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Searching For Answers To Frequently Asked Questions About Your Tax Rebate Check

Published 3/6/08 (Modified 3/14/11)
By MoneyBlueBook

Updated - The IRS has released the official 2008 Economic Stimulus Payment Schedule.

Also, read about the prospects and chances of an Obama stimulus check for 2009.

Based on the substantial traffic and comments I've been receiving for the article I wrote explaining and breaking down the details of the 2008 Stimulus Rebate Package, it's clear that everyone in the United States is concerned about their rebate checks. Everybody wants to know how large their own tax rebate check will be and when they can expect to receive it.

There are many questions to be answered and I've been trying my best to respond to them all. While most questions have been straightforward, others have been slightly more complicated with issues relating to Chapter 7 and 13 bankruptcy filings, or issues relating to wage garnishment and student loan liens. But I will continue to do my best to answer your flurry of tax rebate comments and e-mails.

Visit The IRS Website For The Official Source Of Tax Rebate News and Updates

While I can't necessarily state that all answers that I provide are definitive, I do try my best to answer accurately based on research and reasonable information. One thing I have noticed is the vast amount of misinformation and speculation that is available on the internet. There seems to be much conjecture and rumors surrounding the tax rebate, particularly as it relates to timetable and the order that the checks will be sent out. I wish to remind readers that the only definitive source for tax rebate news and updates is the official IRS Economic Stimulus Payments Information Center (official website). There, they've done a pretty decent job of addressing the seemingly endless stream of tax rebate inquiries, even providing answers to popular tax rebate questions (Tax Rebate FAQ). The IRS tax rebate website provides stimulus check payment hypotheticals and answers questions pertaining to Social Security recipients and veterans living on disability. They post updates regularly and understandably so. Here's a quick link to some of the official tax rebate questions and answers for various filing scenarios:

  1. Single without children
  2. Head of Household, with children
  3. Married, with children
  4. Married, without children
  5. Married Filing Separately, with or without children

Here's the official information release for recipients of alternative types of income:

  1. Recipients of Social Security Retirement Income or Disability
  2. Recipients of VA Benefits, Disability, or Survivor Benefits

If you still have unanswered questions, please continue to post comment questions to my original Bush Tax Rebate article. I will try my best to diligently answer each one as best as I can. Keep in mind that while I do have a legal and financial background, you will be best served asking your own tax professional or hired attorney the more substantive tax and legal questions, particularly when it relates to more delicate legal issues surrounding bankruptcy and liens. My informal opinions should only be viewed and regarded as general background information rather than seen as authoritative financial advice.

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141 Responses to “Searching For Answers To Frequently Asked Questions About Your Tax Rebate Check” 

  1. Raymond says:

    Pravin,

    Your stimulus tax rebate is based on your total 2007 Adjusted Gross Income (AGI) and not just earned income alone. As I discussed in my Tax Rebate article, your AGI includes all income sources including wages, salaries, tips, net capital gain, interest, alimony paid to you, and dividends, offset by any specific business or capital losses - but it does not include the personal exemption, or standard/itemized deductions.

    Although you both may be technically unemployed, you still have taxable income in the eyes of the IRS. Thus, despite having no actual earned income, your 2007 AGI of $26,000 with payable federal income tax of $650 comprised of dividends, interest, and capital gain is sufficient to qualify you and your wife for a Bush tax rebate. Your rebate check will be $1,200 plus any additional rebate for children.

    In regards to your separate IRA contribution question, based on your lack of earned income for 2007, you will be unable to contribute towards an IRA for 2007. However, 2008 IRA contributions may be available to you if you can become employed during 2008.

    To be qualified to make IRA contributions (either Roth or traditional IRA), individuals need to have earned income - defined as wages, salaries, professional fees, and other amounts received for professional services actually rendered. Earned income also includes compensation such as commissions paid to sales personnel, tips, as well as bonuses.

    For both Roth and Traditional IRA purposes, earned income does not include income from capital gains, interest, dividends, disability income, social security, pensions, annuities, or any other form of income not included in gross income.

  2. Pravin patel says:

    Thank you for your detailed answer and clearifications on both questions.
    Thanking you and grately appreciated
    Pravin patel.

  3. Raymond says:

    No problem. I'm happy to help!

