Look for tax rebate in May
Published 10:58 pm Wednesday, February 13, 2008
WASHINGTON — The checks aren’t in the mail, but they will be soon.
President Bush signed legislation Wednesday to rush rebates ranging from $300 to $1,200 to millions of people, the centerpiece of government efforts to brace the wobbly economy. First, though, you must file your 2007 tax return.
More than 130 million people are expected to get the rebates, starting around May. Congress, Bush, the Federal Reserve and Wall Street are hoping the money will burn such a hole in people’s pockets that they won’t be able to resist spending it. And the spending is supposed to give an energizing jolt to a national economy that is in danger of toppling into a recession if it hasn’t already.
Whether people actually spend the money remains to be seen. A recent Associated Press-Ipsos poll indicates most people have other plans. Forty-five percent said they planned to pay off bills, while 32 percent said they would save or invest it. Only 19 percent said they would spend their rebates.
The measure Bush signed, a $168 billion rescue package passed by Congress last week, includes not only rebates for individuals but also tax breaks for businesses to spur investment in new plants and equipment. That, too, could help bolster U.S. economic activity.
Most people who pay taxes or earn at least $3,000, including through Social Security or veterans’ disability benefits, will get a rebate. Singles making more than $75,000 and couples with income topping $150,000, however, will get smaller checks, up to the top limits for any rebate: incomes of $87,000 for individuals and $174,000 for couples.
To get any rebate, you must file a 2007 tax return and have a valid Social Security number. If you already filed your 2007 return, the IRS says you don’t need to do anything extra.
Most taxpayers will receive a check of up to $600 for individuals and $1,200 for couples, with an additional $300 for each child.
People earning too little to pay taxes but who earn at least $3,000 — including elderly people whose only income is from Social Security and veterans who live on disability payments — will get $300 if single, or $600 if a couple.
The IRS will send out rebates, by mail or by direct deposit into your bank account, through the late spring and the summer. The rebates come in addition to any regular tax refund.
To pay for the rebates, which are estimated to cost about $117 billion over the next two years, the government will have to borrow more money, enlarging the budget deficit.
