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How the Economic Stimulus Tax Rebate Will Affect 2008 Tax Returns (Updated January 26, 2009)

by Flexo on February 8, 2008

in Taxes

This article is for tax year 2008. For 2009 and beyond, see our roundup of 8 (or more) Ways to Benefit from the American Recovery and Reinvestment Act of 2009 (AKA Stimulus Plan).

If you’re trying to understand the recovery rebate credit or why it seems like you owe your stimulus back to the government, please read this article about the stimulus payment and the comments in green. Also consider subscribing to Consumerism Commentary to receive updates about the economic stimulus.

Welcome to the readers who are coming to Consumerism Commentary searching for information on the tax stimulus package passed by Congress yesterday and presented to President Bush today for his final signature. A number of readers who have been visiting the rebate calculator are wondering how this rebate will affect tax returns when filing 1040 forms for 2007 and 2008.

Updated March 18, 2008.

First of all, there will be no effect to 2007 tax returns. The “rebate” that will be signed into law next week is actually an “advance” on a new credit that will be presented on 2008 tax returns.

In April 2009 or thereabouts, when you file your taxes for 2008, the IRS will run the calculation for the stimulus rebate again. If the results show that you would have received more (due to an additional child, for instance), you will be sent the difference (or owe less on your final tax bill). If your results show that you would have received a smaller rebate, then you get to keep the difference.

To summarize, the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income, but it is a new credit, so you don’t have to “pay it back.”

Here two important things to remember:

TurboTax is Easy, Free Edition, Fast Refund

  • In order to receive the rebate in approximately May 2008, you need to file your 2007 tax return.
  • The amount of the rebate is calculated using your earned income; if you earned over $3,000 in 2007, you’ll be eligible, but if you had an adjusted gross income of over $75,000, then the rebate will be reduced by 5% of your overage.

March 18, 2008 Update: The IRS has released a schedule estimating when you will receive your rebate.

January 26, 2009 Update: You may be wondering why it seems like you need to pay the IRS back for the stimulus payment you received in 2008. You don’t. The “recovery rebate credit” is for those who didn’t receive a stimulus check in 2008 or received less than they qualify for now. You don’t owe more money than you would have otherwise, if there had not been an economic stimulus plan, even if it appears that way. Read this article about the recovery rebate credit to understand more.

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Tagged as: economic stimulus, Economy and Government, rebate, Taxes



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Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

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  • Great point! Have to remember it is really our money that they are send back to us!

    This isn't income for 2008/09
  • ice
    can someone explain this to me? i have a friend who said he filed his taxes and received over $7000 back because of some stimulus plan which was recently signed by the president . he's claiming that i could recieve the same return (even if i've already filed my taxes with h&r block and i am only receiving just over $700 in return) he says he has recieved $8100 but this seems to be so far fetched and maybe even illegal to me. have anyone heard of this?
  • Chooki
    What I have not been able to determine is, what is the elegibility for the 2008 tax credit? Is it the same as for the rebate? As someone who (luckily as some might see it) is inelegible for the rebate due to income, will the tax credit help me, or will that go in the toilet as well?
  • Peter
    Hi,
    I think that saying "the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income." leaves people with the idea that this is just an advance refund and will mean less of a refund that they would have gotten otherwise in 2009. This is free money that you wouldn't have gotten otherwise. A better way to say it is that it is a new tax credit which you are getting now and will be reflected on your 2008 return (i.e., it will show as a credit on your 2008 return, but then will be balanced by the payment that the Government has already made, for a net of $0)
  • Am I reading this correctly? If they give a taxpayer a rebate and then they determine that they gave him too much, they are letting him keep the difference? That is awful nice of them.
  • So...am I totally dense here, or does this mean you probably should put that money aside to pay taxes in 2009? At that point the amount you owe goes back to normal or maybe even rises to take account of the amount the government has dispensed from funds it needed to operate.

    Not that I didn't intend to put whatever rebate I get (and I'll believe it when I see it) into savings anyhow...but it would be good to know if we get to keep it or if we have to hand it back over a year from now.

    Personally, I think I'd rather just pay my taxes, keep the government functioning on track, and not get jacked around.
  • If you income/tax brackets stay relatively the same from 2007 to 2008, you will not need to set the money aside (although it is a good idea to invest it rather than spend it.)

    The will be tax credits on your 2008 return that should offset the rebate you receive in May. The net effect on your 2008 return "should be" zero.

    In other words, if they were not issuing a rebate in May. The credit would lower your 2008 tax liability on your 2008 return - either producing a lower amount due to the IRS or a higher refund. The rebate is just an advance payment of that credit.

    I agree, keep things simple. If they want to give a credit they should just wait until you file your return to give it to you. I wonder what the administrative cost is to run this "rebate" program at the IRS instead of just letting it happen naturally on tax returns.
  • Daniel
    My understanding is that it is an advance on your 2008 taxes. Your refund for next year could be less and your payment could be more, depending on what your 2007 taxes were.

    I would rather have a permanent tax reduction then this temporary relief. It does nothing but fuel a person's material dependency and greed that will leave a hole in your soul in the coming months.

    Does anyone know what the best investment would be with the tax relief?
  • Interesting. So one more reason to get our AGI lower on our 2007 taxes. Although, since they passed this after year end it's a little late for most strategies to do this.
  • pete
    So- The government is going to give me $1800 (Married filing jointly, 2 kids)- as an "advance rebate" to my 2008 tax bill.

    This year I only owe about $1600 in taxes.

    What happens next year if I also only owe $1600? they gave me an $1800 advance- Will I need to pay back $200?
  • shun
    if i made 2,436 will ibe able 2 gt the rebate check
  • Angela
    WOW..

    Is it going to come in the mail or do I need to request it. This is kind of hard to believe that the IRS is just going to give us ALL checks. Like the other girl said, I will believe it when I see it.

    Seriously, does anyone know how you get it. Do I have to go to a professional to get the money back?

