Tax Rebate News

Thanks to the continuing struggles in our economy, we have yet another tax credit. Many of you are already seeing this credit in your paychecks in the form of lower tax withholding.

(From the IRS Website): In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.

This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.

For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes in early spring. These changes may result in an increase in take-home pay. The amount of the credit will be computed on the employee's 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return.

It is not necessary to submit a Form W-4 to get the automatic withholding change. However, an employee with multiple jobs or a married couple whose combined income places it in a higher tax bracket should consult the IRS withholding calculator and, if necessary, submit a revised Form W-4 to ensure enough tax is withheld. Publication 919 provides additional guidance for tax withholding including a special Making Work Pay worksheet.

If you have questions about the Making Work Pay provision, these questions and answers about the Making Work Pay Credit might help.

If you didn't receive the rebate check in 2008, or if you think you should have gotten a larger check than you did, you can apply for the Recovery Rebate Credit on your 2008 tax return.

The Recovery Rebate Credit is a special one-time benefit that most people received last year in the form of an Economic Stimulus Payment. But people who did not receive the maximum amount of the Economic Stimulus Payment, or whose circumstances have changed, may be eligible now.

In most cases, the IRS will calculate whether a person is eligible and how much of the credit may be due automatically. To allow the IRS to calculate this automatically, simply file your 2008 tax return and follow the "Credit Figured by the IRS" instructions. However, may choose to calculate the Recovery Rebate Credit themselves instead.

In order to calculate the Recovery Rebate Credit, you to know the amount of the Economic Stimulus Payment you received in 2008. If you're having your tax return prepared by a tax preparer, make sure you give them this info so they can calculate your return correctly.

For more information, please visit Recovery Rebate Credit Is for Individuals Who Missed Last Year's Economic Stimulus Payment on the IRS website.

Still waiting for your tax rebate check? You can check your tax rebate status online at the IRS website.

Go to IRS.gov and click on Economic Stimulus Payment Information Center.

Or, you can just click on this link to go directly to the "Where's my stimulus payment?" calculator.

The IRS started sending rebates out on Monday April 28. If you haven't gotten yours yet, or you're just wanting to check to see when you can expect to receive it, the IRS has added a "Where's My Rebate" feature to their website.

This is an interactive feature that allows you to enter your personal information (Social Security number, filing status, and number of exemptions on your 2007 tax return) to find out the status of your rebate.

You can also review the payment schedule and visit the Economic Stimulus Payments Information Center for more information about the rebate check.

Click here to check the status of your rebate now!

Update: The IRS started sending out rebates electronically today - four days ahead of schedule! If you chose to receive your 2007 tax refund via direct deposit, you could receive your economic stimulus rebate as early as today (4/28).

Okay... you know the IRS will start sending out checks for the economic stimulus package in May. But when will you get YOUR rebate check?

The first rebate checks will be mailed out starting on May 2, and will be based on the final two digits of your Social Security number, as well as when you file and whether you elected to receive any refund by direct deposit or snail mail.

The IRS says most people will get their checks by July 11, but if you want to know exactly when to expect your rebate, here are the details:

If you file your 2007 tax return by April 15, and request direct deposit for your refund, then you can expect your rebate according to the following schedule...

SSNs ending in 00-20, deposited by May 2
SSNs ending in 21-85, deposited by May 9
SSNs ending in 76-99, deposited by May 16

Notice that taxpayers who requested direct deposit on their 2007 tax return will receive their rebate by direct deposit as well.

If you file your 2007 tax return by April 15, and request a paper check for your refund, or if you owe a balance due on your tax return, then you can expect your rebate according to the following schedule...

SSNs ending in 00-09, mailed by May 16
SSNs ending in 10-18, mailed by May 23
SSNs ending in 19-25, mailed by May 30
SSNs ending in 26-38, mailed by June 6
SSNs ending in 39-51, mailed by June 13
SSNs ending in 52-63, mailed by June 20
SSNs ending in 64-75, mailed by June 27
SSNs ending in 76-87, mailed by July 4
SSNs ending in 88-89, mailed by July 11

If you file jointly with your spouse, then use the Social Security number of the first spouse listed on the tax return to determine when you will receive your rebate.

One last note: you must file by April 15 to receive your rebate according to the above schedule. You must file by October 15 to receive the rebate this year, but if you wait to file, you could wait as long as December to receive your rebate.

By now you've most likely heard about the tax rebate that was passed by President Bush recently, with the intention of jump-starting the economy.

But what you may not know is that you have to file your 2007 tax return before you can get your rebate check.

This was not good news to me, because I'm one of those people who waits until October to file (hey, I don't get paid to file my tax return, and paying clients come first!).

It also means my workload this tax season will be quite a bit heavier because all of my usual stragglers will be getting their tax info in on time this year to make sure they get their rebate checks (sigh...).

Okay, back to the rebate... If you haven't heard the details yet, here they are:

The IRS is expecting to start mailing out checks in May.

Click here to continue reading...

