by mikemarrs » Sun Jan 27, 2008 1:01 pm
WASHINGTON (AP) - Most taxpayers could expect a rebate of up to $600 starting in mid-May under the economic aid plan set to go through Congress within weeks.
Couples could get twice as much, with even more for most families with children. All that, however, depends on smooth sailing at the Internal Revenue Service, and the agency already is up to its eyeballs in filings and refunds.
The Treasury Department says that despite the strains of tax filing season, the IRS will be able to begin delivering the payments within 60 days after President Bush signs the plan into law, and complete the process in approximately 10 weeks, possibly sooner. The payments would come separately from regular tax refunds.
"The IRS has already begun trying to prepare for this," said Andrew DeSouza, a Treasury spokesman. "They'll be ready to go."
But figuring out if you qualify - and for how much - can be complicated, thanks to confusing rules designed to get the money to middle-income workers and ensure it also benefits low-income people who are most likely to spend the cash.
"Almost everyone who earns income will receive some benefit," said Douglas W. Elmendorf, an analyst at the Brookings Institution. "The idea is to target the money on the people who will spend a large share of it, and to target it on people who are likely to be hurt by an economic downturn."
People who do not make enough to pay taxes but had at least $3,000 in earned income would get $300. Those earning less than that would be disqualified, as would the wealthiest. Older people living solely off Social Security checks would not get the rebate.
Individuals with adjusted gross incomes of more than $75,000 and couples with income exceeding $150,000 would get smaller checks. Contributions to individual retirement accounts, 401(k) retirement accounts and health savings accounts would not count toward the limits.
About three-quarters of those eligible for the checks are working people. About one-quarter would qualify solely through pension or interest income, such as retirees or people who are unemployed. Eligible people would get at least $300.
For middle-class people, the rebates are fairly straightforward. Most individuals would get a $600 rebate, couples would get $1,200, and those amounts would rise with the size of their families. High- and low-income people, however, would get only a partial benefit.
People with income less than $75,000 would get a rebate equal to the taxes they paid in 2007, up to $600. Couples with income less than $150,000 could get up to $1,200. Those who earned more than $3,000 but owed little or no taxes would get a flat $300, or $600 per couple.
So a low-income family of four - with $35,000 in income and virtually no tax liability - would get $1,200. That includes the flat $600 per couple and $300 for each child.
A single person earning minimum wage would receive the lower rebate, $300.
A single parent of two with income of $38,000 and a tax bill of $433 would get $1,033 - a $433 tax rebate plus $300 per child.
To focus the payments on middle-class people, the plan includes rules that reduce the rebates for those with higher incomes. For each dollar over the limits, the payment goes down by 5 percent.
That means that while a family of four with income of $95,000 would get $1,800 - $1,200 for the couple and $300 for each child - a family of four with income of $160,000 would get less, and the same family making $200,000 would get nothing.
Income of $160,000 would put a family $10,000 above the income threshold, reducing the benefit by $500 for a rebate of $1,300. The wealthier family, which falls $50,000 above the threshold, would see its rebate vanish under the formula.
Similarly, a single person with no children who had $16,000 in income would get $600, while the same person making $85,000 - $10,000 above the limit - would get just $100.
People would not have to work to receive a rebate. A retired couple owing $4,000 in taxes would get the full $1,200; if they owed no taxes, they would receive only half that. If the couple earned less than $3,000, however, they would be ineligible. That includes 20 million older people whose only income is their Social Security checks.
The plan would allow people who do not qualify for a rebate this year to get one in the spring of 2009 if they become eligible based on their income level or tax liability in 2008. That has been a standard feature of past rebates, although it does nothing to stimulate the economy.
Some 40 million people who file their tax returns online could start getting payments by direct deposit in May. Congressional tax analysts say the government can send out up to 9 million paper checks a week. The IRS will have to reprogram its computers to calculate who gets the rebate and how much they will receive.
"They sort of learned how to do this last time," said Jason Furman, a Brookings economist, referring to the last round of rebates in 2001.
"It's definitely complicated if you're trying to understand it, but it's not actually going to be complicated for people because they're going to get a check from the IRS without having to fill out a single form."
Still, the agency is already working overtime processing tax returns, and rebates will have to take a back seat come April, when it will be overwhelmed in the run-up to Tax Day.
"The two final weeks of tax filing season are very, very high-traffic weeks for the IRS," DeSouza said. "We'll just have to see what capacity they can handle."
Just was wondering if it was 07 whether we would be getting it for the one who turned 18 last year. And I am far from naive enough to think it was a free handout, just was curious how it was all going to play out in the end.