FAQ about tax rebate checks

The Washington Post has a great Q and A session on some frequently asked questions about the tax rebate.

Here are some good questions a lot of people are asking:

Q: I’m a working veteran with a disability: I am considered 30 percent disabled by the VA. I currently work full time and file taxes. I will be eligible for the $600 incentive payment. I read that disabled Vets may be eligible for $300. Is that in addition to the $600 I will already receive or is that only for vets who do not file taxes?

A: No. The $300 minimum payment may go to veterans who don’t normally file returns, but qualify for the stimulus payment.

A: I’m confused about the tax rebate. My husband and I got a letter saying singles would get $600 and married couples would get $1200. But a friend of ours got a letter saying the amounts were $300/$600 respectively. Which is correct?

A: The actual amount depends on the information contained in your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.

Q: Will we have to claim this as income on our 2008 tax returns next April 15? If so, I’m just going to put 1/3 in my savings account so that I have money set aside for those taxes.

A: No. You will not owe tax on your payment when you file your 2008 federal income tax return. The stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment in the event you do not qualify for the full amount on your 2007 return but you do on your 2008 return. You will need to have the letter as a record of the amount you previously received.

Q: I read somewhere that the upcoming tax rebates will be an advance against 2008 taxes and will need to be paid back in 2009 when we file our 2008 returns. Is this correct?

A: No, this is NOT an advance payment. You will not owe tax on your payment when you file your 2008 federal income tax return.

Be sure to check out the IRS’s information page for more answers to your tax rebate questions. Also, Michelle Singletary’s column in the Post is always a good read, especially if you’re interested in personal finance, budgeting, and getting out of debt.

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