Wednesday, February 13, 2008

The IRS Outlines its Plan for Distributing Economic Stimulus Tax Rebates.

The IRS has announced how it will distribute the economic stimulus tax rebates to taxpayers. To receive a rebate, eligible taxpayers must file a 2007 income tax return. This is true even if a person is not otherwise required to file a tax return. Essentially, if you do not file a tax return, the IRS will not know that you are supposed to receive a rebate or in what amount.

Most people that file their tax returns will receive $600 per person ($1,200 for those married filing jointly). Additional rebates will be given to those with children. Individuals with Adjusted Gross Income over $75,000 and joint filers with AGI of over $150,000 will receive smaller rebates. These people will have their rebates reduced by 5% of the amount by which their AGI exceeds the thresholds. This means that those with incomes exceeding the AGI thresholds will see significant declines in the amount of their rebate quickly. For every $100 by which your AGI exceeds the threshold, your rebate will be decreased by $5.

The IRS has yet to determine the payment schedule, yet it expects to start sending rebate checks in May. Those persons that have chosen direct deposit for any refund on their tax return will have their stimulus rebate directly deposited into their bank accounts. Therefore, filers will want to make sure that their account numbers and routing numbers are correct.

It is important that if you move after filing your 2007 income tax return, you should file a Form 8822 Change of Address with the IRS. (The form can be found at: If the form is not filed, people may miss out on the rebates entirely as the IRS will only be sending the economic stimulus tax rebate payments until December 31, 2008. If the IRS doesn't know where you are before then, you shouldn't expect to see the money.

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