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IRS Will Send Stimulus Payments Automatically Starting in May
Starting in May, the United States Treasury will begin sending out the much-publicized 2008 stimulus payments. The stimulus payments will go out through the late spring and summer.
Most taxpayers will not have to do anything other than file their 2007 individual income tax returns to receive their payment this year.
The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will equal the amount of the tax liability on the return with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return). The minimum amount will be $300 for individuals ($600 for taxpayers who file a joint return).
Even those who have little or no tax liability may qualify for a minimum payment of $300 ($600 if filing a joint return), if their tax return reflects $3,000 or more in qualifying income. Qualifying income consists of earned income such as wages and net self-employment income as well as Social Security or certain Railroad Retirement benefits and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans' Affairs in 2007. However, Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.
Senior citizens who have not needed to file an income tax return in years may still qualify - a simple tax return form is all that's needed.
Low-income workers who have earned income above $3,000 but do not have a filing requirement must file a 2007 tax return to receive the minimum stimulus payment. Similarly, Social Security recipients, certain Railroad retirees, and those who receive the veterans' benefits mentioned above must file a 2007 return in order to notify the IRS of their qualifying income.
The IRS emphasized that people with no filing requirement who turn in a tax return to qualify for the economic stimulus payment will not get a tax bill. People in this category will not owe money because of the stimulus payment.
Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child (subject to income phase-outs). To qualify, a child must have a social security number and be under the age of 17 at the end of 2007. Anyone who is not eligible for the basic payment amount due to the phase-out provision or any other exception will not be eligible for this additional amount for children. Also ineligible are individuals who can be claimed as dependents on someone else's return.
Individuals who receive Social Security benefits, Railroad Retirement benefits and certain veterans' benefits may have to follow special filing requirements in order to receive the basic amount. Those who have already filed a 2007 return showing less than $3,000 in qualifying income and did not list their Social Security, Railroad Retirement or certain veterans' benefits will need to file an amended return to list those non-taxable benefits and qualify for the payment.
For more information, contact a tax preparer or go to www.irs.gov.
Submitted by Patricia Hitchcock, Enrolled Agent at A Street Tax & Financial located at 705 A Street. She can be contacted at 760-787-9696.
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