Taxes 
734
comments

2008 Tax Rebate Stimulus Package Explained

Email  Print Print  

Money Money Money1/15: The Committee on Appropriations just released the an executive summery of the details of the American Recovery and Reinvestment Plan.

This post refers to the first economic stimulus package of 2008. You can read about the second stimulus package here.

Looks like the stimulus payments will be sent out ahead of schedule, with the 800,000 direct deposit payments on Monday April 28th, Tuesday, Wednesday, and a whopping 5 million on Friday (none on Thursday). The schedule of payments will follow the original schedule, just accelerated by a week.

No doubt you’ve heard the “great” news that a deal on a stimulus package has been reached and that checks will be in the mail as early as May. Whether you believe the naysayers that say we’re really just propping up the Chinese economy (or oil rich nations) because we’re borrowing from them to buy their goods or whether you believe the proponents that say this will boost own economy in magical ways the fact of the matter is a deal has been reached – so what is it? Essentially, it’s a removal of the 10% tax bracket for everyone with some modifications. It includes phaseouts that begin past annual incomes of $75,000 and a component that includes those working Americans that don’t earn enough to pay income taxes.

To get a clearer understanding of the rules, let’s walk up the income levels and explain how it works; beginning first with those filing their taxes as singles and then adding in families. How the phaseouts work, from what I can understand, is that you first determine eligibility (if you earned more than $3,000 and paid taxes) and then, if you fall in to the phaseout, start reducing your benefit.

Singles

Determine Eligibility:
If you earned less than $3,000 – unfortunately you’d get nothing.
If you earned more than $3,000 but paid no taxes, you’d get $300.
If you earned more than $3,000 and paid taxes, you get $600.
If you have children, add $300 per.
Determine Phaseout Reduction:
The phaseout levels begin at $75k and end at $87k, at a reduction of 5% per $1,000 over the lower limit. If you earn above $87k, you’re over and thus get nothing regardless of the math.

Couples

Determine Eligibility (appears to be the same as singles):
If you earned less than $3,000 – unfortunately you’d get nothing.
If you earned more than $3,000 but paid no taxes, you’d get $600.
If you earned more than $3,000 and paid taxes, you get $1,200.
If you have children, add $300 per.
Determine Phaseout Reduction:
The phaseout levels begin at $150k and end at $174, at a reduction of 5% per $1,000 over the lower limit. If you earned above $174k, you’re over and thus get nothing regardless of the math.

Some Common Examples

These are taken from a post by Gridking on Tickerform.org:

  • An individual with $2,500 in earned income in 2007: Disqualified because income fell below the $3,000 threshold. No rebate.
  • A married couple with no children, with adjusted gross income of $100,000 in 2007: Would qualify for the full $1,200 couples. A $1,200 rebate.
  • A worker with one child, who earned $9,000 and owed no taxes in 2007: Would qualify for the $300 rebate available to individuals who pay no taxes but earned at least $3,000, plus an additional $300 for the child. A $600 rebate.
  • A couple with income of $145,000 in 2007, with three children: Would qualify for the full $1,200 for couples, plus $300 for each child. A $2,100 rebate.
  • A couple with income of $160,000 in 2007 with two children: Would qualify for a partial rebate, reduced by 5 percent for every $1,000 in income above the $150,000 threshold. An $1,800 rebate $1,200 for the couple plus $300 per child — would go down by 50 percent for this family. A $900 rebate.
  • A couple with income of $200,000 and four children: Disqualified because their income exceeded $174,000, the phase-out limit. No rebate.

There were a few other salient details to the bill, including a temporary raising of the individual mortgage ceiling that Fannie Mae and Freddie Mac could purchase (FHA loan limits) – increasing it to a whopping $729,750 (up from $417,000), and business tax breaks for infrastructure investments.

Some Questions & Answers

Here are the answers to many of the questions in the comments below, I wanted to wait until the Senate and House agreed on something before trying to tackle these:

Is this a rebate? What is it a rebate on?

