The facts: 2008 economic stimulus payments

  • Published
  • By Tech. Sgt. Brian Mayhew
  • 36th Wing Legal Office
According to the Internal Revenue Service's webpage, beginning in May, the Treasury Department will begin sending economic stimulus payments to more than 130 million households. 

The IRS advised taxpayers that in most cases, they will not have to do anything extra this year to get the economic stimulus payments beginning in May. "If you are eligible for a payment, all you have to do is file a 2007 tax return and the IRS will do the rest," said Acting IRS Commissioner Linda Stiff.

Notices
Most taxpayers will receive two notices from the IRS. The first general notice from the IRS will explain the stimulus payment program. The second notice will confirm the recipients' eligibility, the payment amount and the approximate time table for the payment. 

Taxpayers will need to save this notice to assist them when they prepare their 2008 tax return next year. Stimulus payments made by the government to eligible taxpayers must be claimed as income on 2008 tax returns.

Anyone who moves after they have filed their 2007 tax return should notify the IRS by filing Form 8822, change of address, and also notify the post office.

Basic eligibility
The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will equal the amount of tax liability on the return with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return) and a minimum of $300 for individuals ($600 for taxpayers who file a joint return).

Even those who have little or no tax liability may qualify for a minimum payment of $300 ($600 if filing a joint return) if their tax return reflects $3,000 or more in qualifying income. For the purpose of the stimulus payments, qualifying income consists of earned income such as wages and net self-employment income as well as Social Security or certain Railroad Retirement benefits and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. However, Supplemental Security Income does not count as qualifying income for the stimulus payment.

Limitation
To be eligible for a stimulus payment, taxpayers must have valid Social Security numbers. Anyone who does not have a valid Social Security number, including those who file using an Individual Taxpayer Identification Number, an Adoption Taxpayer Identification Number or any other identification number issued by the IRS is not eligible for this payment.

Both individuals listed on a married filing jointly return must have valid Social Security numbers to qualify for a stimulus payment.

Eligibility for the stimulus payment is subject to maximum income limits. The phase-out begins at $150,000 for married couples filing jointly and $75,000 for individuals. Married couples earning more than $174,000 will receive no stimulus payment, while individuals earning more than $87,000 will receive no payment. The phase-out is calculated by a reduction of 5% of the stimulus payment per $1,000 over the phase-out points of $150,000 and $75,000 respectively.

Individuals who have less than $3,000 of qualifying income will not be eligible for the stimulus payment.

Exclusions
Individuals who file Form 1040NR, 1040PR or 1040SS are not eligible for the stimulus payments. These returns are normally filed by Nonresident Aliens, residents of Puerto Rico and residents of the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands. Residents of U.S. possessions will be receiving their rebates directly from the possessions.

Also ineligible are individuals who can be claimed as dependents on someone else's return.

Stimulus payments will be subject to offset against outstanding tax and non-tax liabilities in the same fashion as regular tax refunds.

In addition, the IRS emphasizes the stimulus payments will not count toward or negatively impact any other income-based government benefits, such as Social Security benefits, food stamps and other programs. 

Additional information
The IRS.gov Web site is the best source for additional information and answers to questions regarding the stimulus payments. The site will soon have an online tool which will allow taxpayers to calculate the amount of their advance payment and to check on the status of their specific payment.

The Andersen Tax Center is open from 0800-1200 M-F. Monday hosts walk-ins for 1040EZ filers while Tuesday through Friday are for appointments only. Call 366-4TAX (4829) for an appointment or with help with your tax return.