Want a rebate? File your taxes on time

By: JIM VANDER SPEK - For the North County Times | Saturday, February 16, 2008 8:06 PM PST ∞

The new economic stimulus package that was rushed out of Washington last week puts new pressure on you to file your 2007 federal tax return on time.

Based on the way your return looks, you could receive a rebate of $600 plus $300 per dependent child, with no limit on the number of children. If you are married, the rebate doubles to $1,200. Your payment will be reduced if your adjusted gross income exceeds $75,000, or $150,000 if married, and goes away completely if you earn too much.

These one-time rebates will be sent to you after the government processes your 2007 federal tax return and possibly as soon as May. Filing later in the year after asking for an extension will delay your check.

Perhaps you are part of the 40 percent of the households that pay no federal income tax or don't even file a return. Don't feel left out. You will still get $300 if you can show at least $3,000 of earned income such as on a W-2, Social Security income, VA Benefits, or a combination of these.

This has raised questions as to how such refunds will be generated. Congress told the IRS to develop a procedure that certifies such recipients and then to get the word out. It is "money for nothing," but will not be automatic.

So here is the plan, as just announced by the IRS: File a return even if you don't owe money and make sure your Social Security gross amount is shown on the line of your federal return that asks for it. This is Box 20a on form 1040 and 14a on form 1040A.

If your return was filed without showing entries on these boxes, you will need to amend it and show it on the amended return. If this is the only reason for filing for you or an elderly relative, I suggest you wait until a special online form is developed by the IRS, which they will post on their website at www.IRS.gov, so that you can do this online at no cost.

This rebate idea is not new. You may recall the ones issued back in 2001, the success of which surely provided the inspiration for this round. Raising the ante by including non-tax return filers this time is going to be interesting and challenging for the IRS. As if collecting taxes was not a big enough job.

Actually, the idea of getting "refunds" even though you do not pay taxes is a firmly entrenched part of our "tax" system. For example, a low-income worker with dependent children is generally eligible for the Earned Income Tax Credit generating "refunds" of as much as $4,716, even if no taxes are owed. This is a straight grant.

And so it will be with our new rebate program. If your income is of the right flavor and amount to qualify for a check, you too will be given an opportunity to stimulate our economy. If you do not qualify for all or part of a rebate based on your 2007 income, you could still qualify based on your 2008 income and get the rebate next year.

Don't worry about needing to send it back. Any rebate they send you is yours to spend or to keep.

Jim Vander Spek is a certified public accountant with offices in Escondido. Contact him at Jimv@vanderspekcpas.com.