    HELP
  • I will just come in the mail. As long as you have filed your 2007 return, you do not need to do anything.
  • That should read "It will just come in the mail." I personally will not be coming in the mail.
  • BK
    I would get a $1500 tax rebate. THe way I read it is that next year even if I owe taxes I don't pay it. What is to stop me from maxing out my allowances on my w-4 if I don't have to pay it back?
  • more bad than good in my opinion. Besides, I owe way more than what i'd get so i'll stick to filing on the 15th.
  • Curious
    What happens if you don't originally qualify based on your 2007 return (due to a high AGI) but would qualify due to a drop in AGI on the 2008 return?
  • Bryan
    No, the rebate only applies to persons that made $3,000 or over in the year of 2007.
  • I think to simplify things everyone who had $3,000 of income from a job or social security needs to be sure to file 2007 taxes. Next, the IRS will mail you a check for the amount of stimulus money (I don't say rebate because that seems to add to the confusion) that you qualify for based on your 2007 tax filing. Do your 2008 taxes as normal next year. If based on your 2008 tax status you now qualify for a larger stimulus check it can be claimed as a refundable credit.

    As an example, in 2007 I was a full time student who was claimed as a dependent on my parents taxes (which disqualifies me from receiving the credit based on 2007 tax filings). If during 2008 my status changes so I am no longer a dependent, then when I file my 2008 taxes (in March 2009) I can claim a credit equal to the stimulus money ($600 or $300 depending on income).

    Here is another example. I file my 2007 taxes jointly with my wife and had less than $150,000 in income but more than $3,000. Based on our 2007 tax filings we will receive a check for $1,200 from the IRS as our stimulus money. During the year 2008 our gross income is again within the limits and my wife gives birth to a baby (so we now have one dependent). We can now claim a $300 tax credit on our 2008 taxes because we now have a dependent.

    As a final example, consider that in 2007 you file as a single filer and had income of $60,000. You qualify for $600 in stimulus money that will arrive from the IRS as a check in summer 2008. During 2008 you change jobs and get a large raise so you make $100,000 in 2008 and again file as a single person. You now technically exceed the income limit for the stimulus money, but because the government was nice you do not have to pay any of the $600 back. You simply file as normal and ignore that you even got that stimulus money.

    On the flip side of this situation, if you had only $1,000 of income in 2007 but had $3,001 in 2008 you could claim a $300 credit on your 2008 taxes. In other words, if you qualify in either year you get the money (all that changes is if you get it this summer or when you file your 2008 taxes) and if you qualified in one year but not the other the IRS does not require you to pay any of it back and nothing bad happens tax wise.

    I hope this explanation helps those who are confused.
  • ScottyUSN
    I've heard numberous different scenarios.

    1. This stimulus is not a "rebate" by definition. It is an advance. I've heard it will be considered income and taxable at the appropriate taxable percentage (Say %15).

    2. It is an advance that will require 100% payback in 2008 taxes.

    3. It is a "rebate" you are not expect to pay back.

    I personally qualify for $2100.00 "rebate" and have no desire to receive this money if it's nothing more than a one year interest free loan I will be expected to return in April of 09!

    Looking forward to hearing specifics. I find it tough to believe it a "Rebate" by definition.
  • Scotty: Neither of your scenarios are correct, but number 3 is the closest. It is an advance, but it will not be considered income. It is simply an advance of a new credit that will be included on tax forms for 2008. You don't have to pay it back. In fact, if you qualify for a higher credit when doing your 2008 taxes next year (thanks to a new child, for example), the IRS will send you the difference.
  • Jewels
    Most people are not getting the idea of this whole tax rebate. The money you will get is to help our economy. Basically they are giving you a "surprise" check thinking that you will just go and spend the money. Most people now-a-days are saving there money because of the rising costs. So with the "surprise" check they are pretty much HOPING you will spend the money on shopping and stuff. If you don't except the rebate this year then they will just give it to you next year. You don't have to pay anything back to the IRS...AT ALL EVER!! They just want money back in the economy. In my opinion it's a stupid idea!! I LOVE MONEY but this was not a smart move from Bush.
  • hermit
    If anyone is like me I'll be saving it all, i plan to put it in my ingdirect.com savings account it gets about 4.1% hell of alot more then basic bank savings account.
  • GHR5
    I know that this check is an advance on a credit will appear in the 2008 tax forms/year (i.e. forms that will report income earned in 2008 and that will be filed during the 2009 tax filing season).

    That said, this 'rebate'/stimulus check shouldn't reduce any potential refund I'd get next year, correct? If anything, it would increase same via a change in status (i.e a child born in 2008).

    For example, this year let's say I'm expecting a $2,700 refund. If nothing changed, this was 2009 and I'd ordinarily get another $2,700 refund for my 1040 (i.e. for income earned in 2008), would this then be reduced to $1,200 because of this year's $1,500 check?
  • GHR5: Your second paragraph is correct. The credit advance you receive this year will not reduce your normal refund next year.
  • GHR5
    Thank you, Flexo. I'm new to your blog as of this morning. Great spot. I'll be back often! Have a good day.
  • dave
    i dont think it will reduce your refund when you file your 2008 taxes in early 2009. its my understanding that if you lived in a cave and didnt file 2007 taxes, you would have a line item on your 2008 taxes to get this rebate. but the government wants us to have the money now, so they are giving it to us NOW (an advance). but if you take it now, then you cant take it AGAIN on the 2008 taxes. At that point, you go on calculating your normal 2008 refund and it would not be effected by the advance. Basically...the government wants to give us a gift on next year's taxes, but they just want to do it NOW instead of THEN...everything else will be the same. Is this correct? This is my understanding but i am not 100% sure of this. any help?
  • Dave: You're right -- the only thing you missed is that if a re-calculation of the credit when you file your 2008 taxes shows that you should have received *more* (due to an additional child in 2008, for example), then you will receive the difference as a credit on your return.
  • Chris
    I love how people think this is free money and will not have to be paid back. I understand that this rebate will not have any effects on 2008 tax refund or liability, but there are other costs. Has anyone considered the inflation that the creation of this money will cause? Well guess what, thats what it is going to cost. Plus the govenrment isn't going to operate in 2008 with less money, so while we get it from one side they will find a way to recoup it from another. Remember, there is no such thing as a free lunch!
  • Andy
    Let's say you are a family of three and you get the same refund every year, $1000. So in 2007 you get $1000, in 2008, you get $1000 and in 2009 you get $1000. This is how the law changes it.

