Economic stimulus and your 2007 tax return

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February 27th, 2008 - Posted by Joe

Earlier this month President Bush signed the $168 million economic stimulus package into law. For those not familiar with the program it will mean that most tax payers will receive $300, $600 or $1200 rebates plus $300 per child. The goal of the program is to provide relief to tax payers and stimulate economic activity by putting some cash in the pockets of Americans.

There are some important tax implications and related questions that consumers may have about the stimulus package and Amy McAnarney, executive director for H&R Block's Tax Institute, recently provided some answers and insight for consumers.

Will this affect the tax return I have to file before April 15?

No. However, the amount of your rebate depends on how much money you earn this year and information from the 2007 tax return you'll file before April 15.

How soon can I get my rebate?

Checks should be distributed during a 10-week period starting in May.

If I file my taxes earlier, will that speed up when I receive my rebate?

Checks will not be distributed until May, regardless of when you file, but taxpayers who file for an extension might receive their rebates later than those who file by the April 15 deadline.

What if I don't have to file a tax return this year? Will I still get my rebate this year?

Taxpayers who want to receive their rebate this year should file a tax return this year. H&R Block is among the most affordable choices for Americans who want their rebate but who otherwise would not have to file, with discounted, professional tax preparation starting at $35 in our offices and do-it-yourself options, such as TaxCut Online, for as little as $14.95.

Will the rebate money I get be considered income, and will I be taxed on this next year?

No, and no. The rebate is an advance credit for tax year 2008, based on a tax cut in the economic stimulus bill.

Are there any limits on which taxpayers are eligible to receive a rebate? What are they?

To qualify for the rebate, the taxpayer must have earned income of at least $3,000, which can consist of income and benefits from Social Security or veterans' disability, and have a valid Social Security Number. The rebate is also phased out at adjusted gross incomes above $75,000, or $150,000 for married couples.

To learn more about preparing your taxes online and efiling for your 2007 tax return please visit our online tax preparation guide.