  4. Huffles says:

    I'm the recipient of a fellowship for my training as a scientist. The fellowship is an (F32) Post-Doctoral Training Fellowship from the National Institutes of Health (NIH). I've read that it is taxable income. However, I'm uncertain whether this taxable income is "earned income" and makes me eligible to contribute to a ROTH IRA. Any insight would be helpful.

  5. Raymond says:

    Huffles,

    Under current IRS guidelines noted in Publication 970 (pages 4-5), your scholarship or fellowship is considered taxable income unless it is used towards qualified expenses such as tuition or mandatory course fees. If the scholarship or fellowship is used to cover the cost of research, travel, or room and board, it will not be covered under the tax exemption for qualified education expenses.

    As for whether your fellowship stipend qualifies as compensation or earned income for IRA contribution purposes, if you don't receive a Form W-2 with your income reported in box 1 of Form W-2, you won't be qualified to make an IRA contribution.

    As expressly noted by the IRS - "You can set up and make contributions to an IRA if you receive taxable compensation. Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. For more information about IRAs, see Publication 590."

  6. Diego says:

    im 20 years old i work a mon-fri 7-1 job at 11.50 hr i have one son that i put as a dependant i just wanted to know how much i would be looking at and when?

  7. Raymond says:

    Diego,

    To properly estimate your tax rebate check, I would need to know your adjusted gross income, which is your entire 2007 income comprised of all wages, income sources, and gains. I would need to know how many days out of the entire year you worked for, especially since you are operating on wages.

    Since I have insufficient data, I will try to estimate based on what I have. Presuming you work Monday-Friday, 7 a.m. to 1 p.m. continuously and factoring a total of 261 weekdays for 2007, I estimate your earned income to be around $18,000 give or take. This places you within the qualification range for a $600 rebate, assuming you file as single. With the extra $300 for your son, your total stimulus rebate check will be: $900. If you filed as married, the rebate check total would be $1,500.

  8. Jes says:

    Let's just say I'm not the biggest fan of my ex-spouse... will he receive the entire (plus child) amount for this stimulus payment based on his 2007 return even though I have full legal and physical custody and pay all expenses for our son? The ex has visitation, and as a part of our divorce decree I agreed to share the deduction every other year. His year, was, as it happens, 2007. Is this stimulus package solely based on the 2007 return, then? Is that "just the breaks"?
    On a related note, if it is based on 2007 filing, if he filed bankruptcy and also didn't pay his prior year taxes, will this stimulus payment for my child basically go towards relieving his old tax debt, then, that he chose not to pay? That hardly seems fair that my child should have to "pay" for his father's irresponsibility?- could you shed a little light on this scenario? (I've looked but have found nothing.) Thank you

  9. Raymond says:

    Jes,

    Your case is a very interesting one. My feeling and assessment is that you and your ex husband's child dependent issue will likely be addressed and controlled by what was laid out in the divorce decree agreement. Otherwise, two dependent claims for a child are usually settled by an IRS tiebreaker based on who the child lived with longer during the year.

    As you have indicated that the agreement was the alternation of the child dependent deduction "every other year", I think who gets what will likely be according to the luck of the draw of what the tax law and policies are for that particular year.

    The stimulus tax rebate is an acceleration of a 2008 tax rebate that has been specially permitted to be claimed for the 2007 return. Taxpayers can claim the rebate now or wait until they file their 2008 tax return in 2009.

    Because your ex husband can properly claim the extra child rebate now for 2007, I don't think you will be able to claim the extra child rebate again in 2008. You can obviously claim a dependent child deduction in 2008, but I don't think the IRS will issue another $300 child rebate to you. Keep in mind that while you won't be able to claim the child rebate for yourself this year, you can still be qualified for the tax rebate in other ways if you had income.

    As for your final question, the child tax rebate is meant to benefit the person providing for the child. Since your ex-husband will be able to properly claim the dependent deduction pursuant to the divorce decree in 2007, the tax rebate amount can be properly used to settle any of his outstanding debts including his past tax obligations.

    I know this is not the answer you wanted to hear but this is what I think the result would be.

  10. Mary Ann says:

    I filed an injured spouse form as my husband has debts that I am not obligated to pay......Must I file an injured spouse form again to get my stimulus payment???