    In 2009 your refund you would be $2500 thanks to the new law. Your original $1000 plus the new $1200 for you and your spouse and the $300 for your child.

    Instead of the government making you wait till you file your 2009 return, they are advancing you the $1500 of that 2009 refund in May of 2008.

    So when you file your 2009 taxes you will still get your original $1000 back.

    Now if you have a child this year, you will add another dependant to your 2009 taxes. This will get you another $300 in your refund in 2009. Since you already received a check for all of your dependants on the forms you filled out in 2008.

    So in 2008 you have 3 dependants = $1500
    In 2009 you have 4 dependants = $1800
    You already received $1500, so you get to claim the difference $300. Your $1000 refund will now jump to $1300.

    To make it simple for math, let's say one of your dependants dies and you can't claim them in 2009 return. You don't have to give back the advance you received in May. The government lets you keep the extra money.
  • Andy
    By the way, I know in 2009 you file your 2008 return, but many people just don't understand that and go by the year they file. So I tried to simplfy it for that reason.
  • dumb checker
    You have to learn to spell in order to get the refund. This means that Bush will not recieve one either.
  • Apparently neither will you "dumb checker"... it's recEIve. :)
  • Bob
    What kind of credit is this new 2008 credit? Example:
    Suppose Tax Table says the Tax is $900.
    With 2 children the "Child Tax Credit" offset is $2000, which brings the Tax Due to $0. The "Additional Child Tax Credit" amount is $1,200 but is applied after the "Tax Due" is figured along with $95 already withheld for a total refund of $1295. The "Child Tax Credit" is figured under "Taxes and Credits" while the "Additional Child Tax Credit" is figured under "Payments".
    1. Is the new Credit going to be figured off of the "Tax" amount before other credits to determine eligibility.
    2. Is the new Credit going to be applied before or after the "Total Tax" (example. 2007 1040 line 63) total is figured.
    Knowing "where" this knew "Credit" will be applied on the 2008 Tax forms will help us know what to expect.
  • Moe
    In signing the stimulus package, did this eliminate the current child tax credit of $1000 for tax year 2008?
  • kimm
    I was wondering if your 2007 tax refund was offset for child support will the rebate be offset as well?
  • Moe: There's no legislation that I know of to eliminate the Earned Income Tax Credit.

    kimm: If you receive child support, it will not be considered when determining your earned income for the purpose of the calculator.
  • labellemoma
    if you make at least 3000 in income, including social security benefits , you will be eligible for 300 per individual, 600 for mfj staus. If you had any tax liability up to 600 for individual, 1200 for mfj, you will get that amount. also for any child who qualifies for the child tax credit and is your dependant you recieve 300 per child. Now, next year when you file your taxes there is going to be a new credit applied to tax liability that you wont actually get. But you will not have to pay any of the stimulas refund back. maybe this will help clear things up.qualifying social security does not enclude ssi.
  • So, it this tax credit a way to stave off a recession until the Democrats get into office?
  • Betsy
    OK, so just to make sure that i'm understanding this correctly.

    We are a family of 3, married filing jointly, with 1 child. WE recieved a refund of around $1500 this year, for the 2007 tax refund.

    So, in May we will get $1500 (according to what are income is in 2007 adn having a child)

    So when we file our taxes in early 2009 for the 2008 tax season, then there will be a line for the tax stimulus package. IF we get a check in May (or there abouts) then in 2009 when we file our 2008 returns, we will still get our regular $1500 (or so give or take) refund in 2009??? (unless of course we add a new tax credit by having a child or buying a home in 2008, in which case we get more in our returns) . So, they are basically spliting up our tax returns for the 2008 tax year, and sending us the extra now, and then our regular refund in early 2009? Am i understanding this correctly. So, we will get a refund in 2009, and the "rebate" we get in May will not be subtracted from our normal refund we would be intitled to in 2009, due to over withholding from our paychecks? Correct??
  • Bob
    Ok.
    Just found new info on IRS website with examples. Finally.
    The eligibility is figured on Tax liability BEFORE the Child Tax Credit is applied.

    Still don't know if the New Rebate Credit shows up as a positive number, on the final 2008 returns, figured under the Payments section or if it is figured under Credits and Taxes, like the Child Tax Credit, to achieve a not less than 0 Tax Amount.
  • RMom
    Quick question, please:

    My husband receives Social Security disability benefits (NOT SSI). Because these are not taxable they are not reported on our tax returns so will this income be included in the calculation for the rebate?
  • Bobbie
    Question,... If my only income in 2007 was from Unemployment (Taxable and definately was taxed) and also from closing out my retirement and the seriously taxed me on that too. I also had a small paycheck from my employer. Only like 200 dollars but all added were more than 3,000 dollars.
    My question is, would I qualify for the rebate or the new credit in 2009 ( for 2008 tax year) ??
  • For everyone curious about whether they'll receive the rebate and how much, please use this calculator, paying close attention to the detailed instructions.
  • Andy
    Betsy, the answer is yes.

    Instead of getting $3000 next year, you will get $1500 of it in May and your regular $1500 next year.
  • Bobbie
    hmmmm.. I wondered because they wouldn't let me clain earned income on my children except for the 200 dollars I made from my employer. So I didn't understand if I would actually get the new credit on unemployment and my retirement. I still dont understand why they wouldn't credit me but yet they could tax it. But, whatever. Government!
  • Matt
    Does the stimulus plan contain provisions to eliminate the 10% tax bracket, the lowest tax bracket, to zero percent for one year only?
  • 1953greg
    still sounds like an advance on next years refund (if applicable) to me!!
  • confused???
    I have looked everywhere and I can't find the answer.....Someone at work told me that we will have to pay a tax of 41% off of this tax rebate? Is this true? Do you pay tax on a tax refund??
  • confused: generally, don't believe what you hear around the water cooler unless you work for a tax accountant. You won't owe any federal tax on the rebate/credit you receive. There is more complete information on the post containing the calculator.
  • Layered
    Our money is already spent on doctor's bills. This whole thing is just a diverson to get the angry voters off the backs of both houses of congress. This will stimulate the economy about as much as an aspirin will stimulate the libido!
  • Sandy
    My mother only receives SS. She has not had to file taxes for years. We filled out the 1040A for her to get her $300 rebate. However, she has not mailed it. She's afraid she'll have to pay taxes on it next year. We're wondering if it will considered income next year? Will she have to file another 1040A next year too? This is so confusing...help!
  • Sandy: Your mother will not owe federal taxes on the credit next year for receiving the credit this year, but she won't receive the credit next year unless the IRS determines that she's due a larger credit. In that case, they'll send the difference next year... but no additional federal taxes will be *owed* and the credit will not be considered "income" for federal tax purposes.
  • lyz
    if we qualified for the EIC- thus we paid nothing in taxes but got all of our taxes back (we're starving students with a house and two kids) do we still qualify to receive the money? income is about 35k- so we are over the 3,ooo- but since we didn't pay anything i am wondering if we still get it... this is all just confusing to me.
  • Cody
    This sucks. I just found out that by "child", they mean any dependant. This includes college students not able to recieve a refund from the Economic Stimulus Plan.

