The IRS has stated that "the eligibility for and amount of stimulus payments to taxpayers will vary according to their income and family situations."

The payments will range from $300 to $600 for individuals and $600 to $1200 for joint filers. Taxpayers may receive $300 for each qualifying child. But, payments could be less, depending on tax liability and Adjusted Gross Income.

Unfortunately for some, a phaseout reduction begins at $75,000 for single filers and $150,000 for joint filers.There are 4 possible scenarios:

1. Married with Children
Here are some examples provided by the IRS of how the Economic Stimulus Act of 2008 may affect taxpayers who are married, file a joint return and have children who qualify for the child tax credit payment:

a) Married couple with two children, no wages, veterans’ payments of $2,000, social security benefits of $2,000, no federal income tax liability before child tax credit.
Individual rebate is $600
Qualifying child credit is $600
TOTAL is $1,200

b) Married couple with two children, no wages, no social security benefits, no veterans’ payments, AGI is $25,000, federal income tax liability before child tax credit is $70.
Individual rebate is $600
Qualifying child credit is $600
TOTAL is $1,200

c) Married couple with two children, AGI is $35,000, federal income tax liability before child tax credit is $1,070.
Individual rebate is $1,070
Qualifying child credit is $600
TOTAL is $1,670

d) Married couple with two children, AGI is $160,000, federal income tax liability before child tax credit exceeds $1,200.
Individual rebate is $1,200
Qualifying child credit is $600
Phaseout reduction is ($500)
TOTAL is $1,300

2. Married without Qualifying Children
Here are some examples provided by the IRS of ways the Economic Stimulus Act of 2008 may affect taxpayers who are married, file a joint return and are either childless or do not have children who qualify for child tax credit payment:

a) Married couple with no children, no wages, veterans’ payments of $2,000, social security benefits of $2,000, no federal income tax liability.
Individual rebate is $600

b) Married couple with no children, no wages, no social security benefits, no veterans’ payments, AGI is $20,000, federal income tax liability is $250.
Individual rebate is $600

c) Married couple with no children, AGI is $25,000, federal income tax liability is $750.
Individual rebate is $750

d) Married couple with no children, AGI is $60,000, federal income tax liability exceeds $1,200.
Individual rebate is $1,200

3. Single (Head of Household) with Children
Here are some examples provided by the IRS of how the Economic Stimulus Act of 2008 may effect taxpayers who are single, file as head of household and have children who qualify for the child tax credit payment:

a) Single parent with two children, no wages, no social security benefits, no veterans’ payments, AGI is $20,000, federal income tax liability before child tax credit is $195.
Individual rebate is $300
Qualifying child credit is $600
TOTAL is $900

b) Single parent with two children, AGI is $22,000, federal income tax liability before child tax credit is $395.
Individual rebate is $395
Qualifying child credit is $600
TOTAL is $995

c) Single parent with two children, AGI is $60,000, federal income tax liability before child tax credit exceeds $600.
Individual rebate is $600
Qualifying child credit is $600
TOTAL is $1,200

d) Single parent with two children, AGI is $90,000, federal income tax liability before child tax credit exceeds $600.
Individual rebate is $600
Qualifying child credit is $600
Phaseout reduction is ($750)
TOTAL is $450

4. Single without Qualifying Children
Here are some examples provided by the IRS of how the Economic Stimulus Act of 2008 may affect taxpayers who are single and either childless or do not have children who qualify for the child tax credit:

a) Individual with no wages, no social security benefits, AGI is $10,000, federal income tax liability is $125.
Individual rebate is $300

b) Individual with AGI is $12,000, federal income tax liability is $325.
Individual rebate is $325

c) Individual with AGI is $35,000, federal income tax liability in excess of $600.
Individual rebate is $600

d) Individual with AGI is $80,000, federal income tax liability in excess of $600.
Individual rebate is $600
Phase out reduction is ($250)
TOTAL is $350

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Ask TaxGuru Please refer to the legal disclaimer.

So, I guess the IRS has made it important to file a 2007 Tax return!

Non-filers will be encouraged to file 2007 tax returns especially with an incentative to receive the Rebates! I suggest a prompt filing of the tax return will ensure an early Tax Rebate as well!

Thanks for the Article!

This is great artilce and quite timely! I think I will try and at least file my tax return early!

It seems safe to say that with my AGI hovering around the 150-160k, I will at least get some about $1,300 with 2 qualfying kids. Well, it is a decent amount I suppose, and will pay for my new HP computer!

Thanks TaxGuru!

I will use my rebate to purchase a Dell Computer, sorry I am Dell fan, always works for me!

Gee, I will go on a spending spree! I have already decided on what Computer to buy.

BTW, Great Article...Tax Guru, allows me to figure out exactly how much I can spend on my refund!

Its all nice and dandy to spend the rebate monies we are getting on new computers be it Dell or HPQ, but question I have is are these rebates going be taxed on my 2008 Tax Return??

Its better to find out and save some of it to pay for the additional tax liability if indeed these rebates are going be taxable income for 2008!

Thats right! There is a Tax Liability involved in the Rebate, and taxpayers should hold back about 25-30% of the total rebate received for potential tax liability.

But, honestly, who is going to heed this advise??

We should all buy US Savings bonds and lend the money they give us back to the government with interest

I am going to spend it on an Apple computer! Finally, I will have boughtr an Apple computer! My Dream Computer...

At least I would have helped stimulate the economy in my small way that is.

Starting May 2, 2008 some 130 million U.S. families and individuals will be getting tax rebate checks from the Internal Revenue Service (IRS). Here you will find answers to many of those questions, as well as resources from the IRS to help you understand the tax rebate.
$600 for unmarried persons and $1,200 for married couples. Plus an additional $300 per qualifying child.
How Will the Rebate be Calculated:
The rebate is limited to the net tax liability. For many people, this amount will be the same as found on Form 1040 Line 57, Form 1040A Line 35, or Form 1040EZ Line 10. The rebate is reduced if the net tax liability is less than the maximum credit. The rebate will also be reduced for people with higher incomes. The stimulus rebate is reduced by 5 percent of the amount of income in excess of $75,000 (or $150,000 for married couples). The IRS has posted an Economic Stimulus Payment Calculator on their Web site.

According to compromise bill passed by the goverment you would be eligible to receive a rebate of up to $1200 if you paid that much in Federal Income Tax. If you only paid $750 in taxes, you only get back $750. If you had earned income of at least $3000, you would get at least the minimum rebate of $300. If you qualify for a rebate, you would get an extra $300 for each dependent child.




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