Are you confused about the rebates that the IRS plans to start mailing in May? You are not alone.
Most of the uncertainty is a result of the payments which will be made to those who pay no taxes, but qualify in other ways. Such taxpayers will receive $300 each instead of the $600 paid out to taxpayers. There are two ways to qualify. This was not clear to me until we started calculating rebates for clients who I initially thought had no right to them.
The first are those who have at least $3,000 of earned income, Social Security income, VA income or a combination of these. Although many of such taxpayers have not had a requirement to file, they need to do so this year. At first, the IRS was planning to create an online form, as they promised earlier. However, now they have stopped talking about that.
Instead, if you are in this position, you should obtain a 2007 form 1040A and write "Stimulus Payment" in big letters on the top of page one. Then, you will need to fill in the qualifying income that you earned this year. The amount of Social Security income should be shown on line 14a. In addition, you should fill in the routing and account numbers of your bank account on line 44, sign the return and mail it in. Don't worry about any other information or reporting all of your income, etc. You can go to WWW.IRS.GOV to find and print a blank form.
The second group that is entitled to a refund even if they do not owe taxes includes those who have any kind of gross income, which exceeds the total of personal exemptions plus the standard deduction. In other words, just about anybody who is required to file a return. Thus, even if all of your income is made up of interest, dividends or pensions, you will still get a $300 credit, along with a similar amount for your spouse and for every child under age 17.
Over 130 million households will receive payments. Among the few who are left out include those who make more than $75,000, or $150,000 if married, since the rebate starts to diminish as you make more than that. No surprise here, since such taxpayers bare the brunt of all income taxes. Another group includes those without Social Security incomes who survive on pension and investment income but do not show enough taxable income to qualify.
I am a CPA with the firm Vander Spek & Corsello, CPAs with offices in Escondido, CA - http://www.vanderspekcpas.com/
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