    I live in my own apartment, pay my own rent and utlities... Yet I don't qualify as an independant because I am under the age of 25 and am in college.

    Not only that, I will have to suffer the hike in taxes next year to pay for this crap.

    Must be nice adults. I guess I am back to my $8 an hour job to take-from-the-poor and give-to-the-rich.
  • I haven't bothered to read everyone's response here; am I the only one convinced that it's a politically-motivated sop to the tax paying masses (remember 'bread & circuses'?), funded by fiat currency that's completely worthless in intrinsic value? Nothing but vacuous staring into space out there...? What the hell do I mean? Anyone study macroeconomics in college? A politically motivated demand-pull "solution" using fiat currency is putting the bloody fire out with gasoline; SAVE YOUR REBATE! Invest it, don't just consumption-spend! If you just have to spend it, spend it on something that'll bear a true positive return way down your financial road (numismatics, anyone?). Cheers & the best of luck (tho' I don't believe in that, even!)...! (^)(^)
  • Brenda Coleman
    If someone owes money to the state for welfare that his exwife received, will they still get the rebate or will the state take it.

    Thank you
  • Ben
    Here's a link to the IRS website that clears up how the stimulus package will affect your 2008 taxes:
    http://www.irs.gov/newsroom/article/0,,id=17918...
    Go to the very bottom of the page, and see the 4th from the last question and answer:
  • Tracy
    so let me see if this is right,

    if i get back 1500.00 back from taxes in 2008 from 2007

    next year in 2009 i will get back say 300.00?

    if I get a check for 1200.00 this may
    everbody is saying it is not free money that the goverment is giving us

    thanks
  • Matt
    I keep reading where the check (rebate) you receive will not affect next year's taxes. Ex. If I was to get $1500 back next year (as part of my 2008 tax filings), and I receive a $1200 rebate this year I will just get $200.

    Ok. I see that. But will the tax rebates be sort of built into the 2008 1040 Income Tax Table? Ex. the 2007 tax table for Taxable Income of $89,000 Married Filing Jointly has tax owed of $15,104. All things being equal in 2009 when filing 2008 taxes would that same $89,000 have taxes owed of $16,304?
  • Matt: The 2008 credit will not be built into the tax table. It will be a separate credit, like it is this year (for 2007), except it will supposedly be on the 2008 1040 form. If you receive the credit this year, you won't receive it next year (unless you're owed more due to a new child, for example, in which case you'll receive the difference).

    In your example in your first paragraph, that's only true if the "$1,500" you get back next year takes the $1,200 credit into account. If that's the case, then you won't receive the $1,200 you already received as an advance, you'd get a refund of $300 (not $200). But this also means that without the stimulus credit, you would have only received a $300 refund anyway. So your "real" tax stays the same in 2008.
  • Tracy: It's not free money because someone is paying for it, somewhere. This "rebate" is an entirely new credit which will appear on the 2008 tax return. If you qualify now, you'll receive it this year *as an advance* and you won't receive it in 2009 when you do your 2008 taxes. That's all there is to it, really.
  • Dustyn
    So if the 300-600 dollars given to me exceeds the amount of the rebate I would normally recieve from federal income tax from 2008 tax filing, does that give me the money here in 2008 instead of 2009 and wipe out my rebate for 2008 returns but allow me to keep that overage? So I won't get anything in 2009 but I will not owe for the surplus either?
  • What The??
    I've read it all and am lost. Let's make this easy, I just did my 07 taxes and got back $1,000. In May, I get this stimulus refund of $1,200. Keeping everything the same, when I file in 09 for my 08 taxes, is my refund still $1,00 as it was in 07 or do I owe $200 because I got an advance this May?
  • OPT F1
    I'm working now using my O.P.T., which is tied to my F1 visa. Am I eligible for the tax rebate?
  • msMommy
    I have read over the majority of the comments posted...however, nothing was stated in regards of a couple that isn't married (we are engaged) but have an infant?! Would BOTH of us get a refund, seeing as we BOTH filed seperate refunds!? How much money to you calculate?

    Thanks for your help!
  • KB
    to by What The ?? comment #63...I think I finally understand...your next years refund will still be the $1000 because the new years tax forms will have a way to zero out this check in May
  • lommie50
    my tax refund was off set by a old student loan. Will the irs keep the stimulus check for mr as well as my child
  • Kidd
    If a spouse passes away during 2007, would it be wiser to not except the rebate this year and apply it to next years return when the survivor will not have the advantage of filling a joint return?
  • Denver
    Good info in this thread. Here's my question: Let's say I fill out my tax return and I owe $2,000, and I qualify for an economic stimulus rebate of $1,500. If I include a check for $500 with my tax return, will the IRS just keep my rebate amount of $1,500, and we're all even?
    Thanks...
  • Baffled
    Could you give more explaination on EITC? I read on one site that if your income was equal or greater than the stadard deduction for your catagory plus the number of dependents you claim then you are eligible for the $600 plus $300 per kid. A buddy said that if I had no tax liability that I would only be able to get $300 plus $300 for my kid.

