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

This article was written by in Taxes. 140 comments.


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.

Updated March 21, 2011 and originally published February 8, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 140 comments… read them below or add one }

avatar RacerX

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

This isn’t income for 2008/09

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avatar 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?

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avatar 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?

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avatar 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)

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avatar Chad Bordeaux

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.

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avatar Funny about Money

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.

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avatar Chad Bordeaux

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.

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avatar 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?

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avatar My Dollar Plan

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.

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avatar 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?

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avatar shun

if i made 2,436 will ibe able 2 gt the rebate check

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avatar 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

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avatar Chad Bordeaux

I will just come in the mail. As long as you have filed your 2007 return, you do not need to do anything.

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avatar Chad Bordeaux

That should read “It will just come in the mail.” I personally will not be coming in the mail.

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avatar 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?

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avatar thomas

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.

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avatar 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?

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avatar Bryan

No, the rebate only applies to persons that made $3,000 or over in the year of 2007.

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avatar Adfecto

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.

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avatar 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.

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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.

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avatar 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.

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avatar 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?

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avatar Luke Landes ♦127,550 (Platinum)

GHR5: Your second paragraph is correct. The credit advance you receive this year will not reduce your normal refund next year.

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avatar 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.

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avatar 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?

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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!

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avatar 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.

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avatar 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.

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avatar dumb checker

You have to learn to spell in order to get the refund. This means that Bush will not recieve one either.

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avatar Brian

Apparently neither will you “dumb checker”… it’s recEIve. :)

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avatar 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.

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avatar Moe

In signing the stimulus package, did this eliminate the current child tax credit of $1000 for tax year 2008?

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avatar kimm

I was wondering if your 2007 tax refund was offset for child support will the rebate be offset as well?

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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.

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avatar Mark Pringle

So, it this tax credit a way to stave off a recession until the Democrats get into office?

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avatar 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??

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avatar 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.

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avatar 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?

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avatar 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) ??

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avatar Luke Landes ♦127,550 (Platinum)

For everyone curious about whether they’ll receive the rebate and how much, please use this calculator, paying close attention to the detailed instructions.

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avatar 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.

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avatar 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!

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avatar Matt

Does the stimulus plan contain provisions to eliminate the 10% tax bracket, the lowest tax bracket, to zero percent for one year only?

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avatar 1953greg

still sounds like an advance on next years refund (if applicable) to me!!

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avatar 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??

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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!

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avatar 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!

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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.

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avatar 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.

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avatar danielg

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!)…! (^)(^)

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avatar 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

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avatar 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=179181,00.html
Go to the very bottom of the page, and see the 4th from the last question and answer:

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avatar 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

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avatar 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?

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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?

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avatar 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?

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avatar 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?

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avatar 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!

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avatar 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

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avatar 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

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avatar 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?

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avatar 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…

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avatar 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!

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avatar 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….

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avatar 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?

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avatar 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?

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avatar 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?

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avatar 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.

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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.

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avatar 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…

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avatar onthuhlist

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.

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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.

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avatar 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.

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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!

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avatar 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!

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avatar 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?”

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avatar 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?

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avatar Sammy

Some states have decided not to tax this money

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avatar 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?

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avatar 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.

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avatar 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.

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avatar 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?

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avatar 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.

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avatar 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?

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avatar 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?

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avatar 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?

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avatar ED

2008 income planning for stimulus checks for http://www.consumerismcommentary.com/how-will-the-economic-stimulus-tax-rebate-affect-2008-tax-returns/

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?

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avatar 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??

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avatar Luke Landes ♦127,550 (Platinum)

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.

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avatar 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?

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avatar Luke Landes ♦127,550 (Platinum)

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).

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avatar 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).

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avatar Luke Landes ♦127,550 (Platinum)

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).

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