Since George Bush and the Congress reached a compromise on the economic stimulus package at the end of January this year, taxpayers have been awaiting their tax rebates. Congressional leaders and the Bush administration reached an agreement at the end of January to give the American taxpayers $150 billion in fast cash and tax incentives. The economic stimulus package will give hundreds of dollars to low-income and middle-class families.
Also, the stimulus package will provide business owners with tax incentives for upgrading their business resources including, incentives to invest in new equipments. The federal government announced last week that the first direct deposits into bank accounts will be for 800,000 Americans.
In an effort to boost the economy, the U.S. Treasury will dole out more than 110 billion in federal taxes dollars to 130 million taxpayers by the end of July. The economic stimulus package is being granted by the government in hopes of stimulating a slowing economy by placing extra cash in people's pockets. The government wants the people to spend their rebate checks on goods and services hoping that the spending will spur the economy.
The IRS tax rebate is not a tax return, tax refund, or tax relief, but a simple granting of federal tax dollars to certain taxpayers. The US Treasury Department will distribute the first $50 billion by May’s end. Americans who use direct deposit will receive their payments the fastest. It is predicted that checks will be deposited into the bank accounts of 7.4 million people by the end of this week. However, most taxpayers will get rebates by July 11.
The order in which the tax rebates are sent out is based on the last two digits of your Social Security number, the filing of your '07 income tax return forms, and whether you opted in for direct deposit. If you file for an extension, you may not get the check until next year. Americans who receive their tax refunds via direct deposit will receive their checks much sooner, unlike taxpayers opting out of direct deposits.
The stimulus payments will be sent out to approximately 117 million low-middle income households, 250,000 disabled military veterans, and 20 million seniors surviving off of Social Security. In order to be eligible for the full rebate, single income tax filers must have an adjusted gross income (2007) below $75,000 and joint tax filers must have an AGI below $150,000. Single IRS income tax filers with AGI below $75,000 will get tax rebates of up to $600, while joint couples with AGI less than $150,000 will get rebates of up to $1,200.
Additionally, parents will receive an extra $300 per child under 17; there is no cap on the number of eligible children. Income tax filers who don’t owe federal income taxes, but have at least $3,000 in income –will receive $300 rebates per individual or $600 per joint couple.
The best thing about the tax rebates is that you won’t have to pay it back. Your stimulus check is a one-time tax break, an advance on a credit you'll see on your 2008 return. Also, it will not increase the amount you owe in 2008 nor reduce your 2008 tax refund.
The rebate amount is based on your 2007 tax returns. If it seems your 2008 income and number of children would have made you eligible for a much larger rebate than the one you received, you'll be given the difference. However, if your 2008 income was lower than in 2007 and you received a lower stimulus payment, you keep the difference. One thing is clear about the economic stimulus package; you must file a 2007 federal tax return in order to get the check.