Thursday, February 14, 2008

Stimulus spelled out

Wondering how this complicated rebate scheme attached to the economic stimulus plan works? This Forbes article does a good job of explaining. They break it out into 3 main rebates so long as your 2007 and 2008 adjusted gross income (AGI) is less than $75,000 for individuals and $150,000 for couples:

1) Any adult with an AGI of $8,750 for single or $17,500 for a couple will get a $300 per adult rebate.
2) Each child earns the adult $300 so long as the child is 17 yrs of age or younger the whole year (2007 is the assumed year)
3) An extra $300 per adult so long as that adult owed at least $600 in taxes. Couples would have to owe $1200 together. The example given is that if the couple only owes $900, they will only get an extra $150 per adult for a grand total of $900 back.

Here is the real crazy piece of information:

The rebate is technically a credit against your 2008 tax bill that is being paid (in most cases) as what we'll call a "prebate." This prebate is based on your 2007 income tax return. The actual credit is based on your 2008 tax return. Whichever year produces the bigger check for your family is the year that counts.

So, I guess if you can't earn the rebate on your 2007 taxes you might be able to still earn it for 2008. This is so confusing, no wonder it took Congress so long to pass it. Here is the closing line which is all too true:
Got all that? A true stimulus bill--for accountants, that is.

I guess those who have accountants or use tax software will be getting their money's worth.

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