Okay... so you've just learned that you're going to get a rebate of up to $600 (or $1,200 if you're married, plus $300 per kid).

And you've probably heard that the purpose of this tax rebate is to get you to start spending to stimulate the economy.

But... maybe you've got some bills to pay, or want to save that money instead.

You're not alone. Early polls show that most people will pay down debt or save the money rather than spend their rebate check.

Here are some suggestions from financial planners on how to use your rebate check:

* Fund your Roth IRA
* Pay down high interest credit card debt
* Open a college savings account for your children
* Take care of home repairs
* Draft wills or take care of other tasks that you've put off because you didn't have the funds to pay the lawyers fees
* Split the rebate between multiple goals - use some to pay off debt, and some to spend

So... how will you spend your rebate check?

For more tax tips, please visit the Ebiz Tax Tips blog.

Individuals with a valid Social Security Number and at least $3,000 in qualifying income will qualify for the tax rebate.

Qualifying income includes wages, self employment income, Social Security benefits, railroad retirement benefits, veteran's disability compensation, or pension or survivor benefits from the Department of Veteran Affairs. Supplemental Security Income (SSI) will not qualify as earned income.

Dependents and people who could be claimed as a dependent by another taxpayer do not qualify for the rebate check. Non-resident aliens and anyone without a Social Security number also do not qualify for the rebate.

Individuals who have less than $3,000 of qualifying income and who do not pay tax will not be eligible for the rebate check.

Income from interest, dividends, capital gains or IRA withdrawals do not qualify as earned income for purposes of qualifying for the rebate check.

Single taxpayers will receive between $300 and $600, married taxpayers will receive between $600 and $1,200. Plus, you will receive an additional $300 for each qualifying child.

A qualifying child is any child under age 17 who is related to you by blood, marriage, or adoption, and who can be claimed as your dependent (may also include foster children). For purposes of the rebate, a child who meets the criteria for the Child Tax Credit and who has a Social Security Number will also meet the qualifying child criteria, allowing the parents to receive an additional $300 rebate (for each qualifying child).

The amount you receive is phased out based on your income, so high income taxpayers may receive a reduced rebate, or even no rebate.

The IRS expects to start mailing out checks in May 2008. However, you have to file your 2007 tax return by April 15 to receive your check in May. Taxpayers who fail to file on time may have to wait until December to receive their rebate check.

The IRS will be mailing out statements to taxpayers. You should receive two statements before you actually receive your rebate check. The first statement is to notify you about the rebate and provide general information. The second notice will notify you if you are eligible for the rebate, how much you can expect to receive, and when you should expect to receive it. The second notice will need to be saved for use when preparing your 2008 tax return.

If you requested direct deposit on your 2007 tax return, your rebate will also be deposited directly into your bank account. If you requested a paper check be mailed to you, or if you had a balance due on your 2007 tax return, then your rebate will be mailed to you.

The only thing you have to do to receive your rebate check is to file your 2007 tax return. Even if you normally are not required to file a tax return (because your income is below the filing requirement and you don't owe any taxes), you must file a 2007 tax return to receive your rebate check. This is how the IRS will determine who qualifies to receive the rebate, so if they don't have your 2007 tax return, they can't process your rebate check.

If you are filing a tax return just for the rebate check, make sure you show your nontaxable income on the appropriate lines (non-taxable Social Security benefits go on line 20a, non-taxable pension benefits go on line 16a), so the IRS knows that you have qualifying income for purposes of calculating the rebate amount.

Reminder: you must file by April 15 in order to receive your rebate check in May. Taxpayers who fail to file by April 15 may have to wait until December to receive their rebate checks.

For most people, the rebate check will have no affect on their tax return. This is an actual rebate, it is not a pre-bate or a refund against your 2008 income taxes. So for most people, the rebate won't have any affect on your 2008 tax return.

However, for taxpayers who qualify for a larger rebate based on their 2008 income than their 2007 income, they will be able to claim a tax credit for the additional amount on their 2008 tax return. On the flip side, if any taxpayers received a larger rebate than they should have (if the rebate were calculated on their 2008 income), they will not have to pay it back.

If you owe the IRS money (back taxes), if you are behind on your student loans or child support, then the IRS will use the rebate to offset the amount you owe.

If you move in 2008, you will need to file a Change of Address (Form 8822) with the IRS to make sure they still get their rebate check.

You must have a valid Social Security Number (SSN) to qualify for the rebate. An Individual Taxpayer Identification Number (ITIN) does not qualify. In addition, if you file married filing jointly, both spouses must have a valid SSN. If only one spouse has a SSN, then neither spouse qualifies for the rebate.

Identity thieves are already thinking up and using scams involving the economic stimulus package. There are both email and telephone scams using the IRS name to try to steal your identity, so be cautious.

If someone claiming to be the IRS calls or emails you asking for a Social Security Number, a bank account or a credit card account number, do not give it to them. The IRS will not be calling or emailing taxpayers, so any phone calls or emails you receive are a scam.