In early 2008, American taxpayers were notified that they would receive an IRS stimulus check in addition to the potential tax refund received after filing their 2007 taxes. This announcement had many citizens wondering if they would receive a check, how much they would receive, and what exactly the purpose of this rebate check was. In order to fully understand the IRS stimulus checks, it is important to learn the 5 W’s (and the H) of the stimulus checks.
What is the purpose of the IRS stimulus checks?
The IRS stimulus check is issued by the United States Treasury to over a hundred million individuals through the late spring and summer periods following the tax season. Eligibility is determined by the IRS and the most recent tax return. These IRS stimulus payments are distributed to most taxpayers to serve as a tax cut based on their most recent incomes.
The IRS stimulus checks aim to help the economy by boosting an individual’s savings account, thus encouraging them to spend the money shopping or paying off accumulated debts. With the rising costs of gas and groceries, along with the mortgage crisis and the credit crunch, the stimulus checks are meant to provide a financial cushion for the average consumer. The total amount being distributed by the Treasury and IRS is over $110 billion, which will add a great amount of money back to the economy to avert the risk of a recession.
Who qualifies for a tax stimulus check?
For an individual to qualify for the 2008 tax rebate checks, he or she must (1) file their 2007 federal tax return; (2) have a valid Social Security Number; and (3) have $3,000 in income. The IRS stimulus payments can be broken down into three categories: singles, couples, and dependents.
- Singles making less than $75,000 will receive a payment of $600
- Couples making less than $150,000 will receive a payment of $1,200
- Each child (dependent) will receive an additional payment of $300
In order to receive the $300 per child, each of your dependents must be younger than the age of 17 and have a Social Security number. If your dependent is 17 or older, your child will not qualify for the $300 addition to your stimulus check.
When will I get my tax stimulus check?
In addition to filing your taxes on time, the IRS stimulus checks are sent out based on two sets of criteria: (1) how you filed your taxes and (2) the last two digits of your Social Security number.
If you filed your taxes electronically, your IRS stimulus check will be directly deposited in your bank account. If you filed your taxes on paper through the mail, your IRS stimulus check will be mailed to you. Directly deposited checks are generally received by taxpayers at an earlier date than paper checks sent through the mail.
Each batch of IRS stimulus checks—those electronically deposited and those mailed out—are sent based on the last two digits of your Social Security number. For directly deposited checks, the Social Security numbers are divided up into three batches: 00-20, 21-75, and 76-99. Paper checks begin to be mailed out when the last batch of directly deposited checks are deposited. There are nine batches for paper checks based on the last two digits of your Social Security number: 00-09, 10-18, 19-25, 26-38, 39-51, 52-63, 64-75, 76-87, and 88-99. Each group of numbers determines which week your deposit will be made. If you and your spouse filed a joint tax return, the first Social Security number listed on the tax return will determine when the check will be sent.
Why didn’t I receive an IRS stimulus check?
There are a number of reasons why not every taxpaying individual receives an IRS stimulus check, including the following:
- If you are a dependent of someone else’s taxes—such as college students in the age group 18-25—or are a dependent without a Social Security number, you will not receive the IRS stimulus check.
- If you made over $75,000 as a single or $150,000 as a married couple, then you exceed the income criteria to qualify for the tax stimulus check.
- If you owe taxes from a previous year or to the government, then the IRS will use your stimulus check to pay back the taxes or fees.
- If you did not file a 2007 tax return, then you will not qualify for the stimulus check. Many senior citizens fall into this category as their main source of income lies in Social Security. Without filing taxes for the year, a tax stimulus check cannot be issued.
Where can I use my tax stimulus check?
You can use your tax stimulus check at retail locations, on a vacation, to pay off car payments, or any other purchase you choose. Some people even chose to donate the tax stimulus check to a charity. By donating to a charity, you have the benefit of writing off the donation on your next year’s taxes as a tax deduction.
Many large retailers, such as Sears and Wal-Mart, will cash your check and turn it into a gift card. For some of these retailers, they will provide an additional percentage of your check to your gift card for free or offer a percentage off your purchase with your stimulus check.
Although not everyone will have received a stimulus check because of age or lack of a valid Social Security number, the $110+ billion dollars provided to be pumped into the United States economy should prove the stimulus checks effective and encourage spending. By using the stimulus check, the additional input of money will stimulate the economy and keep the United States further away from the risk of a recession.