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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. Shirl says:

    Okay I have a few questions. We filed MFJ with and AGI 39,000 we have two children under 17. there was a child tax credit of 372.00 and an additional child tax credit of 1628.00. We got a refund, but am curious will we get the max on our stimulus check

  2. Angie says:

    Hi, I need to know if I owe mva for lapse of insurance will I still be getting my rebate.

  3. Lynn says:

    Hi, I heard that if you used turbo tax or filed your taxes through a 3rdparty on line program, even if you did direct deposit, you will have to wait for a paper check. Is this correct? Thank you

  4. Jake says:

    This looks like a good thread to get a question answered. I am a full time student, and i made around $13,000 last year. I read somewhere that even if I CAN be claimed as a dependant by my parents that I will be disqualified from the stimulus. I'm not sure if they actually claimed me or not, but am I disqualified either way?

  5. sherri says:

    Jake,
    From what I understand, you will ONLY be disqualified IF you were claimed by someone as a dependent on their returns. If not, then making $13,000 last year will allow you to receive $600.

  6. jo says:

    I'm currently making payments on a student loan, will I receive an economic stimulus check? I'm 23 and filed taxes in February and am within the income range.

  7. AMBER says:

    Is the money suppose to be in the bank by the 1st of may if you got direct deposit? And is there a date were there gonna stop putting the money in the accounts?

  8. LINDA says:

    IF YOU OWE BACK TAXES WILL THEY BE TAKING THE REBATE CHECK?

  9. Shandi says:

    For my return I marked that I could be marked as a dependent, however my parents did not claim me as a dependent. I am 19, am I not going to receive the stimulus check?

  10. kittie says:

    I just got my stimulus, and I don't understand! We filed married filing jointly, we did not have to pay taxes (but we DO pay taxes like everyone else (ie: state and federal)), we have 1 child, made 23,000 for 2007, and were told that we were going to get $1500. Instead we got our deposit and it was only $900!!! Can someone please explain why? I thought married couples were supposed to get $1200, not $600. :(

  11. Debby says:

    If i went thru TaxSlayer to file my taxes online will I receive a paper check or direct deposit. TaxSlayer is RAL and I file online every year.

  12. Nic says:

    I file single head of household and claim my 3y/o son. My AGI is around 17,000. But I get child earned income credit. And what I recieved back this year as more than what I had originally paid in. I thought I was going to recieve 600 for me and 300 for my son. But I have been told b/c I got more back in earned income credit I am only getting a total of 600. Can you clear this up please?? Thank you

  13. Chris says:

    hi!,

    I'm currently in default on my sallie mae student loan and i made $5000 last year and i filed a paper return at the end of february, my question is this,
    will my economic stimulus check be intercepted by sallie mae?

  14. Maryann says:

    I would like to know if I will still receive a rebate check. I filled taxes although I owe, I am currently on a payment plan.. should i expect one?
    thanks!

  15. Mike says:

    Its funny, i'm a dependent on my parents because im in school and i live in their house. right now i am paying for my school loans myself and cant afford to get my own place. i get shitttt!!! haha i love america

  16. Brenda says:

    My husband received a letter in 2007 stating he owed an old student loan and starting with his 2008 income tax return they would start keeping it to repay the debt. We received all of our income tax return this year. Because the letter states they're not going to start keeping our refund until next year will we still get the rebate now? or will they keep it towards the 2008 filing of income tax?

  17. Ron says:

    Last year i received an over payment on unemployment, they took my state taxes but not my fed., will i receive a stimulus check?

  18. 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

  19. Jane says:

    I am a mother who receives childs support for my son. The father (who is now married) owes $4000.00 in back child support. If my child's father and wife do not file an injured spouse form and I receive their whole rebate, can they file the form at a later date and request the money back from me?

  20. ANDREA says:

    WE RECEIVED A $600 TAX CREDIT IN OUR CHECKING ACCOUNT 5/2/08. MY HUSBAND ARE MARRIED AND FILED JOINTLY WHY WOULD THIS HAVE NOT BEEN THE $1200.00 FOR MARRIED COUPLES OR WILL IT COME THROUGH IN TWO DEPOSITS IF IT IS BASED ON SS#.

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