The rebate checks are coming. But it's going to require a little participation on your part, even if it means simply filing your 2007 tax return with the IRS.
The checks aren't coming until May at the earliest, so don't sweat beating out the April 15, 2008 tax filing deadline. However, if you plan on filing an extension to gain a few more months of breathing room, know that your rebate check will also be delayed.
The stimulus package may be simple in theory but it requires the government to skim your 2007 return to make sure you qualify. That is why some 20 million recipients of untaxed Social Security checks, who may not typically file their annual returns, are being asked to do so this time around in order to qualify for their piece of the action.
There is also another important dynamic to the rebate checks; the richest taxpayers aren't getting in on the fun. Couples that report more than $174,000 in adjusted gross income won't be receiving the rebates, while those making between $150,000 and $174,000 will get only a pro-rated amount of the rebate. If you're a single filer, slash those thresholds in half to see where you stand.
This is going to create some tense number-crunching for taxpayers who are within the ballpark of those thresholds. We are talking adjusted gross income, here. This figure is less than the actual net income you report on your 1040 several lines higher. To arrive at your AGI, you deduct items like IRA contributions, health savings account and higher learning tuition fees, if applicable.
You can't go back in time for many of the moves available to work down your AGI, but you can still contribute to a qualified retirement plan for 2007 through the April tax filing deadline if you haven't done so yet. If it makes the difference and you have legitimate deductions to lower your AGI, like writing that check to fund your IRA in 2007, now is the time to do so.
There is plenty at stake. Most taxpayers who paid at least $600 in taxes in 2007 will be getting $600 apiece and another $300 for every child. For example, a family of five can get as much as $2,100 in a few months. And this is found money. It isn't something that will be taken out of your next tax return, even if you cynically argue that it will add to our nation's debt that will ultimately be repaid.
The rebate checks are not an advance. They are part of the stimulus package to get funds back into the hands of consumers to help skirt the recession that some economists believe we may already be in.
So make sure you qualify, first. Make sure you participate, second.
Rick Munarriz is a personal finance columnist for HispanicBusiness.com. He can be reached through www.Reportedly.com.
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