 |
|
|
|
|
| 4/9/2008 5:33:00 AM | Email this article • Print this article | Your "Economic Stimulus" check
explained - sort of
by Bruce Smith
Starting in May, most American households will be receiving a check from Uncle Sam as part of the economic stimulus package recently authorized by Congress.
However, the confusion surrounding this money is reaching proportions unseen in recent memory.
To begin, everyone will be getting a slightly different amount because the dollar figure will be based on their 2007 taxes actually paid, their tax bracket and the types of deductions they declared.
But worse, and contrary to popular opinion, it is not "free money," but merely an advance on the refund that you might be getting next year from your 2008 taxes.
Adding to the uncertainty, the amount swings wildly from person-to-person. Here's our current understanding of the law:
In general, single taxpayers will get a minimum of $300 and a maximum of $600. Those married and filing jointly will see those numbers doubled: a minimum of $600 and a maximum of $1,200.
BUT - you will receive only the amount within those parameters that equals the amount you paid in taxes this year. For instance, suppose you are single and only paid $500 in taxes this year - your economic stimulus check will only be $500. But, if you're single and only paid $200, you're going to see the minimum, $300. And if you paid $600 or more in taxes, you will receive the maximum, $600. Same rule of thumb applies to the married, filing jointly, folks.
In addition, there will be bonuses for having children. All heads of household who claimed the $1,000 per child deduction on their 2007 taxes will get an extra $300 per kid.
The big question comes next year when you're hoping for that annual refund check.
If you did not get the maximum amount in your economic stimulus check this year, and your tax liability goes up next year, (perhaps you made more money and/or have less deductions), you will be entitled to the difference between the maximum and what you actually received this year.
However, if your refund goes down next year and dips below the advance the government is giving to you this year, you will not have to repay anything. For you, that difference in this year's check will be "free money."
In addition: Special provisions are being made for people on Social Security, VA benefits and railroad pensions. For these individuals, even if they do not owe any taxes whatsoever, this year they will get the minimum payment of $300. However, they must have at least $3,000 in income this year, and they must file a tax return this year even if otherwise not required to do so.
Last, if you're behind on your child support, owe the government on a defaulted student loan, or the IRS is looking for back taxes, kiss your economic stimulus "gift" goodbye.
Thanks to Wilma Bennett of the Graham Business Association and Bob Riler of the Pierce County Department of Aging and Long-Term Care for help in understanding this program.
|
Article Comment Submission Form
|
|
|
|
|
