2008 Economic Stimulus Act
On February 13, 2008 President Bush signed into law H.R. 5140 also known as the 2008 Economic Stimulus Act. This law will provide for stimulus payment of up to $600 for every qualifying taxpayer and an additional $300 for every qualifying child.
A qualifying tax payer eligible for the full $600 payment ($1,200 for a couple) is defined as someone who has earned income and a tax liability. The payment will equal the amount of the liability paid on the 2007 return, up to a maximum of $600 ($1,200 per couple). An extra $300 per qualifying child will also be paid. To qualify each child must qualify for the Child Tax Credit on the 2007 return, which generally requires them to be under 17 and also have a valid Social Security number.
Provisions are also in place to provide low income and retirees with a $300 per person ($600 per couple) stimulus payment. In order to qualify however they must have at least $3,000 of qualifying income and they must also file a 2007 tax return. Many of these individuals are not normally required to file tax returns, but in order to get the payment in 2008 they must file a 2007 return regardless of income.
The IRS will soon be mailing letters to taxpayers who filed a 2006 return, followed by letters to recipients of Social Security and Veterans benefits explaining the credit and the requirement to file a tax return for 2007.
The IRS has issued simple guidelines and an example of how to file a 1040A to qualify for the payment. This and additional details can be found on the IRS website dedicated to the stimulus payments at the Economic Stimulus Payments Information Center.
There are also provisions for businesses in the act such as an increase in the Section 179 expense allowances, and depreciation allowances.
The IRS originally indicated checks would be sent in May and June, but the latest communications seem to indicate the process will last over the summer of 2008. The IRS says a schedule for payments is coming soon. For those who chose to have your refunds direct deposited to your bank, the stimulus payment will also be direct deposited. If you filed a 2007 tax return, you do not need to take any further action to collect the payment. For those who didn’t file and may qualify for a payment, they should immediately seek out assistance in completing and filing a return. This help is available for free to low income and elderly individuals who are most likely to fall into this category through the IRS sponsored VITA and TCE programs. You can find a location near you by calling 1-800-829-1040 or the AARP at 1-888-227-7669 or visiting the AARP internet site.