Understanding the impact of the economic stimulus
By Greg Sullivan
Are you still feeling stressed now that tax season has passed? Well, this year you had company, and misery loves company.
Why are more people filing income taxes this time around?
Those who in the past may have not traditionally filed taxes had a little extra incentive this time. To be more specific, the economic stimulus package as defined by the Economic Stimulus Act of 2008.
According to a recent Dear Abby letter submitted by IRS Commissioner Doug Shulman, certain retirees, disabled vets and low-wage workers are not normally required to file taxes.
"However, this year they must in order to receive the payments," Shulman said in the letter.
Single filers qualified for up to $600 rebates, while couples qualified for up to $1,200. An additional $300 was available for each claimed dependent child that is under 17 as of Dec. 31, 2007. Some payments were less, depending on tax liability and income. Phaseout reduction began at $75,000 adjusted gross income for single filers and $150,000 for joint filers.
Some of these words may sound like economic mumbo-jumbo but it appears that, at least for those who took advantage of them, the stimulus package may end up having at least some real impact for some people in Morgan County.
"After they were talking about the rebate, I filed," said Buckhead resident Louise Tiller.
Tiller, who has been on disability for about 10 years after injuring and having surgery done on her knees, is not required to file taxes although she has in the past.
This year, though, she expects to get some rebate money for filing. Tiller, 63, filed jointly with her husband Percy Tiller, 65, who is also on disability and has been ever since he was seriously injured in a automobile collision about 35 years ago. Louise has cared for him since.
The two, like many others, may receive up to $1200 depending on their tax liability.
What will she do with that money? "Pay some bills," said Tiller.
Gail Goldsmith, a public accountant in Madison, said explained that it was mandatory for people to file if they wanted to be considered for the rebate even if they weren't necessarily required to file taxes. Qualifying for the rebate, she added, also isn't necessarily automatic.
"Not everyone qualifies," Goldsmith said. "There is a formula you have to go through. It depends on the individuals return and tax liability. It's a per return evaluation."
"If there's any outstanding tax debt," she explained. "That rebate will go to that tax debt."
"The rebate is based on your taxed income, filing status and how many qualifying dependents you have."
In a question and answer session on the American Association of Retired Persons' website, www.aarp.org, a sample question asked how a person filing taxes could determine whether or not they were eligible for a rebate.
The site answered with the following: "To receive your refund, all you need to do is file your 2007 return. If the qualifying income shown on that return is more than $3,000, you do not need to do anything else. The Treasury Department will start mailing the checks in May."
The answer goes on, "You are eligible for the rebate if your "qualifying income" for 2007 is more than $3,000. Qualifying income consists of salaries and wages, self-employment income, Social Security benefits, railroad-retirement benefits, veteran's disability compensation, and pension or survivor's benefits received from the Department of Veterans Affairs. However, if your income is more than $75,000 ($150,000 if filing a joint return), your eligibility for the rebate phases out incrementally."
For those eligible for a stimulus payment, it still may not be too late, according to the AARP website.
"The IRS encourages everyone to file by the normal April 15 tax deadline: The sooner you file the sooner you can receive your stimulus payment. But if you have obtained a valid six-month extension to file or if you are filing to establish your eligibility for the stimulus payment, filing by Oct. 15 means the IRS can process your return and issue a stimulus payment before the end of the year," the site says.
Possible side bar:
Stimulus Payment Schedule for Tax Returns Processed by April 15
(Information obtained from the Internal Revenue Service Web site, www.irs.gov/irs/article/0,,id=180250,00.html)
Economic stimulus payments will be issued according to the last two-digits of the main filer's Social Security number. People who use direct deposit also will be among the first to receive the payments starting May 2. Paper checks will be put in the mail starting May 16.
Last two SSN digits: Payment will be transmitted:
00 through 20 May 2
21 through 75 May 9
76 through 99 May 16
Last two SSN digits: Payments will be mailed by:
00 through 09 May 16
10 through 18 May 23
19 through 25
26 through 38 June 6
39 through 51 June 13
52 through 63 June 20
64 through 75 June 27
76 through 87 July 4
88 through 99 July 11
People who file a return after April 15 will receive their economic stimulus payment, but probably about two weeks later than the schedule shows. A return must be filed by October 15 in order to receive a stimulus payment this year. See the online calculator for an estimate of the amount you will receive.
A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15.