President Bush has signed the economic stimulus package into law. This plan provides tax breaks to businesses that invest in capital equipment, temporarily allows larger mortgages through the Federal Housing Administration (and related entities), and provides a personal income tax cut for 2008. Instead of passing this on when we file taxes next year, the IRS will mail a tax rebate check to most Americans this summer. This is an advance on the reduced taxes for 2008.

How much will you get back? Flexo at Consumerism Commentary recently shared a handy little tax rebate calculator, which I’ve reproduced below:

The tax rebate will have no effect on your 2007 tax return, which you’re probably working on right now. These changes are for the current year. According to the IRS web site:

  • The vast majority of Americans who qualify for the payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year.
  • The IRS will use information on the tax return to determine eligibility and calculate the amount of the stimulus payments.
  • Taxpayers should be aware that there are identity theft scams involving the proposed advance payment checks (known informally as rebates to many Americans).

Checks will be sent out beginning in May. For more information, read facts about the 2008 stimulus payments from the IRS. Finally, Kathleen Pender at the San Francisco Chronicle was the best source I found on how tax rebates work in the economic stimulus package.

As always, the information in this post is correct to the best of my knowledge. If you spot an error, please let me know so that I can correct this article.