Serving Boone, Blowing Rock, Banner Elk, and other towns of the North Carolina High Country | Founded 05-05-05

March 6, 2008 issue

 

Understanding the Stimulus Payment

It All Hinges on that 2007 Tax Return

Story by Kathleen McFadden

The Economic Stimulus Act of 2008 passed both houses of Congress—U.S. Senators Richard Burr and Elizabeth Dole, as well as Rep. Virginia Foxx and Rep. Patrick McHenry voted in favor of the bill—and President Bush signed it into law on February 13. As a result, more than 130 million American households will receive checks from the government beginning in May.

The minimum payments are $300 for a single person and $600 for a married couple filing jointly. The maximum payments are $600 for a single person and $1,200 for a married couple filing jointly. Eligible taxpayers may receive an additional $300 for each qualifying child. To qualify, a child must have been under age 17 as of December 31, 2007.

The only way to receive the stimulus payment is to file a federal tax return for 2007. 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 file this year and can show qualifying income of at least $3,000.

To get the payment, you don’t have to do anything but file your tax return. You do not need to calculate the amount of your particular 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 special forms.

However, according to the IRS, identity thieves are already pushing stimulus payment scams. At least one telephone scam is making the rounds using the proposed rebates as bait. To read about these tactics, click to www.irs.gov/newsroom/article/0,,id=178061,00.html.

But here’s a simple way to avoid being burned: don’t believe anything you hear on the telephone or receive by email about the stimulus payments. The IRS is just going to send the check to you; IRS agents aren’t going to call you personally to chat about it and offer to get the check to you early.

If you are due a tax refund, you will receive one payment for your regular tax refund, and you will receive your stimulus payment later.

Stimulus payments will be direct deposited for taxpayers who select that option when filing their 2007 tax returns. Even if you aren't due a refund on your tax return, filling out the bank routing information will allow for your stimulus payment to be direct deposited.

And here’s the best news: Unlike the tax rebates Americans received in 2003, you don’t have to pay this one back when you file your taxes next year. According to the IRS, the stimulus payment is not taxable and will not reduce your refund or increase the amount you owe when you file your 2008 return.

VA Benefits Recipients

Did you receive disability compensation, pension or survivors’ benefits from the Department of Veterans Affairs last year?

Even if you are not otherwise required to file a tax return, you may still be entitled to an economic stimulus payment from the federal government. The stimulus payment will not affect the amount of VA benefits you receive.

What You Need To Do: All you have to do to get the stimulus payment is file a 2007 IRS Form 1040 or Form 1040A and report at least $3,000 in qualifying income on the form. You can include the amount of your VA benefits to qualify for the stimulus payment.

How You Determine Qualifying Income: Add the amount of your VA disability compensation, pension, or survivors’ benefits to any other qualifying income you have to reach the $3,000 requirement. Other qualifying income would include wage earnings or Social Security benefits.

What You Fill Out: Enter your name, address, Social Security Number and filing status on the form. Then enter the amount of VA and Social Security benefits you received on line 14a of the Form 1040A or line 20a of Form 1040. You can estimate the benefits you receive from VA or the Social Security Administration by taking the monthly amount you received last year and multiplying it by the number of months you received payments. If you need to include wage earnings to reach the $3,000 qualifying level, enter that amount on Line 7 of Form 1040A or 1040. In addition, you should write the words Stimulus Payment at the top of the 1040A or 1040.

Social Security Benefits Recipients

Did you receive Social Security benefits last year?

Even if you are not otherwise required to file a tax return, you may still be entitled to an economic stimulus payment from the federal government. The stimulus payment will not affect the amount of Social Security benefits you receive.

What You Need To Do: All you have to do to get the stimulus payment is file a 2007 IRS Form 1040 or Form 1040A and report at least $3,000 in qualifying income on the form. You can include the amount of your SSA benefits to qualify for the stimulus payment.

How You Determine Qualifying Income: Add the amount of your Social Security benefits to any other qualifying income, such as wage earnings or certain benefits paid by the Department of Veterans Affairs, to reach the $3,000 requirement. Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.

What You Fill Out: Enter your name, address, Social Security Number and filing status on the form. Then enter the amount of benefits reported to you in January on Form 1099-SSA on Line 14a of Form 1040A or Line 20a of Form 1040. If you don’t have Form 1099-SSA, you can estimate your Social Security benefits by taking the monthly amount you received last year and multiplying it by the number of months you received a check. If you need to include wage earnings to reach the $3,000 qualifying level, enter that amount on Line 7 of Form 1040A or 1040. In addition, you should write the words Stimulus Payment at the top of the 1040A or 1040.

Getting Help with Filing

Watauga County’s two senior centers are offering free tax assistance. AARP Tax-Aide counselors will be available through April 15, by appointment only, on Tuesdays at the Lois E. Harrill Senior Center in Boone and on Mondays at the Western Watauga Community Center. If you want to make an appointment, call Sherry Harmon at the Harrill Center at 828-265-8090 or Toni Wait at the Western Watauga Center at 828-297-5195.