Nobody will be adversely affected by the stimulus
payments, says one official.
By ANGIE SCHMITT
VINDICATOR STAFF WRITE
No, the stimulus payments won’t be taxable. Yes, they will arrive separately from regular tax returns.
When will they arrive? As early as May.
Billions of additional dollars will be making their way toward American mailboxes this tax season, thanks to the $168 billion economic stimulus package signed into law Feb. 13. Up to $600 is at stake for individuals and $1,200 for couples — not including an additional $300 per dependent child.
But as the tax season reaches its height, confusion and misinformation about the package is widespread, according to acting IRS Commissioner Linda Stiff.
Stiff made herself available to media across the nation Friday, to answer questions about the stimulus package that is expected to benefit 130 million Americans.
For different categories of filers, she explains, cashing in on America’s economic vulnerability will require different degrees of exertion.
“The vast majority of taxpayers won’t need to do anything other than file their tax return,” said Stiff.
For filers who normally file tax returns and whose income was at least $3,000 in 2007, stimulus payments will be calculated from regular 2007 tax documents. Those who have already filed their income tax return do not need to file again, Stiff said.
Rebates will begin being phased out at $75,000 for individuals and $150,000 for couples. For those earning more than that, the IRS will multiply the difference by 5 percent and subtract that total from the payment. This group will still be eligible for $300 payments per dependent child, but this payment will be subject to the 5 percent reduction.
Veterans, Social Security recipients and some low-income individuals who do not normally file tax returns — but are eligible for the rebate — must complete and file IRS form, 1040A. The form is available to download at irs.gov or
can be picked-up at the local library. Filers are asked to write the words “Stimulus Payment” on the top of the 1040 A form.
“Filing this form is the easiest way for individuals from this group to receive their stimulus payment,” said Stiff.
Income generated from workers compensation or disability benefits — except among veterans — will not qualify for stimulus guidelines, Stiff said. Also not included are Social Security disability payments and supplementary security income payments.
Babies born after Dec. 31, 2007, will not be counted toward dependent children, because of the language of the legislation, said Stiff. College students who work, but are listed as dependents on their parents’ tax return will also not be eligible, said Stiff.
However, those who experience life changes, such as the birth of a child, a divorce or a college graduation, in 2008 may be eligible for some benefits when they next file, said Stiff.
The IRS is working to develop a payment schedule that will provide taxpayers more information about when they can expect their payment, said Stiff. Though checks will begin being mailed in May, stimulus payments will continue to be distributed through spring and summer.
Those who wait until fall to file, may be too late to qualify, said Stiff.
Rebates will likely be distributed through patterns in Social Security numbers and geography. Currently, there is no mechanism for tracking a stimulus payment, but Stiff said the IRS hopes to have one operational soon. The feature would be similar to its “Where’s my refund” online feature.
In the meantime, filers can speed their payment by registering for direct deposit, Stiff said. To apply for the service, filers should attach a routing number and bank account number to their return.
Stiff assures taxpayers that account information will remain secure.
“The only way the IRS will use that information is for it to put the stimulus payment directly in your bank account,” she said.
However, IRS officials are warning of stimulus rebate scams, in which individuals posing as IRS agents attempt to solicit personal information by e-mail or phone. The Internal Revenue Service does not gather information by phone or e-mail.
Contrary to some speculation, Stiff said, stimulus rebates will not be included in taxable income for 2008. Nor will rebate dollars be drawn from future returns. The stimulus package will also not have any effect on eligibility for federal benefits.
“No one will be adversely affected in 2008,” said Stiff.
However, any unpaid federal tax and some other nontax debt, such as student loans and child support, will be deducted from stimulus payments.
More information is available at irs.gov.