What You Need to Know about the New 2008 Tax Rebate
by: Iowa Legal Aid
You may have heard about money the federal government will be sending out in May. Find out what you need to know to claim this rebate.
Who will qualify?
- Rebates will be given to many taxpayers.
- Lower-income taxpayers who have at least $3,000 in income may still get a rebate.
Who won't qualify?
- People whose only income is TANF(FIP) or SSI will not get a rebate.
- Taxpayers who file taxes with an ITIN will not get a rebate.
- Only children with valid social security numbers will be considered qualifying children. It doesn't matter if this child's parents both have social security numbers.
- A social security number holder who files taxes with a spouse who has an ITIN will not receive the rebate.
- A taxpayer who is the dependent of another taxpayer won't get a rebate.
How much will my credit be?
- The maximum credit for taxpayers will be:
- $600 for individuals*,
- $1,200 for joint filers*, OR
- the taxpayer's net income tax liability, whichever is lower
- Plus credits for any qualifying children.
*There is a reduction in the $600 ($1,200) credit for higher-income taxpayers.
What if I don't owe any taxes?
Lower-income taxpayers with at least $3,000 of "qualifying income" will get:
- $300 for single taxpayers
- $600 for married taxpayers filing jointly
- Plus any additional amounts for qualifying children.
What is qualifying income?
- Qualifying income can be earned income, Social Security income (Old Age, Survivors, Disability and Tier 1 Railroad Benefits), or Veteran's pension or Veteran's compensation.
- There are a few other ways a taxpayer can qualify for this rebate. If your tax situation is not covered by this article, you can go to www.irs.gov for more information.
How much is the qualifying child credit?
- The credit for qualifying child(ren) is $300 per child.
- Qualifying child:
- Taxpayer's child must meet the same qualifying child definition as the child tax credit.
- The child must:
- Be under the age of 17,
- Have lived with you for 6 months or more, and
- Meet the relationship test.
Some relationships that count are son/daughter, grandchild, nephew/niece, brother/sister, stepchild and foster child placed by a court.
What about Divorced, Legally Separated, and never-married parents?
If one parent has given the other parent the deduction for the child, the qualifying child credit will likely go to the parent getting the deduction.
Parents who take turns claiming the deductions may both get the qualifying child credit.
The parent claiming the child for the 2008 tax year will likely get the credit when the parent files a return in 2009.
How do I claim it?
- You must file a 2007 tax return.
- You should file it by the due date or before the end of an extension.
- Returns filed after the deadline may still get the rebate, but it will take longer.
- The return has to be processed and the IRS must send the check before December 31, 2008.
What about people who don't usually file a tax return?
- Social Security recipients, veterans and other low-income individuals with "qualifying income" will need to file a return even if they aren't normally required to file.
- Lower-income taxpayers may miss out on other important tax credits when they don't file a return when they have income.
- To find out about other credits you might be able to claim, see the Iowa Legal Aid Website at iowalegalaid.org. Go to the topic "Work" and select taxes for more resources.
How will I get the money?
- Taxpayers who provided direct deposit information on their 2007 return will have their rebate automatically deposited into that same account.
- Other taxpayers will receive paper checks.
Will SSA or DHS count this credit as income?
- This credit will not count as income for taxpayers who get benefits like SSI or the Food Assistance Program (known before as "Food Stamps.")
- If you save the credit, it will not count as a resource until two months after the month you get the check.
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