What you need to know about economic stimulus payments

According to the Internal Revenue Service, the vast majority of Americans who qualify for an economic stimulus payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year. The IRS will determine eligibility, figure the amount and issue the payment. In most cases, the payment will be a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return) and a minimum of $300 for individuals ($600 for taxpayers who file a joint return). Low-income workers who have earned income more than $3,000 but do not have a regular filing requirement must file a 2007 tax return to receive the minimum stimulus payment. Normally, certain Social Security, Railroad Retirement benefits and certain veterans payments are not subject to income tax and are not required to file a tax return. However, the economic stimulus law passed in February contains a special provision allowing Social Security recipients and recipients of certain veterans benefits and certain railroad retirement benefits to count those benefits toward the qualifying income requirement of $3,000 and thereby qualify for the stimulus payment. They must file a 2007 return in order to notify the IRS of their qualifying income. Report these benefits on Line 14a of Form 1040A or Line 20a of Form 1040 to establish eligibility. Please note the form lines just mention Social Security, but use these lines even if your only benefits were Railroad Retirement or veterans benefits. Social security benefits are usually reported on the 2007 form 1099-SSA and railroad retirement benefits reported on the form 1099-RRB, which recipients would have received in January. People who do not have a Form 1099 may estimate their annual Social Security benefit by taking their monthly benefit, multiplying it by the number of months during the year they received the benefits, and entering the number on Line 20a of Form 1040 or Line 14a of the Form 1040A. The sum of veterans disability compensation, pension or survivors benefits received from the Department of Veterans Affairs in 2007 should also be reported. People are allowed to estimate their annual benefit by taking their monthly annual veterans benefit, multiplying it by the number of months during the year they received benefits, and entering the number on Line 20a of Form 1040 or Line 14a of the Form 1040A Some recipients of the benefits described above may have filed a 2007 tax return reporting at least $3,000 in qualifying income. They do not need to do anything else. They will begin receiving their stimulus payments in early May. Others may need to amend a previously filed tax return to include benefits to reach the $3,000 qualifying income level. Adding these benefits on an amended tax return will not increase an individuals tax liability but will establish eligibility for the stimulus payment. Taxpayers can use IRS Form 1040X to amend a tax return in order to qualify for the stimulus payment. Individuals who pay no tax and who have less than $3,000 of qualifying income will not be eligible for the stimulus payment. Additionally, to be eligible for a stimulus payment, taxpayers must have valid Social Security numbers. Both individuals listed on a married filing jointly return must have valid Social Security numbers to qualify for a stimulus payment. Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child (subject to income phase-outs). To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number. Dividends, interest and capital gains income is not included when determining qualifying income. Supplemental Security Income does not count as qualifying income for the stimulus payment. Also not included in qualifying income are non veterans or non Social Security pension income (such as those from Individual Retirement Accounts). Individuals who file Form 1040NR, 1040PR or 1040SS are not eligible for the stimulus payments. Residents of the United States possessions will be receiving their rebates directly from the possessions. Also ineligible are individuals who can be claimed as dependents on someone elses return. The IRS emphasized people with no filing requirement who turn in a tax return to qualify for the economic stimulus payment will not get a tax bill. People in this category will not owe money because of the stimulus payment. Stimulus payments will be direct-deposited for taxpayers who select that option when filing their 2007 tax returns. For taxpayers who have not filed their 2007 returns yet, the IRS reminds them direct deposit is the fastest way to get both regular refunds and stimulus payments. Most taxpayers will receive two notices from the IRS. The first general notice from the IRS will explain the stimulus payment program. The second notice will confirm the recipients eligibility, the payment amount and the approximate time table for the payment. Taxpayers will need to save this notice to assist them when they prepare their 2008 tax return next year. Anyone who moves after they have filed their 2007 tax return should notify the IRS by filing Form 8822, Change of Address, and also notify the Post Office. Individuals who need to file a return this year to receive a stimulus payment may be able to take advantage of thousands of free tax preparation sites nationwide for low-income and elderly taxpayers. Clinton County American Association for Retired Persons Income Tax Assistance Preparation service is located at the Senior Citizens Council at 5139 N. Catherine St. in Plattsburgh. The following are the dates and times tax preparers are available: In March: 9 a.m. to 6 p.m. on Wednesdays and Thursdays and 9 a.m. to 2 p.m. on Fridays and Saturdays. In April: 9 a.m. to 6 p.m. Wednesdays and Thursdays and 9 a.m. to 2 p.m. on Fridays. No appointments are taken; each are on a first come, first served basis only. Taxpayers should be alert for tax rebate scams such as telephone calls or emails claiming to be from the IRS and asking for sensitive financial information. The IRS will not call or e-mail taxpayers about these payments nor will they ask for financial information. Scam emails and information about scam calls should be forwarded to phishing@irs.gov. The Senior Connection is a column provided by the Clinton County Office for the Aging. For more information about services for senior citizens, contact their office at 135 Margaret Street, Suite 105, Plattsburgh, or call them at 565-4620.

Vote on this Story by clicking on the Icon


Use the comment form below to begin a discussion about this content.

Sign in to comment