Who gets the money and how much? That’s really what everybody wants to know, right? Well I have tried to “crack the code” on this stimulus rebate money and here are the facts as I understand them. I have to admit, the IRS has gotten a little better in explaining things, but still after pouring over the facts on the IRS site, I am left a little uncertain about a few things. Here is my understanding about this stimulus money. Check out this IRS site for up to date information.
“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. This has a lot of things implied. For instance, “if you are eligible”….
You are eligible if
- You filed a 2007 tax return
- Made $3000 or more in qualifying income in 2007
- Have a social security number ( You must have a SSN or no money)
- Are not claimed as a dependent on someone else’s tax return
- Do not make more than a maximum income that I will explain below
Okay. This means some people who normally don’t need to file a tax return will need to this year to get the money. This will mainly apply to senior citizens receiving Social Security payments and Veterans’ Administration pension type income that is normally not taxed.
“In most cases, the payment will equal the amount of tax liability on the tax return, with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return)” ,quote from IRS site. Most people will either get $600 or married filing jointly will get $1200. Some people that normally don’t owe taxes like some senior citizens will only get $300 but that should be the minimum. The part about “equal to the amount of tax liability” just throws me off, but your tax liability will be over the 2 amounts mentioned in many cases, so they will be the maximums.
Now if you have children, and they are claimed as your dependents, and they were under the age of 17 on December 31, 2007, then you will get another $300.
Finally, what if you are rich? (I guess the Government thinks you are rich, if you make over $150,000 jointly). Does it seem like you are rich? I doubt it. Anyway, the money you will receive gets reduced by 5% for every dollar you make over $75,000 as a single and $150,000 filing jointly. As an example, if you make $155,000 dollars and have no kids, you will likely get a check of —
155000 – 150000 = 5000 over the limit.
5000 * .05 = $250.00 , so subtract 250 from the amount you would have received ($1200) and you get $950. That’s the way I understand it, anyway.
As with all my financial or tax advice, I am not advising as a professional and I give no professional legal or tax advice. If you need professional advice, please get that from a CPA or attorney.
I hope this helped you understand this. Checks should be arriving in May and you can then invest in a Roth IRA for 2008 with the money that you didn’t expect to get. I have written few articles lately on the benefits of the Roth IRA, so be sure to check them out.
Let me know what you think. Leave a comment or write me an email at email@example.com.