    Which is correct? Thanks!
  • BobH
    Nothing our government does is ever simple and straight forward. This complicated rebate system operates just like the credit card companies by linking it to future tax return in 2008. These morons make me sick. I suspect Bush's tax credits for the rich are not as complicated....
  • Fallinghardcore
    Let's say i got direct deposit on my tax return, then closed the bank account. Where will my check go? Will my check be sent to the address on the W-2?
  • Nancy
    Will the government take the economic stimulus from what isowed in back child support or student loans? Also, are the economic stimulus being sent separtely to the husband and wife, or in one check providing we file jointly?
  • Kelly
    Here's my question on it:

    I worked full-time in 2007 so I know I'll qualify for $900 (dependent). My question is in my 2008 return. I'm not working this year (I only did for the first part of January). I'm going to college full time. I'm also having a baby this year. If I was working full-time this year, I understand that I'd probably get another $300 for the child I'll be having this year, but how does this affect me since I'm not working this year?
  • willie
    If I owe tax from previous years do they deduct the stimulus payment from what I owe or will they just omit the people who owe the government.
  • Fallingharcore: If the bank account that the IRS has on file for you is closed, then the direct deposit will fail, and the IRS will send a check to your address on your 1040 (not W-2).

    Nancy: The government will use the payment to cover any back taxes owe, it depends with child support and student loans. If you filed jointly, the payment in the form of one check or direct deposit will go to the primary (first) SSN on the 1040.

    Kelly: If you don't qualify this year, next year's tax return (filed in 2009 for 2008 income) will have the credit as a line on the form. You'll get another chance to qualify.
  • Amy
    Nancy, yes, the government WILL take what is owed in back child support if the AG's office filed for it just like they do with the regular refunds. And yes, the check will go to BOTH the husband and wife together if that is how you filed your 2007 taxes originally.
  • james
    I know the IRS will apply your stimulus to your back taxes, but if you owe for 2007--is that consider back taxes? Soory if that is a dumb question, but I can't get a straight answer on this. Even the person at IRS didn't know for sure. I filed my 2007 taxes on 3/19 (electroncially) and owe $213. I hadn't sent the payment yet. I haven't even got a bill from IRS. The lady I spoke at IRS this morning said the tax due bill will not go out until mid-May. So, will they deduct the $213 from the $600? Or will I get the $600 direct deposited and have to pay the $213 via online or by mail? I'm supposed to be in the first group (17) but nothing has been deposited yet...
  • You're not making any sense in this paragraph: 'To summarize, the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income, but it is a new credit, so you don’t have to “pay it back.”' First of all, what is meant by a 'new credit'? Is there such thing as an old credit, and do you have to pay back old credits? Secondly, what about most of us who get tax rebates each year? You only address the situation where taxes are 'owed'. Completely not following you.
  • onthuhlist: You don't receive a rebate every year. You may receive a *refund* every year. Here's how to break it down:

    Congress authorized a new credit which will appear on your 2008 income tax form (which you file in April 2009). This is the new tax credit described. (The EITC would be an example of an "old" credit and is unrelated to this topic.)

    Congress has also authorized a special PRE-PAYMENT (a check to you from the government) outside of the tax return filing process with an estimation of what you'd probably receive for this new credit, but based on your 2007 income instead of 2008 income. This is the payment you will receive in the next month or so if you qualify, regardless of whether you owed taxes when filing your 2007 return or qualified for a refund.

    When you fill out next year's taxes, you will see a line for the credit. But you already received the payment in advance. So you will not claim the credit next year, nor will you "owe it back" to the government. If you qualify for a *larger* credit at that time (because it'll be based on 2008 income rather than 2007 income), you will receive the difference.

    If this isn't clear, seek a tax professional.
  • anjeee
    I've been searching high and low for an answer to this question, but can't find one.

    if someone earned income (say, $15k) from self employment, and would have owed a couple grand in self-employment taxes, but those taxes were offset by the EIC, thereby causing the person to receive a tax refund (even though they never actually PAID any tax because it was offset by the EIC which actually resulted in the person receiving a refund) is that person still eligible for the stimulus payment? they did in fact earn more than 3k in income, but didn't end up paying any taxes due to the EIC. and if they WILL receive a stimulus payment, will they receive the additional amounts for their children as well?

    thanks so much.
  • Tom K
    If you receive the rebate check this year, what would happen if, theoretically, you had no income in 2008? Why _wouldn't_ you have to pay it back at that point? The credit doesn't have any actual tax liability to offset.
  • The way the law is designed, you get to keep the higher payment based on either 2007 or 2008 income. If 2008's is higher, they'll include the difference by reducing your final tax bill or increasing your refund. So you could receive the payment this year and keep it even if you don't qualify for the credit next year. The supposed goal is to stimulate the economy ASAP.
  • Sammy
    I owe $$709 for the year 2007. The IRS received my return on 02/06/08. They said it STILL IS NOT PROCESSED. They told me they process the returns that get refunds first. They CLAIM that this should not delay my stimulus check.(one agent)(the next one I talked to did not know and could not figure out why my return is taking so long to process!!)NO TWO ANSWERS ARE THE SAME! Should be in the first batch to be mailed last two digits (05)on May 9-16. But, I really don't belieive them!! One person there says one thing the next another. They are people just normal people working a job and they just as confused as the rest of us!! I am not counting on anything until I see it in my hands! And, they can wait for payment of $709 until they finally process my stimulus payment!! They would probably lose my payment if I sent that to them!
  • Sammy
    According to the person I talked to: They will deduct the $$ you owe from your stimulus. But, they process people's tax returns who get a refund first. They received my 2007 on 2/06 and still have not processed it because I owe $$709. SO, according to all the articles that I have read, your refund MUST be Processed by APRIL 15 to get your stimulus on time. Also, if you owe..... You will receive a check and not Direct deposit. One IRS agent told me it won't delay the stimulus payment if you owe, I don't really believe this! Check out my posting below!
  • Quasibozo
    This forum should be titled: "How to take a simple question and segue to quantum physics." Reading all of the comments above I get the idea that this is how issues get composted in congress. The bottom line is it is of no consequence to next years FEDERAL taxes. The new question is: "How does the Economic Stimulus Rebate affect our STATE and LOCAL taxes?"
  • kyo34
    if i had a baby in november will i get the stimulus check for him as well. my wife and i qualify for the 1200. so would i get 1500 based on my child?
  • Sammy
    Some states have decided not to tax this money
  • Nicole
    My ex husband and I live together on his taxes for 2007 he claimed me and our duaghter on his taxes. He recieved $500 for claiming me on his tax return. Will he receive $300-$600 dollars on his stimulus check for claiming me on his 2007 tax return?
  • michael
    i made 23k last year, i was suppose to get 1200 dollars,600 for me and 600 for my wife who doesnt work, we always file joint, i recieved barely more then 1k, i must have been taxed on it.
  • Sean
    What bothers me about this whole "rebate" is that it is not a rebate at all. For the people that barely qualify for this money, they didn't pay and don't pay income tax at all. Therefore this is free money for those that are low income.

