Starting in May, the U.S. Treasury will begin sending economic stimulus payments to more than 130 million households. To receive a payment,taxpayers must have a valid Social Security number, $3,000 of income, and file a 2007 federal tax return. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive a stimulus payment.
A new online calculator at the IRS Web site of www.irs.gov will give you an estimate of the stimulus payment you may be due. You must answer a few questions and the calculator will do the rest. Remember: you must file a 2007 tax return in order to receive the payment. Payments will start May 2.
The last two-digits of your Social Security number and whether you opted for direct deposit into your financial account or a paper check will determine when you receive your payment.
The basic eligibility requirements are:
ï Individuals or Families must have at least $3,000 in qualifying income, which can be income from or in combination with Social Security benefits, Veterans Affairs benefits, Railroad Retirement benefits and earned income.
ï The taxpayers must have valid Social Security Numbers.
ï The taxpayers cannot be claimed as dependents or eligible to be claimed as dependents on another's tax return.
ï The taxpayers must file a 2007 tax form such as a 1040EZ or 1040.
There are special rules for military personnel. For federal tax purposes, the U.S. Armed Forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard and National Guard are also included, but not the U.S. Merchant Marine or the American Red Cross.
Normally, combat pay is not counted as income and is not taxable. However, for the purposes of receiving an economic stimulus payment, military personnel serving in combat zones have the option of including their nontaxable combat pay on their 2007 or 2008 income tax returns if it helps their eligibility for the 2008 economic stimulus payments.
To receive the stimulus payment this year, combat zone personnel or their spouses must file a 2007 income tax return by Oct. 15. Otherwise, they can claim the economic stimulus payment on next year's income tax return. Military personnel who normally would not file an income tax return because their 2007 income is not taxable can file a simple Form 1040A with the IRS if they want to receive the economic stimulus payment. They should report their nontaxable combat pay on Line 40b of the Form 1040A to show at least $3,000 in qualifying income. The Department of Defense lists the amount of excluded combat pay, along with the designation, ìCode Q,î in Box 12 of Forms W-2.
Be aware that identity thieves are already pushing scams involving the stimulus payments. At least one telephone scam is making the rounds using the proposed rebates as bait. See the IRS Web site at http://www.irs.gov for more information.
For more tax information, visit the Walter Reed Tax Center in Delano Hall (Bldg. 11), Rm. 1-69, or call (202) 356-1012, Ext. 41213.
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