As you know by now, Representatives and Senators on both sides of the aisle put aside their natural animus and agreed last night to a stimulus plan that includes tax rebates.
Dubya is OK with the deal, too, even though it is slightly different from the one he and House leaders originally hammered out.
Here's the basic framework:
- Individual taxpayers will receive rebate checks of at least $300 and up to $600.
- Married couples will get up to $1,200.
- Taxpayers with children will receive an additional $300 per kid.
You'll be eligible if you have at least $1 of tax liability or $3,000 in qualifying income on your 2007 return.
That "qualifying income" definition is the major area tweaked by the Senate. Now, in addition to earned income such as wages, salary, tips and the like, rebate-eligible income includes veterans' disability or survivors' disability payments, as well as Social Security benefits.
Win some, lose some: Folks in those last two earnings categories were the big rebate winners. Previously, they would have been shut out of the government money.
Now, 117 million low- and middle-income households,
But there are losers, too. If you are a single taxpayer and make more than $75,000 your rebate will be reduced. The same goes for a married couple with income in excess of $150,000.
And taxpayers with college kids are not going to be happy either.
They're already footing big university bills and probably were looking forward to the extra cash. But where the rebate is concerned, the definition of child is the one that applies to the child tax credit; that means only kids younger than 17 will get Mom and Dan an added $300 per youngster.
Prebate now, rebate later: While the tax checks will be issued based on 2007 income, they actually are "prebates" on your 2008 return.
So if you don't get the full rebate amount this year, you might be able to collect a little more when you file your 1040 next filing season. This is essentially what happened back in 2001 with that round of rebates.
The IRS has yet to provide details on how all this will work, either the 2008 claims or the mailing of checks this year beginning in mid-May. That's understandable. The bill isn't even officially the law of the land yet.
But as things get ironed out, I'll let you know what I know.
What I do know right now is file your return as usual, make your shopping list and get ready for the tax money to arrive in a few months.