In an effort to stimulate the economy, Congress reached an agreement on a tax "rebate" which President Bush signed on February 13th.  Here are the details we know currently:

• Approximately 130 million taxpayers will receive rebates.  The only action necessary is to file their 2007 tax return.
• Rebates will only be issued to taxpayers who file a tax return (even if not legally required to do so)
• If your 2007 refund was directly deposited to your checking or savings account so will the rebate,.  Therefore, be very careful about closing bank accounts in the near future!
• You must notify the IRS if you change your address after filing your tax return
• Illegal aliens will not qualify for checks!
• Most individuals will receive a $600 rebate if they pay income tax
• Most couples who file joint will receive a $1200 rebate if they pay income tax
• Families with children will receive an additional $300 per child (if the child qualifies them to receive the child tax credit)
• Taxpayers who do not pay income tax (because either they make too little to pay taxes or their tax liability is reduced to zero due to tax credits) but earn at least $3000 (including Social Security Benefits) may receive a $300 rebate.
• The rebates will be "phased out" (reduced or eliminated) for individuals earning more than $75,000 and couples earning more than $150,000. 
• The IRS will continue to issue rebate checks through December 31, 2008 in order to accommodate taxpayers who file their returns later than April 15th.
• The IRS will be mailing 2 notices to taxpayers.  The first is a general notice that will explain the rebate program.  The second will confirm the taxpayer's eligibility, payment amount and when the can expect their rebate.  Note that numerous email and telephone scams have already been reported according to the IRS.  The IRS *WILL NOT* be contacting taxpayers by phone regarding the rebate and *NEVER* communicates with taxpayers via email in any circumstance.

To see if you qualify, pull out your tax return and write down the numbers from your Federal Return:

If you filed Form 1040-EZ  write down the figures from lines 4 (Adjusted Gross Income) and 10 (Tax).

If you filed Form 1040A write down the figures from lines 21 (Adjusted Gross Income) and 37 (Tax).  Also note the number of dependents with a checkmark in the column 4 of the exemptions area on page one.

If you filed Form 1040 write down the figures from lines 37 (Adjusted Gross Income) and 57 (Tax).  Also note the number of dependents with a checkmark in column 4 of the exemptions section on page one.

To qualify for the basic $600 (single, head of household or married-filing separately) or $1200 (married filing jointly) check you must:

• Have filed a 2007 Form 1040, 1040A or 1040-EZ.
• Have a tax of at least $600 (single, HOH or married filing separately) or $1200 (married filing jointly) on the appropriate tax line for your return type referenced above.
• Not be claimed as a dependent on another tax return (i.e. a student claimed on a parent's tax return or a older parent claimed on a child's tax return).
• Have an Adjusted Gross Income of less than $75,000 if single, head of household or married filing separately; or $150,000 if married filing a joint return.

To qualify for the additional $300 for a dependent child you must:

• Multiply the number of checkmarks in the exemptions area (generally, for every child under the age of 17 the box should be checked). 
• Now, multiply $300 times the number of checkmarks you had.  Add this number to the $600 or $1200 you figured above.

What if my tax is zero?

You may qualify for a $300 special rebate... read below under Special Circumstances

What if the IRS normally "intercepts" my tax refunds?

In the following circumstances your rebate may be intercepted and applied to an outstanding obligation such as:

• Delinquent federal or state income taxes
• A current installment agreement with the IRS
• Child support arrearages or similar issues
• Student loans in default
• Other federal obligations outstanding (for example, VA medical debt)

In these circumstances you will receive a notice from the IRS indicating your rebate has been "offset" and which agency your rebate was forwarded to.  If the obligation is taxes due the IRS and your outstanding balance is less than the rebate amount you should be issued a check for the difference.

Lower Income Workers and Social Security Recipients
If your tax is zero, but your Social Security benefits and Veterans benefits plus earned income (wages, self-employment income, farm income and certain profits from S-Corporations or Partnerships) totals at least $3000 you should receive a $300 rebate check ($600 if married filing jointly).

Please note that you MUST file a 2007 income tax return (even if you are not normally required to file one because your Social Security and or total income was under the limit to require filing a return) if you want to receive the tax rebate check.

Also, please note that if you are claimed as a dependent on someone else's tax return, you will not be eligible for a tax rebate.

Note that for the purposes of the $300/$600 reduced rebate the following sources of income do not count towards the $3000 earned income limit:

• Interest and dividends
• Capital gains
• Unemployment compensation
• Pensions and annuities (including IRAs, 401(k), 403(b) and 457(g) distributions
• Gambling winnings
• Alimony
• Passive income from Partnerships and S-Corporations
• Rental income
• Supplemental Security Income (SSI)
  

Upper Income Individuals
If your adjusted gross income is higher that $75,000 (single, head of household or married filing separately) or $150,000 (married filing jointly) your rebate may be partially reduced or you may not qualify for one at all.  Your rebate will be reduced by 5% of your adjusted gross income over these amounts.

Example 1: a single taxpayer has an adjusted gross income of $85,000.  His $600 rebate would be reduced by $500 ($85,000 AGI minus $75,000 limit = $10,000 x 5% = $500).  His rebate would then be only $100.

Example 2: a married couple with two children under age 17 have adjusted gross income of $170,000.  Their $1200 rebate  would be reduced by $1000 ($170,000 AGI minus $150,000 limit = $20,000 x 5% = $1000).  Their rebate check would then be only $200.  Note that the additional $300 rebate for children is automatically reduced to zero when income exceeds the limit.

Example 3: a single taxpayer with three children under age 17 has an adjusted gross income of $110,000.  His $600 rebate would be reduced to zero ($110,000 - $75,000 limit = $35,000 x 5% = $1,750) because 5% of the income over the limit is greater than the rebate amount.