IRS Stimulus Checks — Must File 2007 Tax Return to Claim!
By: Whitney Ibarra
The Henssler Financial Group Position Paper

In February 2008, both the Senate and House of Representatives passed the Economic Stimulus Act of 2008. With the President's signature on Feb. 13, this measure will send rebate checks to more than 130 million taxpayers beginning in early May of this year and continuing over several weeks during the spring and summer.

In most cases, the checks will equal the amount of the taxpayer's 2007 federal tax liability, with a maximum of $600 for individuals (those filing single, head of household, or married filing separately) and $1,200 for those taxpayers filing joint returns. Eligible taxpayers who qualify for payment will receive an additional $300 for each child who qualifies for the child tax credit. Payments to higher income taxpayers will be phased out, reduced by 5% of the amount of adjusted gross income (AGI) above $75,000 for individuals or $150,000 for those filing jointly.

This act also benefits taxpayers who normally do not have a tax liability or who are not required to file tax returns, such as low-income workers, those who receive Social Security benefits or veterans' disability compensation. These taxpayers will be eligible to receive a payment of $300 ($600 for a joint return) if they had at least $3,000 of qualifying income. Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans' benefits, and earned income, such as wages, salaries, tips and self-employment income. It is extremely important to note that while these people may not normally be required to file a tax return with the IRS, they will have to file a 2007 tax return in order to establish eligibility for the rebate.

In order to receive your rebate check, you just need to file a 2007 tax return as usual — no other action, extra form, phone call, etc. is necessary. The payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns. Taxpayers who have already filed with direct deposit will not need to do anything else to receive the payment. For taxpayers who haven't filed their 2007 returns yet, the IRS would like to remind them that direct deposit is the fastest way to get both regular refunds and stimulus payments.

For those taxpayers who end up extending their returns and file later in the year, the IRS will continue sending payments until December 31, 2008. Beware that if you file your 2007 tax return and then move residences, you should file a change of address card with the U.S. Postal Service to help ensure the receipt of your payment.

Two additional measures of the Economic Stimulus Act, geared toward businesses, include:

• a boost in Section 179 expensing and the overall investment limit for 2008 and
• a bonus first-year depreciation deduction for qualified property acquired and placed in service in 2008.

For more information and any other details regarding this issue, please contact The Henssler Financial Group Tax & Accounting Division at 770-428-4025.