By James R Filak CPA
Some answers on the anticipated tax rebate checks that are planned to be distributed beginning in May
Who gets a rebate check ? taxpayers with 2007 net income tax liability will get a maximum of $600 for an individual and $1,200 for married couples.
Also, $300 for dependents under 17. If you had no liability but earned income of $3,000 or more, you will get a check. Social security will be counted as earned income, thus many seniors will get a check.
‘Net tax liability? is the calculated tax amount on your tax return before credits and tax withholdings.
Who won’t get a rebate check ? primarily kids 17 or over and college kids who can be claimed as dependents by their parent(s) . Also, there is a phaseout based on income:
The phaseout begins at $75,000 for single and $150,000 for married couples. Those with incomes over $87,000 for single and $174,000 for couples with adjusted gross income will not receive anything.
What do I need to do?
To be eligible, just file your 2007 income tax return. Rebate checks are scheduled to begin in May, 2007.
However, it may take 3 to 4 months for the IRS to distribute the approximately 130 million checks. This schedule is not finalized. How does the rebate affect my 2008 taxes?
The rebate is being called an advance on your 2008 tax refund. Thus, there will be a reconciliation on the 2008 tax return. But, if the rebate is greater than it should be, you will not have to pay it back to the government.
Thus, with some tax planning you may be able to keep most or all of the rebate check.
This program is to promote the economy by having taxpayers spend the rebate monies, but if you may have to reduce your 2008 refund, I am not sure if the intended benefit will work.
For more info, call Jim at 248-236-8110 or visit www.filakcpa.com