    Consider this your $1200 welfare check.
  • Dianne
    We submitted our 1040 electronically. Near the end of this process, we were asked to “verify the salary” in a box provided. Regrettably, this resulted in a doubling of the reported salary, which in turn, made our adjusted gross income too high to be eligible for the stimulus payment (rebate). We detected this unfortunate error only after our 1040 had been accepted. We corrected the error by submitting an amended return (1040X), which made our adjusted gross income well within the range to receive the rebate. When can we expect our rebate and will it be directly deposited like our anticipated 2007 tax refund?
  • Big John
    Well, I liked the stimilus package when I first heard of it, the President explained it as a SIMPLE way to receive money. He said it is so SIMPLE--you get $600.00 EACH for a married couple that had a certain income, which equals $1200.00 total. EASY RIGHT. Well, I lost around $7000.00 by theft last year so I sent a copy of the police report with my return and deducted this loss. WELL, you guessed it because I lost $7000.00 and received a refund on all money I paid in I only received $600.00 for me and my spouse. SO, I lost twice financially. I just hope there is not a way for me to lose anymore money. The "stimilus" package as presented was really going to help, but did not help me and appears to only be for the people who make more money. PLEASE explain WHY Congress took a good idea and made it so complicated, because it did not help me--due to my theft loss.
  • Nancy
    My daughter recieved her stimulus check and realize her tax form indicated 0 dependent children, which of course reflected an decrease in her stimulas amount that she recieved. She has 2 children. How can she correct this to obtain additional money?
  • Jules
    My friend is worried that she might not get the stimulus payment because her only source of income was from child support last year and from a winning lottery ticket. She lives with her boyfriend, but he did not claim her as a dependent. She filed taxes from the child support and the lottery ticket for a total of 12,900. She has two children, so shouldn't she get $1200?
  • kim
    If a person who is a dependent on someone elses tax form (and that person received a rebate), filed separately, and received the rebate on their own, what would happen?
  • ED
    2008 income planning for stimulus checks for http://www.consumerismcommentary.com/2008/02/08...

    Apparently a key tax planning issue for some is to make sure they have at least $3000 in qualified income in 2008 (if they did not in 2007).

    My situation may be true of many. Retired (hence no earned income). Had been debating whether to start social security payments or wait to full retirement age (have other funds to live on). In 2007 I received no social security and it is too late to change this. If I start social security now I can receive over $3000 in 2008. Since I have dependent children (young wife) it appears we could receive $1200 for children and $600 for us. If correct, this becomes a big incentive to start social security now (which means a lower annual payments in future years).

    Is my understanding correct?

    I can imagine similar situations for others who did not receive full benefits based on 2007 income, such as someone who can take a short term job for extra income, (or someone with a small business whose earning are near $3000 per year) who may want to manage things to have over $3000 in qualified income in 2008 (delaying expenses, taking income a bit earlier, etc.).

    Since your can social security checks before full retirement age (65 to 66) and then repay the money and start at full retirement age, it appears many who have stopped working after 62 should be sure to get social security checks in 2008, even if they will later repay them so their future checks will be larger.

    If I understand correctly, how come these strategies are not being more widely discussed?
  • layddevious
    From what I have read on these blogs , my take on the economic stimulus check we received earlier this year is NOT supposed to make any difference in what our refund will be when we file our 2008 taxes. However according to H & R Block tax calculator we have to state the amount we got. It does reduce our refund by the exact amount we received. I did two scenarios with their calculator. On both I put head of household, 1 dependent, and that I made 35,000. I also entered in the same amount for the federal taxes withheld. The first time I entered that I recieved 900 for the stimulus the next time I entered 0 ( that I did not recieve a check ) The expected refund was exactly a $900.00 difference. How is that not taking that money back??
  • Ladydevious: It's pretty straightforward: there's a new credit on the 2008 tax return forms. Either you received an advance for the credit in 2008, like most people did (the economic stimulus payment) or you're getting the credit on your tax return form. The net effect is the same.
  • bet_d
    Going back to the scenario provided by layddevious, I did the exact same thing. I agree that we are paying this back. This was nothing more than a loan or an advance that is now being paid back with the 2008 tax return. Right?
  • bet_d: It's not being "paid back." It's a new credit on the 2008 income tax form. You received yours early (in 2008). You received your credit early, like most people in this country. Since they gave you your credit already, you don't get it now (again).
  • Damien
    I too am running into a problem with H&R tax cut software where my rebate amount is deducting money from my federal return. I was under the understanding that the tax rebate last year would not count towards our return this year because of the "new credit" it was suppose to be applied as (think: child credit for example).
  • Damien: It's not a problem. What you're seeing is the fact that you already received your stimulus credit. The people who haven't received it yet will have it added to their tax refund (or subtracted from their amount due).
  • Damien
    Well bummer.
  • topeka
    Your friend is worthless and should get a job and stop being a drain on the rest of society.
  • magic
    if i recieved only half of what i was supposed to get in the stimulus rebate, would i be getting the other half? or would it just balance out even.. basically what im saying is i only got half and since , i only got half do i have to pay it back since im eligible for the other half...

    which would make my income tax return just like normal...
  • matt
    Well what a rebate! The goverment failed to tell the taxpayers that the credit they recieved in 2008 will be taken away from any tax refund in 2008 taxes. For example i started my taxes today and there was a question that asked how much i recieved in the rebate program. I recieved $300. When finished with taxes I felt the return was low and went back and checked that I did not recieve a rebate and calculated again and the refund was $300 larger, so uncle sam is taking back his "rebate". I don't understand, every article I have come across has said you don't have to pay it back, but in the end you DO!
  • Matt: The government is not taking back the rebate, it's just not giving you two. The stimulus payment and the "recovery rebate credit" are the same. You already received your check in 2008, so you're not receiving the credit (again) in 2009. Just because you felt your return was low doesn't mean that you're receiving less that you are supposed to. Of course your *refund* would be higher if you calculated again saying you didn't receive the credit last year. But you did receive it last year, so you can't get it again this year.

