For individual taxpayers, starting in May 2008, the Treasury will begin sending rebate checks to more than 130 million individuals in amounts between $300 and $1,200. In addition, many households will qualify for another $300 for each eligible child.
But First....
You must file your 2007 tax return:
The IRS will automatically figure your rebate based on your 2007 tax return that is due April 15, 2008. It will start sending rebate checks out in May for those who file before then. The key here is that you must file a 2007 tax return in order to get your potential rebate. Many people who normally don't have to file a return will have to do so in order to get a rebate check (elderly, low income, taxpayers that may otherwise not owe tax etc.)
The impact on 2008 taxes:
The rebate that the IRS will send you after you file your 2007 return usually won't affect your 2008 taxes on the return that you file in 2009. However, it can. When you do your 2008 taxes, you will figure what the rebate would have been based on your 2008 taxes. It could be higher or lower than the check that you received from the IRS in 2007. If it is higher, you will get a credit against your 2008 taxes for the difference. It if is lower, you won't have to pay the difference back.
Notifications from IRS. Most taxpayers will receive two notices from IRS (presumably after they have filed the 2007 return). The first will be a general notice explaining the stimulus payment program. The second will confirm the recipient’s eligibility, the payment amount and the approximate time line for the payment. Taxpayers are instructed to save the second notice to assist them when they prepare their 2008 tax return next year. When they file their 2008 return in 2009, taxpayers will need to (1) calculate the amount of the rebate credit based on their 2008 tax return, and (2) reconcile that amount against the advance rebate payment they received based on their tax situation as reported on their 2007 return. For most taxpayers, the two amounts will be the same. If, however, the amount in (1) exceeds the amount in (2) (because, for example, the taxpayer paid no tax in 2007 but is paying tax in 2008), the taxpayer will be able to claim that amount as a credit against 2008 tax liability. If, however, the amount in (1) is less than the amount in (2) (because, for example, the taxpayer paid tax in 2007 but owes no tax for 2008), the taxpayer will not have to repay the rebate amount to IRS. And you thought it was going to be simple!! |
