File 2007 taxes to get rebate check
The 2008 Economic Stimulus Act of 2008 was signed into law by the President on Feb. 13. It provides a refundable federal tax credit that most taxpayers will receive in the form of a rebate check, starting in May. Here is some information that may help you better understand how the tax rebates will affect you.
Whether you are for or against the rebate, experts estimate the amount being added to our budgeted national expenditures because of the rebate at about $115 billion. To put that number in perspective, consider that our national debt is about $9 trillion dollars and that our annual budgeted expenditures are about $2.7 trillion dollars.
A single taxpayer (includes head of household and married filing separate) who qualifies (generally means her or she needs to have earned income, Social Security benefits or disabled veteran benefits of at least $3,000) and files his or her 2007 federal income return will get a basic credit between $300 and $600, depending upon income taxes paid.
Couples who qualify (generally means they need to have combined earned income, Social Security benefits or disabled veteran benefits of at least $3,000) and file their 2007 federal income return will get a basic credit between $600 and $1,200, depending upon taxes paid. The basic credit phases out for higher-income taxpayers, beginning at $75,000 single and $150,000 married filing joint.
If a taxpayer receives at least $1 of the basic credit and has qualifying children, the taxpayer will also receive a child credit of $300 per child.
To get a rebate check (an advance payment of the estimated basic and child credits), most Americans only need to file their 2007 federal individual income tax returns. The IRS will automatically determine whether each taxpayer filing a 2007 return is eligible, calculate their rebate and direct deposit (if possible, otherwise mail) the rebate check.
When taxpayers prepare their 2008 federal income tax returns, they will complete a worksheet to determine their credits based upon their 2008 return information.
If the sum of the credit amounts based upon their 2008 return is more than the rebate check previously received, taxpayers can claim the excess as a refundable tax credit on their 2008 individual tax returns.
However, if the sum of the credit amounts based upon their 2008 return is less than the rebate check previously received, the shortfall does not need to be repaid.
The only way Americans who normally do not file income tax returns can get a rebate is by filing a 2007 or 2008 federal individual income tax return. Such persons may be entitled to a rebate of $300 for individuals and $600 for a married couple if they have earned income, Social Security benefits or disabled veteran benefits of at least $3,000.
Persons claimed as dependents by another taxpayer are not eligible for any economic stimulus. For example, if you claim your kid as a dependent, your kid cannot get a basic credit.
Our leaders are encouraging all qualifying Americans to file 2007 federal income tax returns now so that the rebate money can begin circulating in our economy as soon as possible. Although no rebate checks will be issued after Dec. 31, 2008, you could choose to not file (or maybe you forget to file) a 2007 return and still get a check by filing a 2008 tax return, although as discussed above the amount you would then receive could be smaller than if you had qualified yourself earlier for the rebate check by filing a 2007 return.
If you have internet access, information about the tax rebate is available at the IRS web site. Search for "irs.gov", go to the site, and then click on "Rebate Questions" to find out more information.
The site has questions and answers, and many examples (even an example on how to complete Form 1040A, the form that will be used by many elderly and low-income taxpayers).
The IRS also has a toll-free number that you can call to get more information (1-800-829-1040). The IRS reminds you to watch out for email and telephone scams and to file a change of address form with the IRS if you move.
Many agencies offer free tax assistance. For example, in Becker County, both Mahube Community Council and the AARP Tax Aide Assistance program are taking appointments to assist the elderly and low-income households with tax preparation. Call 847-1385 or 1-888-458-1385 to make an appointment.
Whether you prepare your own tax returns or have somebody else assist you with preparation, make sure you are getting all the tax benefits to which you are entitled.
For example, you can get refunds (even if you did not pay in) for things like the refundable earned income tax credit (federal), the refundable working family credit (Minnesota), the refundable daycare credit (Minnesota), the refundable child tax credit (federal), the refundable telephone excise tax credit (federal 2006), the refundable credit for expenses you incur for your children in kindergarten through 12th grade (Minnesota), and the property tax refund (Minnesota).
A good working knowledge of tax law can be important and result in bigger refunds in many cases.
And tax preparation software can often be used to run alternatives which may be available to you that could impact the amount of refunds to which you are entitled.
(Kim Mollberg is a CPA in Detroit Lakes)