File For Your Tax Rebate

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Q: Do I have to file a federal tax return to get my ‘economic stimulus’ rebate?

A: Yes. Even if you normally don’t file a federal tax return, to get your payment under the ‘economic stimulus package,’ you have to file a return. An estimated 20 million seniors on Social Security are eligible to get $300 per individual or $600 per couple. Payments will be sent starting in May—but only to people who file a 2007 federal tax return. The IRS will do the rest.

These payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns. Direct deposit is the fastest way to get stimulus payments. To accommodate taxpayers who file tax returns later in the year, the IRS will continue sending payments until December 31, 2008

In most cases, the payment will equal the amount of tax liability on the tax return, with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return). But the law also allows for payments for select taxpayers who have no tax liability, such as retirees on Social Security, low-income workers or those on veterans’ disability, pension or survivors’ benefits. These taxpayers will be eligible to receive a payment of $300 ($600 on a joint return) if they had at least $3,000 of “qualifying income”—-which includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits, and income from wages or self-employment. Dividends, interest and capital gains income is not counted as qualifying income. Supplemental Security Income (SSI) and IRA payments also don’t count as qualifying income for the stimulus payment.

The IRS says some Social Security recipients, certain Railroad Retirement and certain veterans’ beneficiaries, should report their 2007 benefits on Line 14a of Form 1040A or Line 20a of Form 1040. If you have already have filed your federal taxes, but did not report these benefits, you have to file an amended return using Form 1040X. Payments to higher income taxpayers will be reduced by 5% of the amount of adjusted gross income above $75,000 for individuals and $150,000 for those filing jointly.

The IRS will be mailing 2 notices to taxpayers about these stimulus payments—-but seniors are warned to watch for tax rebate scams, like telephone calls or e-mails claiming to be from the IRS and asking you for financial information. The IRS will not call or e-mail you about these payments. For information on free tax help, call 1-800-906-9887, or 1-888-227-7669.