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To get this year’s much-talked-about economic stimulus payments – a.k.a. “rebates” – most taxpayers need to do nothing more than file their tax return. There are no special forms to fill out or special actions to take to receive a stimulus payment. Taxpayers should simply file their return and wait. The first payments will start to be issued in May.
However, some people need to take action.
Some low-income workers, Social Security beneficiaries, certain railroad retirees and those who receive certain Veterans Affairs benefits may qualify. Many do not normally file a tax return. But they should this year if they have at least $3,000 in qualifying income (see below). Some very low-income workers may amend their already-filed 2007 tax return (using Form 1040X) to include eligible benefits so they can reach the $3,000 threshold.
The IRS can’t determine a stimulus payment without a 2007 tax return on file.
What is qualifying income?
Filers may reach $3,000 of 2007 qualifying income with a combination of:
§ earned income (generally wages, salaries, tips, net self-employment income or nontaxable combat pay if the filer elects to include it as earned income);
§ Railroad Retirement benefits from Form 1099-RRB;
§ Social Security benefits (including monthly retirement, survivor and disability benefits, but not including supplemental security income payments) from Form 1099-SSA; and/or
§ veterans’ disability compensation, pension or survivors’ benefits received from the Department of Veterans Affairs
Filers can estimate their annual Social Security benefit or VA benefits by taking their monthly benefit and multiplying it by the number of months in 2007 that they received benefits.
Filers who have no tax liability for 2007 but do have at least $3,000 in qualifying income may get a maximum of $300 ($600 for joint filers) stimulus payment. Just file a 2007 federal income tax return with $3,000 in income by combining any of the above.
How to file a 2007 tax return to qualify for a stimulus payment
Taxpayers required to file a 2007 tax return do not need to fill out any other forms. Those who need to file a return in order to qualify for the stimulus payment should use Form 1040A. A sample Form 1040A is posted at IRS.gov as a guide for taxpayers who need to use this form to qualify for the stimulus payment.
Enter earned income, if applicable, on line 7. Put Social Security, Railroad Retirement and VA benefits on line 14a and nontaxable combat zone pay on line 40b. (Line 14a refers only to Social Security. However, to qualify for the economic stimulus payments, filers should use this line to include railroad retirement and VA benefits as well.) Finally, write “Stimulus Payment” at the top of the form.
Children and the stimulus payments
§ Filers with qualifying children will receive an additional $300 per child with a valid Social Security number. There is no limit on the number of qualifying children for which a taxpayer can receive payments.
§ Qualifying children are those who meet the rules for the Child Tax Credit. Generally, that’s a child who is age 16 or younger on Dec. 31, 2007, and is the filer’s child, stepchild, foster child, sibling, stepsibling, or a descendant of any of them (for example, a grandchild, niece or nephew). Other factors may apply. See Publication 972, Child Tax Credit, at IRS.gov or order it at 1-800-TAX-FORM.
§ Children, including students, who can be claimed as a dependent on someone else’s return do not qualify for their own payment, regardless of income or whether someone else does claim them.
For official information, forms
The official online source for economic stimulus payment updates is www.IRS.gov. Taxpayers can get forms and other information there, or order forms by calling 1-800-TAX-FORM between 7 a.m. and 10 p.m. The IRS’s Taxpayer Assistance Centers also carry forms and publications, as do some libraries and post offices.
Free tax help
Low income individuals who need to file a return this year to receive a stimulus payment may be able to take advantage of thousands of free tax preparation sites nationwide. Call 1-800-906-9887 to locate the nearest VITA site.
Seniors can use the Tax Counseling for the Elderly (TCE) program which provides free tax help people 60 and older. IRS partner, AARP, offers the Tax-Aide counseling program call 1-888-227-7669 or visit www.aarp.org.
Beware of scams
The IRS will sendinformation about the stimulus payments through the regular mail. Beware of phone calls or e-mails from IRS imposters soliciting personal information and promising a “rebate” or other type of tax payment. The only form to fill out to get a stimulus payment is a 2007 federal tax return. The IRS will never send unsolicited e-mail requesting personal information.
FAST FACTS
§ The stimulus payments will be a maximum of $600 for eligible individuals, $1,200 for married couples filing jointly. Add $300 for each qualifying child.
§ The payments are not taxable as income, nor will the payment reduce the refund or increase the amount owed in 2008.
§ Taxpayers (and spouses, if applicable) must have a valid Social Security number to qualify.
§ The IRS will continue to send payments until Dec. 31, 2008 to accommodate taxpayers who file returns later in the year.
§ Individuals whose 2007 adjusted gross income exceeded $75,000 ($150,000 if married and filing jointly) may get a reduced payment or no payment at all.
§ Payments will start going out in May to the bank account or address on taxpayers’ 2007 tax returns, and continue through spring and early summer. An exact payment schedule is not set yet.
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