Your Taxes: US taxpayers, did you receive your economic stimulus payment?

US taxpayers may be eligible for a one-time stimulus payment of up to $600 starting in May.

By LEON HARRIS
taxes good 88 (photo credit: )
taxes good 88
(photo credit: )
This article concerns you if you are a US taxpayer. America faces a financial crisis and everyone is preparing for a recession. If you are a US bank, you may be eligible for a bailout payment, and $700 billion has been set aside for this purpose. But what if you are not a bank? Well, you should check if you have received an "economic stimulus payment" from the Internal Revenue Service (IRS). The IRS has just announced it seeks to return $266 million in undeliverable refunds and economic stimulus payments to US taxpayers. Are you one of them? How much is it worth? US taxpayers may be eligible for a one-time stimulus payment of up to $600 ($1,200 for a married couple filing jointly) starting in May. There also is a $300 per child payment for qualifying children younger than 17. The IRS says it is looking for US taxpayers; more than 279,000 economic stimulus checks totaling about $163m. and more than 104,000 regular refund checks totaling about $103m. were returned by the US Postal Service due to mailing-address errors. "People across the country are missing tax refunds and stimulus checks. We want to get this money into the hands of taxpayers where it belongs," said IRS Commissioner Doug Shulman. "We are committed to making the process as easy as possible for taxpayers to update their addresses with the IRS and get their checks." It is crucial that taxpayers who may be due a stimulus check update their addresses with the IRS by November 28, 2008. By law, economic stimulus checks must be sent out by December 31 of this year. The undeliverable economic stimulus checks average $583. The "Where's My Stimulus Payment?" tool on the IRS Web site (http://www.irs.gov/individuals/article/0,,id=181665,00.html) is the quickest and easiest way for a taxpayer to check the status of a stimulus check and receive instructions on how to update his or her address. Taxpayers without Internet access should call 1-866-234-2942. Taxpayers must submit their social security number, filing status and amount of refund shown on their 2007 return. The tool will provide the status of their refund and, in some cases, provide instructions on how to resolve delivery problems. Taxpayers checking on a refund over the phone will be given instructions on how to update their address. Taxpayers can access a telephone version of "Where's My Refund?" by calling 1-800-829-1954. The IRS encourages taxpayers to choose direct deposit when they file their return because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns. The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors and speeds up refunds. Determining if you qualify According to an earlier IRS informational notice, titled Economic Stimulus Payment Notice, most people with a 2007 US net income tax liability will qualify. This includes most people who get tax refunds. You won't get a stimulus payment in 2008, if any of the following apply to you: • You don't file a 2007 tax return. • Your net income tax liability is zero and your qualifying income is less than $3,000. To determine your qualifying income, add together your wages, net self-employment income, nontaxable combat pay, Social Security benefits, certain Railroad Retirement benefits and certain veterans' payments. • You can be claimed as a dependent on someone else's return. For example, this would include a child or student who can be claimed on a parent's return. • You do not have a valid Social Security number. • You are a nonresident alien. • You file Form 1040NR, Form 1040NR-EZ, Form 1040PR or Form 1040SS for 2007. How is it calculated? Essentially, there are two parts to the stimulus payment: a basic amount based on income tax liability, filing status or other qualifying factors if there is no tax liability; an additional amount based on whether a qualifying child is reported on the return. Taxpayers who had a net income tax liability will receive a payment, unless they can be claimed as dependents on someone else's return, are high-income individuals or do not have a valid Social Security number. The payment is equal to the taxpayer's net income tax liability, but no more than $600 for a single person or $1,200 for a married couple filing a joint return. The minimum payment is $300 for a single person or $600 for a married couple filing jointly. Eligible taxpayers who qualify for a payment may receive an additional $300 for each qualifying child. To qualify, a child must be under age 17 as of December 31, 2007. The stimulus payment - both the basic component and the additional funds for qualifying children - begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds. Here are two examples of how the phase out works: • An individual with AGI of $80,000 and federal income tax liability in excess of $600 would qualify for a basic rebate of $600. However, because this individual's AGI exceeds $75,000, his or her rebate is reduced by $250 (the credit is reduced by multiplying the amount of AGI over $75,000 by 5%). The taxpayer receives an economic stimulus payment of $350. • A married couple with two children, AGI of $160,000 and federal income tax liability before the child tax credit exceeding $1,200 qualifies for a basic rebate of $1,200 and an additional qualifying child credit of $600 for a total rebate of $1,800. But because the couple's AGI exceeds $150,000, their rebate is reduced by $500 (the amount of AGI over $150,000 multiplied by 5%). The couple receives an economic stimulus payment of $1,300. As always, consult experienced tax advisors in each country at an early stage in specific cases. leonharr@gmail.com Leon Harris is an international tax specialist.