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IRS Has Answers to Your Stimulus Payment Questions

IRS Has Answers to Your Stimulus Payment Questions - The Beacon

02-2008

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By: Amy

IRS Has Answers to Your Stimulus Payment Questions

j0431549.pngThere have been many questions about the Economic Stimulus Plan and who will be getting checks. In order to answer those questions, it’s best to go straight to the source, and the IRS has published a list of questions and answers that may clear up some confusion. Here are some of the more general questions:

Q. What do I need to do to get an economic stimulus payment?

A. All you need to do is file a federal income tax return for 2007. Even if you are not otherwise required to file a tax return, you must file a 2007 return in order to receive a payment this year. Although some filers, such as high-income filers, will not qualify for a stimulus payment, most will.

In most cases, you will fill out your return, reporting all your income, deductions and credits as you normally would. But even if you are not required to file, you must file a 2007 return to get a stimulus payment this year. Low-income workers, Social Security beneficiaries, certain railroad retirees and those who receive certain benefits from the Department of Veterans Affairs who normally don’t file may receive a stimulus payment if they do. The IRS will provide special filing instructions for those who do not otherwise have a filing requirement. The instructions will explain which lines on the tax return the filers need to complete.

You do not need to calculate the amount of the stimulus payment. If you qualify, the IRS will automatically figure it and send it to you. The IRS will also send you a notice showing the amount of your payment. You do not need to call the IRS or fill out any other special forms.

Q. How do I find out if I am eligible?

A. Most people with a 2007 net income tax liability will qualify. This includes most people who get tax refunds. Net income tax liability is the amount shown on Form 1040, Line 57 plus the amount on Line 52. For 1040A filers, it is the amount on Line 35 plus the amount on Line 32. For Form 1040EZ filers, it is the amount on Line 10.

Families with children under 17 generally will qualify for an additional payment. Some people with no tax liability also will qualify. This includes Social Security and Railroad Retirement beneficiaries, recipients of certain veterans’ payments, low-income workers with earned income and/or benefits of at least $3,000 and individuals who have combined income of at least $3,000 from any combination of these sources.

Some higher-income taxpayers will not receive a stimulus payment or will receive a reduced payment.

Q: Will receiving an economic stimulus payment in any way affect my eligibility for other federal benefits, such as temporary assistance for needy families, food stamps or Social Security? Will it count as income for purposes of my Social Security benefits?

A: No. The stimulus payments will not have any effect on eligibility for federal benefits.

Q: I know some people won’t get a stimulus payment. How do I know if I’m one of them?

A: You won’t get a stimulus payment in 2008, if any of the following apply to you:

* You don’t file a 2007 tax return.
* Your net income tax liability is zero and your qualifying income is less than $3,000. To determine your qualifying income, add together your wages, net self-employment income, nontaxable combat pay, Social Security benefits, certain Railroad Retirement benefits and certain veterans’ payments.
* You can be claimed as a dependent on someone else’s return. For example, this would include a child or student who can be claimed on a parent’s return.
* You do not have a valid Social Security Number.
* You are a nonresident alien.
* You file Form 1040NR or Form 1040NR-EZ, Form 1040PR or Form 1040SS for 2007.

Q. When will I receive my stimulus payment?

A. The Treasury Department will start sending out payments in early May.

Q. Is my stimulus payment taxable?

A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. You will need to know this amount next year when you fill out your 2008 return.

Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?

A. No, the stimulus payment will not reduce or increase your refund when you file your 2008 return.

If you still have questions, you can find the entire Q & A publication here.

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Amy

Amy was a trade practice associate with the BBB until 2008. She was instrumental in starting our consumer education blog and managing our online presence.