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Many Working Americans Will Get Tax Rebates

Under the new law, at least 117 million low- and middle-income households will receive one-time tax rebates, along with 20 million senior citizens living on Social Security and 250,000 disabled veterans. 

How do the tax rebates work?

• Single tax filers must have a 2007 adjusted gross income (AGI) of less than $75,000 to receive a rebate of up to $600.
• Joint tax filers must have a 2007 AGI of less than $150,000 to collect a rebate of up to $1,200.
• Parents will receive a $300 rebate per dependent child, with no limit on the number of eligible children. Each child must be younger than 17 on Dec. 31, 2008, to qualify.
• Tax filers who do not owe income taxes due to credits and deductions but have at least $3,000 in earned income (including Social Security and disability payments) will receive a rebate of $300 per person or $600 per couple.

Some taxpayers will get partial rebates

• Tax rebates, including the $300 per-child rebate, begin to reduce when an individual has an AGI of $75,000, or when a couple has an AGI of $150,000.
• The rebate decreases by $50 for every $1,000 a taxpayer earns above the income limit and disappears at some point, depending on the size of the taxpayer's family.

Others will get no rebates

Rebates will not be sent to:

• Individuals with a filing status of single with more than $87,000 in gross income
• Childless couples with a gross income of more than $174,000
• Nonresident aliens
• Those without a Social Security card
• Estates and trusts
• Individuals who are or could be claimed as dependents on someone else's tax return

Rebate checks will be issued beginning in May

According to Secretary of the Treasury Henry Paulson, the IRS will start sending rebate checks in early May. He has estimated it will take about 10 weeks to issue all the checks. Taxpayers can expect to receive their rebate checks between May and early July.

Taxpayers who don't file their 2007 taxes until the Oct. 15 extended deadline will not receive their rebate checks until year-end.

Rebates are a one-time tax cut

Tax rebates under the Stimulus Act are actually an advance on a credit taxpayers will receive on their 2008 tax return. These rebates are initially based on a taxpayer's 2007 income.

If an individual's or couple's 2008 income and the number of children would have made them eligible for a larger rebate than they collected, they will receive a check for the difference.

However, if an individual's or couple's 2008 income is less than what was earned in 2007 and the taxpayer would have qualified for a lower rebate than he or she received, the taxpayer gets to keep the difference.

Qualifying income includes Social Security benefits, certain railroad retirement benefits, certain veterans' benefits and earned income, such as income from wages, salaries, tips and self employment. While these people may not be normally required to file a tax return because they do not meet the filing requirement, the IRS emphasizes they must file a 2007 return in order to receive payment.

Questions on the Economic Stimulus Act of 2008? Contact Craig Maksymiak at 312-980-2977 or your Blackman Kallick representative at 312-207-1040.

Read our full article on the Economic Stimulus Act of 2008

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.