Economic Stimulus Payment Notice

Dear Taxpayer:

We are pleased to inform you that the United States Congress passed and President George W. Bush signed into law the Economic Stimulus Act of 2008, which provides for economic stimulus payments to be made to over 130 million American households. Under this new law, you may be entitled to a payment of up to $600 ($1200 if filing a joint return), plus additional amounts for each qualifying child.

We are sending this notice to let you know that based on this new law the IRS will begin sending the one-time payments starting in May. To receive a payment in 2008, individuals who qualify will not have to do anything more than file a 2007 tax return. The IRS will determine eligibility, figure the amount, and send the payment. This payment should not be confused with any 2007 income tax refund that is owed to you by the federal government. Income tax refunds for 2007 will be made separately from this one-time payment.

For individuals who normally do not have to file a tax return, the new law provides for payments to individuals who have a total of $3,000 or more in earned income, Social Security benefits, and/or certain veterans’ payments. Those individuals should file a tax return for 2007 to receive a payment in 2008.

Individuals who qualify may receive as much as $600 ($1,200 if married filing jointly). Even if you pay no income tax but have a total of $3,000 or more in earned income, Social Security benefits, and/or veterans payments, you may receive a payment of $300 ($600 if married filing jointly).

In addition, individuals eligible for payments may also receive an additional amount of $300 for each child qualifying for the child tax credit.

For taxpayers with adjusted gross income (AGI) of more than $75,000 (or more than $150,000 if married filing jointly), the payment will be reduced or phased out completely.

To qualify for the payment, an individual, spouse, and any qualifying child must have a valid Social Security number. In addition, individuals cannot receive a payment if they can be claimed as a dependent of another taxpayer or they filed a 2007 Form 1040NR, 1040NR-EZ, 1040-PR, or 1040-SS.

All individuals receiving payments will receive a notice and additional information shortly before the payment is made. In the meantime, for additional information, please visit the IRS website at www.irs.gov.

Finally, some good news from the IRS. This letter is part of an outreach program to ensure that all eligible taxpayers receive a rebate check this summer. To be eligible, you must have made at least $3000 last year and filed your taxes. The rebates begin phasing out for single taxpayers that make over $75,000 and married taxpayers that make over $150,000 AGI.

The tax rebate is part of a $168 billion economic stimulus plan President Bush signed into legislation February 13. The rebate is up to $600 per person and $1200 per couple, plus an additional $300 per child younger than 17 years old.   

Critics are still debating over how effective the rebate will be in stimulating the economy. An Associated Press-Ipsos poll found that only 19% of those surveyed said they planned to spend their rebate checks; 45% planned to pay bills; and 32% would save or invest the money. I’m trying to convince my wife we need to use the rebate to invest in a small sailboat. What do you plan to do with your rebate?