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Confused About The Economic Stimulus Package?

Confused About The Economic Stimulus Package?
 By Mike Scott

With political rhetoric driving fears of a national economic downturn, Congress has passed the Economic Stimulus Act of 2008.  More than 130 million American households will receive economic assistance payments beginning in May, but there is a lot of confusion about who will get the payments, and how much they will receive.
"My telephone has been ringing, and I’m getting a lot of questions," said Bill Dunning of Clark County Tax Service in Kahoka. 
Questions are also pouring in the the University of Missouri Extension Office in Kahoka, according to Debbie Whiston.
“People are confused, and this is important for them to know,” Whiston said.
"The first thing people need to know is that they have to file a return to get the stimulus check," Dunning said.
Dunning and Whiston provided information from the IRS to answer some frequently asked questions about the program.

What do I need to do the get an economic stimulus payment?
All you need to do is file a federal income tax return for 2007.  You do not need to calculate the amount of the stimulus payment.  If you qualify, the IRS will automatically figure it and send in to you.

How do I find out if I am eligible?
Most people with a 2007 net income tax liability will qualify.  This includes most people who get tax refunds.  Their return must show at least $3000 in qualifying income.  Families with children under 17 will qualify for an additional payment. 

I normally don’t need to file a return.  How do I know if I’m one of those people who may be eligible?
This group includes some recipients of Social Security, Railroad Retirement, of veteran’s benefits, as well as taxpayers who do not make enough money to normally have to file a 2007 tax return.

I want to estimate my payment.  How will it be figured?
Taxpayers who had a net income tax liability will receive a payment, unless the can be claimed as dependents on someone else’s return, are high income individuals or do not have a valid Social Security number.  The payment is equal to the taxpayer’s net income tax liability, but no more that $600 for a single person of $1200 for a married couple filing a joint return.  The minimum payment is $300 for a single person of $600 for a married couple filing jointly.
To figure your qualifying income, add together the following amounts:
Wages reported on Form W-2
Net self employment income
Social Security benefits reported in box 5 of the 2007 Form 1099-SSA
Certain Railroad Retirement benefits reported in box 5 of the 2007 Form 1099 -RRB
Veteran’s benefits received in 2007, including disability compensation or survivor’s benefits.
Non-taxable combat pay if the taxpayer elects to include it as earned income.
The stimulus payment begins to phase out for individuals with adjusted gross income of over $75,000 and married couples with AGI over $150,000.

Will receiving an economic stimulus payment in any way affect my eligibility of other federal benefits, such as temporary assistance for needy families, food stamps, or Social Security.  Will it count for purposes of Social Security benefits?
No.,  The stimulus payments will not have any effect on eligibility for federal benefits.

I know some people won’t get a stimulus payment.  How do I know if I’m one of them?
You won’t receive a payment if any of the following apply to you:
You don’t file a 2007 return
Your net income tax liability is zero and your qualifying income is less that $3000.
You can be claimed as a dependent on someone else’s return
You do not have a valid Social Security number
You are a nonresident alien
You file Form 1040 NR of Form 1040 NR-EZ, or Form 1040SS for 2007.

Is my stimulus payment taxable?
No.  You will not owe tax on your payment when you file you 2008 federal income tax return.

I’m eligible for a payment, but I still owe federal income tax from a prior year.  Will my payment be reduced?
Yes.  For this purpose, the stimulus payment will be treated like any other tax refund.  This means that part of all of your payment can be used to pay any past due federal or state income taxes or non-tax debt such as student loans or child support.