    Yes, the government did a poor job of enacting this credit in a way most people would understand. But it is a simple concept. You can't receive the credit twice.
  • leah
    The way they are telling things on this site is wrong!!! I have done my taxes already and how they explained it to me is totally differnet than what they are printing. You are paying these rebates back, they are also makingn you claim more on you return than what you actuallyn got. My rebate i recieved was 600 dollars, my husbnd received 300 dollars, they sent our return back stating that it was wrong, we had to claim what we COULD HAVE RECEIVED like for 3 dependants is900 dollars and my husband could have recieved 600 dollars based on our income so thats what they are making us claim takin off 1500 dollars for these tax rebates. If it was going to be used against us in the end why did they send these rebates to us.
  • Leah: Sounds like you need a better tax accountant. Whoever "they" are who told you this are completely wrong. The information is plain and simple on the form instructions published by the IRS. This site is helpful as well. Good luck!
  • Ellen
    I am sorry I should have said we recieved $1200 last year and now we should recieve $1500, right?
  • Becky
    What I don't understand, is why the state thinks they can get paid from our rebate check. Just did my taxes with Liberty Tax Service, and they said there is a handful of states, Oregon included, that are deducting the amount we received for our rebate check ($1200 for us) from our tax return this year. We can usually receive around $1400 back from state, but this year we are barely getting back $200 because of the rebate check. WTF?! Can someone please explain how it is right that we are being taxed on a tax credit? I was told by the tax service that because of this, some people will actually owe money to the state.
  • erick
    If you are paying in for taxes you don't have to pay back the stimulus you received. (you don't owe more $ than your taxes)

    But if you are getting a refund you will get less than expected because you have already gotten it months ago.

    Seems a little unfair to me
  • Erick: That's not an accurate statement. In terms of the economic stimulus/recovery rebate credit, there is no difference between those who owe taxes after filing their return than those who will receive a refund, other than the obvious. The only difference is between people who received their full economic stimulus payment in 2008 and those who did not.

    Andrea: You're probably right. I know I tried to get out the word that the economic stimulus payment was just an *advance* on a new tax credit, but the government didn't do a good job of communicating and explaining to the public. In all, over the course of the last year and tax returns filed this year, the payment was above and beyond normal taxes, but it doesn't appear that way to many people.
  • Oracle
    Please clarify for me.
    The company I worked for closed and so I had to do just any work I could find.
    However I still didn't net enough money in 2007 to qualify for a stimulus check.
    If I do find that I net enough wjen I file my 2008 return, will I receive the stimulus check offered for the 2007 return?
    If so, will it be as a refund on my 2008 return?
    Or will I not receive anything at all?.
    I am confused.
  • Oracle: If you now qualify for the stimulus (called the "recovery rebate credit" on the 2008 returns), you will receive the stimulus as a form of an addition to your tax refund (or a decrease to the tax you owe).
  • michele
    If I didn't do research on this, I would still be clueless to how the stimulus check worked. The way the govt explained the stimulus package to me is totally different than what I am finding now, now that I am preparing my taxes. This should have been explained clearly to citizens as to that it was an advance on our tax refunds for 08. I never heard that spring of 08. If I would have known that, I would have done something different with the money.
  • Ricer46
    Wrong michele,
    It turns out that the "rebate" was merely an interest free loan. A $600 rebate results in having to pay an additional $600 in taxes this year unless you earn more than $75K.

    Ed. note: This comment is incorrect.
  • Ricer46: I suggest you read the post at the top of this page and my above comments (in green). People who received a stimulus check last year DO NOT have to pay "more" taxes. It is the people who did NOT receive a stimulus check who are eligible to receive that stimulus as a part of their refund (or to reduce the amount of tax they owe).
  • Ricer46
    No, you're going to have to pay the $1200 back!

    Ed. note: This comment is incorrect.
  • CONFUSED
    I am confused. Last year my wife and I received a refund of around $900 from my 2007 return. Our income has not changed this year (everything is exactly the same) but after filling out our 2008 return and putting in the amount of the Economic Stimulus check Turbo Tax says that I owe $55. Before I put in the amount of the Stimulus check my refund was $854. Tell me how this is possible if the Stimulus check is not being deducted from my refund.
  • Confused: There are a number of ways that is possible. There are more variables that come into play than your income. Take your taxes to a professional if you have questions about your particular tax return. Most importantly, are you sure that was your *refund* not the stimulus check that was $900 last year? Basically, what you're saying that that your refund *and* your stimulus check were both $900 last year. If not, you are either comparing apples with oranges or you entered the wrong amount as your *stimulus amount* in this year's tax return.

    Entering $900 as your stimulus payment in the form will result in your supposed refund dropping $900. Until you enter $900 on that line in Turbo Tax, the software assumes you didn't receive a stimulus payment, which according to your note, you did. Ignore Turbo Tax's calculations until you are done entering everything on your tax form.
  • confused
    My 2007 refund was $900. My wife and I received a $1500 Economic Stimulus check ($600 for myself, $600 for my wife, and $300 for our son) later that spring so $900 was not the stimulus check. I am not complaining because I will not have to pay back the extra $600. I am just stating that the money received from the stimulus check reduced my 2008 refund. I have been using turbo tax for about five years now because our tax return is fairly simple so I don't think it is anything new with my return. The CPA that did our taxes the five years before that did not find any other deductions the first year that I conpaired the two and cost around double what turbo tax costs.
  • Confused: Perhaps a better way to look at it is that the economic stimulus increased the money you've received (back) from the government overall. If the economic stimulus (and recovery rebate credit) didn't exist, you'd have the same tax bill this year, owing $55, but you wouldn't have received the $1,500 last year. Overall, you're not paying anything back, even if year to year, your numbers make it look that way.
  • Heather
    My tax preparer didn't figure my refund as being reduced because of the stimulus. The information wasn't entered anywhere on the return, and was only used to calculate whether or not I was due a Rebate Recovery Credit. Which I was not.

