UPDATE:Thanks to one of our faithful readers, I was reminded of one crucial point I forgot to make earlier. The rebates represent a 2008 tax cut. But instead of getting the tax cut next year, when you file your 2008 return, you’ll get it this year. Although many people have been complaining about this fact, it’s actually a benefit for you. Normally, the taxes taken out of your paycheck are used by Uncle Sam interest free before you file a claim for a refund (your tax return). The government never pays you interest on the $600 that you are getting back as a refund. However, by getting that $600 now, you can actually put that money to work for you – either in an investment instrument or to pay down debt. You’ll get more out of that $600 now than you will next year.
The press has been all over the recent economic stimulus package passed by congress. Personally, I don’t feel like the stimulus package is what will fix the sluggish economy, but it does look good in the news and for certain politicians. In any case, I’ve never been one to turn down free money!
In general, this late Christmas bonus is equal to the your net income tax liability, but no more than $600 for a single person or $1,200 for a married couple filing a joint return. The minimum payment is $300 for a single person or $600 for a married couple filing jointly. In additional, families with children under 17 will get an additional $300 per child.
However, many people have been confused as to how the checks will be cut. Do you have to apply somehow? Are there certain qualifications? How do they know that I want free money?
In an effort to help educate the public, the IRS has thrown up a website of frequently asked questions regarding the stimulus package.
Here’s what you need to know in a nutshell:
Under the Economic Stimulus Act of 2008, more than 130 million American households will receive economic stimulus payments beginning in May. The only way to get one this year is to file a federal tax return for 2007. This filing requirement also applies to some people who do not normally file, including many low-income people and recipients of Social Security, certain benefits received from the Department of Veterans Affairs and certain Railroad Retirement benefits.
Basically, the checks will be cut to those people who file taxes. So if you normally don’t file taxes, for whatever reason, you’re going to have to file this year in order to get your check in the mail.