I’ve received a bunch of questions over the past fews days like this one:
Taxpayer asks:
Will retirees on fixed income that pay income taxes receive the rebate?
Taxgirl says:
It’s really important to understand that nothing is set in stone yet. Despite an accord of sorts between the House and the White House, as reported here, there are still details to be worked out.
However, under the proposed plan, those taxpayers who reported earned income of at least $3,000 last year but who did not make enough to pay federal taxes would receive a $300 check ($600 for a married couple filing jointly). Those taxpayers who would pay at least $600 in income tax for 2007 would receive a check for $600 ($1,200 for a married couple filing jointly).
So, under those circumstances and in the proposed plan, a senior who reported income of at least $3,000 of earned income last year (this would not include dividends or Social Security income) – whether taxes were owed or not – would receive a $300 check. Seniors who reported earned income of less than $3,000 or did not file a return would not – under the proposed plan – receive a check.
Again, it is very important to understand that the plan has not yet been approved by the Senate. Senators on both sides of the aisle have beefs with the proposed plan. The Dems want to see the checks go out to more folks while the GOP wants to trim checks.
Earlier today, the Senate Finance Committee agreed on a version of the economic stimulus package. This proposal is expected to go to the Senate for a full vote tonight or Thursday.
Eligibility for the rebates remains capped but at much higher rates than the House version. The ceilings as proposed by the committee are $150,000 for individuals and $300,000 for couples, twice as much as those proposed by the House.
In return, the Senate proposal shrinks the rebate checks. The Senate version suggests checks of $500 for individuals and $1,000 for married couples. The bill would also allow a credit to $300 per child for taxpayers with at least $3,000 income.
President Bush clearly prefers the House version of the plan, saying, “If they’re truly interested in dealing with the slowdown in the economy, the Senate ought to accept the House package, pass it and get it to my desk as soon as possible.”
So, don’t spend your checks yet and don’t get upset yet. There’s more to come!
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