The funds are NOT a rebate on the taxes you will pay next year, they are based on your 2007 tax return. Next year, after you file your taxes, the IRS will calculate what you should’ve gotten and adjust your return. So if you received too much “rebate,” they let you keep it. If you received too little, they decrease what you owe next year. (Correction made, Thanks Phil!)

How do I know what I get?

What you receive in May (or June or July) will be based on the tax return that is due April 15th. It will then be adjusted next year if necessary. So, it is based on your 2007 return, use the math I outlined above or the calculator below to determine what you’ll be getting.

Tax Rebate Calculator

This is a calculator that you can find on Consumerism Commentary and has been vetted by tax professionals, this is NOT tax advice so please consult a professional if you have additional questions:

(Photo: Tracy O)

{ 734 comments, please add your thoughts now! }

Related Posts


RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

734 Responses to “2008 Tax Rebate Stimulus Package Explained”

  1. Mally says:

    It amazes me what the promise of money can do to people. I am also a single parent . I have always worked full time. Not rich with many earthly things. But I will always appreciate my blessings in life. This stimulus check will only add to them.
    God bless you all.

  2. julie says:

    i think the child age needs to change. i have a daughter who turned 18 at the end of 2007. she does not work so she can concentrait on schooling. she is a senior, like most 17 and 18 year olds. i feel the childs age should be 18 and under or at least in high school.

  3. Deborah says:

    My ? is:
    Is this stimulus check based on you filing a federal tax return, or a federal and a state return. If anyone knows, I will appreciate the answer. Thanks in advance!

  4. blue paperclip says:

    To watasi: If you are eligible (which you seem to be) you can expect to receive your rebate in early to mid May, depending on the last two digits of your social security number, even if you did not receive a notice that you will be eligible. There are several reasons why you wouldn’t have received a notice, such as mail problems. So if everything works out, you should be receiving your rebate soon.

    To Deborah: It is based on filing your 2007 federal tax return. You are not required to file a state return in order to be eligible for the rebate, due to not every state having a state income tax.

    To john p: This is not true. According to the IRS, it doesn’t have to do with whether you own a home or rent one. The main eligibility and rebate-amount factors are filing status (married, single, etc), type of income and income level (adjusted gross income).

    Hope this helps. :-)

  5. jd says:

    you know after reading the numerous posts about people that are losers, lazy, or un deserving of the money being paid to them. it makes me furious to know that i work on average 55 hours a week and 4 months out of the year on 12 hour shifts without a day off that i fall under your holyer than thou attitude. i am married have two kids and make under 20k a year. Please, Please tell me where me putting my life on the line, working my ass off so that you have the right to have your 100k+ a year job makes you better then me more deserving of a break. someone has to due the minimum wage jobs in this country or you wouldnt have that nice high earning job that you have. im just glad that serving in the US military makes me lazy and a loser.

  6. saladdin says:

    The military is 100% voluntary.
    I don’t see your BAQ or BAH or free health care calculated in that 20k salary either. Stop acting bitter about a personal choice. When your time is up, get out and find you one of these 100k jobs you think is just floating around.

    saladdin

  7. jd says:

    i never said it was floating around my problem is people thinking that jsut because someones salary is less than 100k doesnt mean they are lazy or a loser. yes it is a personal choice and my baq and bah bring my total to what the military tells me every year is 32k a year. i like to see the 100k job that doesnt have excellent health care packages. my only point is that seeing people post on here bashing people that dont have high paying jobs is pathetic. as far as getting out and finding one of thoughs 100k jobs just floating around i start working with rockwell-collins making 120k to start im just not going to be the jerk telling people that because they dont make as much as me they arent as good as or dont put as much into this country

  8. martha says:

    how does the early date affect paper checks.

  9. joann says:

    Since the direct deposit date was moved up by 4 days, does that mean i should get my paper check 4 days earlier.


Comments are closed for this post.


Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2014 by www.Bargaineering.com. All rights reserved.