The IRS is, indeed, sending out a rebate to all eligible taxpayers this year in an attempt to boost the economy. The tax rebates will begin being sent out in May. These rebates can be substantial, up to $1,200 for joint filers plus $300 per child under without limit. Eligibility is based on the 2007 tax return information, so you may not wish to extend your return this year. Additionally, taxpayers who have their 2007 refunds direct deposited will receive their rebates by direct deposit – sparing them from any delays in printing and mailing the large number of rebate checks. E-filing will also speed the rebates.
Anyone that has no tax liability and therefore is not required to file a return under usual circumstances will need to file a 2007 return to prove eligibility for the rebate. There will not be a tax bill assessed as a result of filing a return to prove eligibility. Although the rebate is limited to the amount of taxes paid, some may qualify for a minimum payment of $300 ($600 if filing jointly) if their tax returns reflect $3,000 or more in qualifying, normally exempt income. Affected taxpayers who have already filed may file a Form 1040X including these benefits to reach the $3,000 qualifying income level without changing their tax liability.
For more information regarding the rebate, you can contact our office or visit the IRS website at http://www.irs.gov/newsroom/article/0,,id=179095,00.html.
The rebates being sent our are only for individuals, although there were some considerations for businesses in the Stimulus Package. Look for a separate blog containing information regarding business benefits.
Source: AICPA Tax Alert Feb. 14, 2008