  11. Raymond says:

    Mary Ann,

    You should go ahead and file the injured spouse claim with your return. Your portion of the stimulus rebate if you qualify, should be 50% in a community property state and proportionally attributed if not. If you've already sent in the form, just hang tight until May when the checks are projected to be sent out.

  12. Teresa says:

    We filed bankruptcy in January 2007 and elected to pay our 2007 taxes due via Chapter 13 payback plan. It, along with attorney/court fees, are to be paid first. Based upon my calculations, the IRS should be paid in full promptly no later than May. Will we receive the rebate check (yes, we do qualify within the AGI limits)? Will we receive the rebate if the courts have not paid them yet? Or will they forward the rebate whenever the 2007 taxes due are paid in full? I've tried to research this independantly and am not able to find the true answer. HELP -- thanks in advance for your time and consideration, as well as the forum to propose such questions. Thanks again!

  13. Raymond says:

    Teresa,

    This has been a common bankruptcy question regarding the tax rebate plan. Unfortunately, I am unable to provide you a very definitive answer because it depends on how your Chapter 13 trustee views such windfall tax rebates that are not linked to the overwithholding of taxes.

    Normal tax refunds are part of the bankruptcy estate and debtors must turn over future refunds to the bankruptcy trustee. However, the 2008 tax rebate is not in the nature of a true refund. It's a free government handout without the underlying overpayment of taxes.

    Since the answer may be subjectively based on the position held by your bankruptcy trustee, I suggest you ask your bankruptcy attorney to ask the trustee about his or her position on this matter. My guess is that more likely than not, because you are already in Chapter 13, you should be able to keep at least part of your tax rebate. However, in the interest of the estate, the trustee will likely want to intercept your rebate check and review the amount on a case by case scenario before releasing any amount to you.

    However, that's just my take.

  14. Alan Juchum says:

    Our joint filing income would be over the limit to get a rebate check, however, we had to take an emergency withdraw from our IRA which shows up as income. Does this withdraw really make us ineligible? Without this amount, we would be well under the $174K allowance.

  15. Raymond says:

    Alan Juchum,

    Your IRA withdrawal counts as ordinary income towards your adjusted gross income (AGI) on your tax return. If it bumps your married joint filing AGI past the $174,000 threshold for married couples, the excess will summarily disqualify you from receiving an economic stimulus payment.

  16. Karen Smith says:

    my income was over the amount that we could earn because of gambling winnings and i am just wondering why they count that on this issue because it is not real income because you lose more than what you win and it comes off of your taxes as a loss and i don't understand why they don't take your actual earnings from your job that is on your w2.

  17. Jes says:

    Karen- I'm not the moderator but I just wanted to state that if you weren't advised to offset those winnings with documented losses, isn't your tax accountant doing you a disservice? It's my understanding that you are to offset your winnings with your gambling losses when you report them on taxes... Just wondering about that... also, if you make the choice to gamble with the hopes of winning, isn't that the result? More income? I'm curious to see what the results of your question are.

  18. Raymond says:

    Karen Smith,

    Jes makes a good point. Your tax adviser should have informed you that you are permitted to offset your gambling losses against your gambling income to the extent of your winnings. However keep in mind that you are not permitted to deduct your gambling losses as an overall net loss.

    To get any tax benefit from gambling losses, you must itemize your deductions. Taxpayers who select the standard deduction option cannot deduct gambling losses at all. For taxpayers who itemize, the gambling losses are fully deductible, and are not subject to the 2% of adjusted gross income requirement for miscellaneous itemized deductions.

    Perhaps this will allow you to decrease your overall adjusted gross income to fall within the tax rebate threshold limits. Good luck

  19. buzzards27 says:

    Is my 97 year old father [actually his estate] entitled to a rebate check? He passed away on Feb 5, 2008. He had $12,000 in income during 2007 but doesn't have a tax liability. He hasn't filed a return in years and I know we'd have to file a return to qualify.

    Everything I see says his estate is qualified and would get a $300 check, but I do not see anything on the IRS site that mentions a death or timing of a death.

  20. Raymond says:

    Buzzards27,

    Your father's estate should be able to claim and receive a stimulus payment. The tax rebate will be paid to the estate, to be distributed according to the terms of the will. The IRS addressed this deceased taxpayer issue in its official Tax Rebate Frequently Asked Questions.

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