How To Claim Under the Economic Stimulus Package
Beginning May, 2008, an estimated over 130 million American households are expected to begin receiving checks from the federal government as part of a program to jolt the economy back into action. The Economic Stimulus Act of 2008 approved by President Bush and passed by Congress provides for payments from a low of $300 for low income workers and some persons receiving only Social Security, Railroad Retirement, or Veterans’ benefits to a high of $1,200 for a working married couple filing a joint income tax return.
If there are dependent children in the household under the age of 17 by the end of 2007, add $300 for each qualifying child. For higher wage earners, there is a reduction in benefit for single persons with adjusted gross income (AGI) over $75,000 or married persons with AGI over $150,000 in 2007.
The most important requirement to remember is that payments only will be sent to persons who file a federal personal income tax return for 2007. If the federal income tax return is filed, it is not necessary to complete any additional forms to obtain the stimulus payment.
Here are answers to some of the most likely queries.
What Would Cause Me Not To Receive An Economic Stimulus Payment. The first and most likely reason you would not receive an economic stimulus payment would be if you do not file a federal personal income tax return for 2007. Other reasons include: you have no net income tax liability and your qualifying income (defined below) is less than $3,000 or you have no Social Security Number or you are claimed as a dependent on another person’s income tax return such as a dependent child or student. As stated above, dependent children under the age of 17 would be claimed on the parent’s tax return.
Can I Have Too Little or Too Much Income To Qualify. You can have too little or too much income but you should realize that income is defined differently for the stimulus payment than it is for regular tax purposes. You need at least $3,000 in qualifying income or some net income tax liability. Qualifying income includes both earned income or wages and net self-employment income and all Social Security retirement benefits, nontaxable combat pay, certain Railroad Retirement benefits, and certain Veteran’s benefits. Supplemental Security Income (SSI) which is a form of welfare income, does not count toward qualifying income. Other exceptions are pension income from employers, dividends, interest, and capital gains.
If your 2007 adjusted gross income was more than $75,000 if you are single or more than $150,000 if you are married filing jointly, the payment you would be entitled to receive will be reduced by 5% of any AGI you have above those figures so it is possible not to receive the benefit if your income is too high.
How Can I Figure Out What I Would Receive. Go to the Economic Stimulus Payment Calculator at www.irs.gov/app/espc with your completed 2007 Form 1040 or 1040-EZ or 1040A and answer the questions to obtain the government estimate.
hat Should I Do If I Usually Do Not File an Income Tax Return. This answer is important. Many senior citizens do not file Federal Income Tax returns because their non-Social Security income is too low to require them to file. Seniors in this position, generally speaking, should file their 2007 Income Tax Return anyway so they can get the benefit. There is a special Form 1040A for people who normally do not file but are filing to get the stimulus package benefit and there are some additional volunteer taxpayer assistance groups to help.
Can I Request the Stimulus Payment If I File My Tax Return On Extension. You can do this. Make sure that you still file no later than October 15, 2008 if you want to receive the benefit.
Is My Stimulus Payment Taxable. The stimulus payment is not taxable and the government has stated that receipt of the benefit will not negatively impact benefits from other government programs such as food stamps and TANF.
If I Owe the Government Back Taxes, Will I Receive the Full Stimulus Benefit Check. The government will deduct back taxes owed from prior years from the check.
What Will Happen If Someone Who Has Filed a 2007 Tax Return Dies Before Receiving His Check. Believe it or not, the stimulus package check is still issued in the name of the deceased person. The payment then will become part of the decedent’s estate and should be handled in probate. Get help if you need to know what to do next.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.