    Methinks you are entering the amount of your stimulus on the line that ask for how much the Recovery Rebate credit is, and reducing it as a payment already made to you.

    And we all know how much trouble our new Treasury Secretary almost got into for using Turbo Tax.
    I'd rather spend the extra money and make sure it's right.
  • becky
    I asked a question and it never showed up on here... weird. well Id like to know when people are being reimbursed if they got less than they should have in the stimulus check,
    For example I got 698 but the calculator says I should have received 900. 600 for me and 300 for my daughter. I did not receive the 202 dollar difference with my regular tax refund. When would I receive it?
  • Tax Apprentice09
    I see that there is a ton of confusion regarding taxes this year. To help simplify this problem I have included some thoughts for you to consider.

    - Tax software included the stimulus rebate as INCOME which it should not be doing, this should have been fixed in many of these applications. If you are noticing that the tax rebate is lowering your tax return, then you should look for an updated application or file your taxes using the IRS tax form.

    - As stated above, do not include the stimulus rebate from last year as INCOME! If you follow the 1040 closely, you will notice that if you do NOT include the stimulus from last year as income that there is no place for the stimulus to lower your return. On the line pertaining to the Recovery Rebate Credit, follow the RRC worksheet in order to determine the amount to list. The chances are that if you received the rebate last year that you will enter a 0 on this line.

    - It pays to consult with a professional tax advisor/preparer because of situations like this. The IRS has rejected over 15% of returns because of these errors.

    - The stimulus was an advance of the RRC that is offerred on this year's tax form. It does not need to be paid back and is not a government scheme to rob the American people. Before jumping to conclusions get the correct information.
  • ricer46
    That's what I thought too initially, but it's not so. It's just an illusion. There are some who did not file for their rebate last year. If you did not, then you get it this year, if you did, then you don't. Turbotax begins by assuming that you did not receive the rebate, and adds $600 to your refund. Then when you tell it that you did get the rebate. it removes it. Unfortunately Intuit does not explain this well at all, but a bit of research will turn up the proper explanation, and yours is not it,
  • ricer46
    Yeah, I finally figured it out. Thanks.
  • Tax Apprentice 09
    I am sorry that you feel my information is not helpful. I am trying to provide relief to those that believe they are being ripped off. I have completed a number of tax returns this year and none of them have had the problems that people on here are having. I have provided this same information to contacts that completed their taxes by themselves and they found that the online program at the time was wrong (before the updates on certain ones). If you want to get your REAL refund back, then heed the knowledge presented and double check your return instead of relying solely on a third party program (These programs are usually very reliable but the stimulus rebate created confusion in the programming).
  • Tax Apprentice 09: The information you've provided is helpful. Thank you for sharing. People continue to have questions due to the way online tax preparation software tallies the refund/bill.
  • Katie
    Hello. I am very confused about one thing. I did not receive the stimulus payment last year(2008), so I did receive it this year. Is what I received the "rebate recovery credit"? I've also had a few people tell me that I will also receive later in the year 2009's stimulus payment. Is this correct? Please someone help me! Thanks! ktnicole05@gmail.com
  • AnnieKnot
    Help has arrived – I will have no financial worries from now on! As the woman on YouTube predicted, I don’t have to worry any more about paying for my groceries, my gas, or my mortgage!

    As part of the 95% of Americans who will see their taxes reduced and thanks to the largesse of ReidBamaLosi, I am ecstatic to report that I now have $22 more each month than I have had before. What should I do first? Pay down my mortgage? Take that dream trip to New Zealand? Fund my grandkids’ college? What else can I do with this windfall of 73 cents per day? Should I start socking it away right now to start funding the future tax increases that are inevitable? That would be the patriotic thing to do, right?

    For these golden opportunities, I say thank you, Jesus! No, wait, can’t say that, no reference to religion or God, bad, bad to do that. So whom do I thank? Oh yeah, forgot, thank you to my Big Brother, my Government, who now has an endless supply of funds to support me and all of my fellow citizens, and not-so citizens, for the rest of our lives. An endless supply of money just like the loaves and fishes – no, wait, there I go again with another reference to something, shudder, religious. Thank you, China! Your altruistic generosity is inspiring knowing that you expect nothing in return. Thank you to my dear grandchildren who now have the privilege of paying for this – in more ways than one - for the rest of their lives.
  • dunobk1
    ok they say that we do not "pay back" our stimulus payment, but that is a down right lie... let me explain.. if the stimulus check was an advanced credit towards what i owe on my taxes in 2009 then its exactly that..u would think. for example i payed roughly $4,600 in taxes in 2008, after filing my taxes they figured how much i owed leaving me with a return of $3,700 ok taxes payed right and if the stimulus was simply a credit towards what i owe for 2008 then it should have been used towards that $900 that i owed to taxes.. well the last thing they do at the tax center is ask how much i got from the stimulus check, after entering that number..which was $600.. boom my tax return drops from $3700 to $3100 so if that is not paying back the stimulus payment please tell me what the heck it is. i called the irs and even they could not explain it, the "professional" on the phone said its like gettin 100 points at the start of a school class and at the end if u dont get any points taken away, then you end with zero... what is that crap someone shed some light on the situation please!!!
  • peggr
    What number did you call to actually talk to someone? I ended up in auto-attendant hell for 20 minutes and still didn't get to talk to anyone.

    thanks,
    Peg
  • Aimee
    I agree with dunobk1. Our return dropped the EXACT amount we were "given" in that piece of crap stimulus check. I hate the government, I really do.....
  • peggr
    We got trapped by the last "tax reduction" in takehome pay in W's administration, because even though the withholding was reduced, our tax liability was NOT. I see this happening again. We got socked with a huge tax bill for 2008 even though we are both deducting only 1 person, have the normal homeowner and charity deductions. Is this going to get even worse with this new so called tax reduction?
  • Newcomer89
    Hi, this is my first year filing taxes and I am new to the stimulus, I did not recieve that much back, but I was wondering will I be affected by the stimulus? Also I am no longer working. Please reply. Because I thought it was supposed to help us "Poor" people.
  • Damien
    Did your friend purchase a new home? There is a new home buyers credit for $8000 for both 2008 and 2009 now.
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