stuff, but I actually have a question regarding the tax rebate. I didn't have a job the whole of 2007 because I was a stay-at-home mom for that particular year. So my husband claimed me as a dependant for 2007 and we have a child together, which he also claimed. Now, our return -was- going to be around $4300 but my husband has an overdue student loan, that the whole of the $4300 went to pay, so we didn't get the money. That was perfectly fine, one less bill we had to pay, BUT my question is that the student loan was actually a little over $5000, so will our rebate check get taken to pay the remaining student loan or are they going to over look it this year so that all Americans can have a shot at the check? I have asked all my family and my friends and they don't seem to know and I ran across this website while browsing for an answer. Just wondering if we will get it even though we may own on a student loan. Thanks!

  17. Jennifer says:

    okay im 18 years old and i made $12,446 in 2007, will i qualify for the rebate even though my parents claimed me? And since im over 16, that means that my parents wont get anything for me. so does that mean that neither of us will get anything for me???

  18. Ashley says:

    If I am married and have a child i am suppose to get 1200 well recieved a deposit form the tax service today and only recieved 900 whats the deal?

  19. Jillian says:

    My husband and I filed MFJ. I am a stay at home mom and he is active duty military. We have one child. Our total income for 2007 was around 40,000. I had assumed that we would qualify for the 1200 as a couple and then 300 for our daughter to total 1500. However, we just received a notice from our bank that we had a pendind direct deposit of 900. Did I somehow misunderstand the qualifications and limitations?

  20. Morena says:

    If my husband and I filed jointly with adjusted income 44,000 and 2 dependents we got a rebate for 1,200. Do we qualify for an extra 300 for each child? Were we suppose to get 1,800 or 1,200?
    Thanks

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