Calculate Your Economic Stimulus Tax Rebate

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.

More about...Planning, Taxes

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Jnetty
Jnetty
12 years ago

The plan states $600 for individuals and $1200 for married couple. But when I do the calculator I only get $300?
I don’t understand how they figure the amount you get if you file Single. I file single and AGI was 29,000

Tyler
Tyler
12 years ago

This is a real switch. Normally the governemtn witholds their share of the taxes (for employees) from each paycheck. Now they are giving an “Advance”. Somehow this sounds like it will come back to bite someone in the behind.
Enjoy it while it lasts I guess!

Rob Z
Rob Z
12 years ago

Yes, this calculator is incorrect. Wife and I file jointly, total income was 120K, with 1 child. That should be 1200 + 300 = 1500, but this calculator showed 900.

icup
icup
12 years ago

So can somebody help me out here… Since this is an ‘advance’ on the 2008 taxes, does this mean that if I would get a refund when I file my 2008 taxes on April 15th 2009, that refund would be reduced by the amount of the advance? Or are they cutting taxes such that I would get something in the ballpark of my normal refund plus $1200?

In other words: this is not the ‘free money’ its being billed as, but rather more like a payday loan with no interest, correct?

J.D.
J.D.
12 years ago

Thanks folks, for pointing out the errors. Please continue to post mistakes, including your info if you’re willing to share it. I’ll try to contact the guy who did the calculator to see if he can correct it.

NJS
NJS
12 years ago

icup, here’s the deal:

For the year 2008, there will be this stimulus rebate. Instead of waiting till you file your ’08 tax return (next year), you will be getting this stimulus rebate early, in either late spring or early summer.

This rebate does not change your taxes otherwise. It does not affect your ’08 return in any other way. You’ll still be paying the same taxes (and getting the same normal refund or tax bill) next year.

Milo
Milo
12 years ago

The calculator is correct. Since this is a tax rebate of your 2008 taxes you must put in a “Net Income Tax Liability”. If you put in a zero you will get the minimum rebate amount given to those who pay no taxes but still have income, which is $300 for a single and $600 for a couple. I made the same mistake myself the first time I used the calculator.

Flexo
Flexo
12 years ago

Those who are reporting errors, please make sure you’re entering correct values for earned income, AGI and your full 2007 tax liability…

Rob Z: what are the values you used for each field? If you used 150000 for earned income and 150000 for AGI, and 0 for tax liability, then your credit is in fact 900. If you owed tax throughout 2007, which most likely you did, say 12000, then your credit is 1500… and the calculator handles that appropriately.

cdg
cdg
12 years ago

To Jnetty: The “plan” does NOT state $600 for individuals and $1200 for married couples. The basic rebate is the LESSER of your net income tax liability or $600 ($1200 for married couples), so your rebate could be anywhere from 0 to $600. If you qualify for the Special Provisions (added by the Senate), you will receive a minimum of $300 (or $600 for married couples) + $300 for each qualifying child. To Rob Z: See above. What was your net tax liability? I’m guessing it was less than $900, or you left the field blank. To cup: The rebate… Read more »

Patty
Patty
12 years ago

I have no earned income and no social security. I do have pension and investment income. So all the the fields in the calculator are 0 except for total adjusted income and tax liability. It is calculating a $600 rebate. Is this right? I thought you had to have earned income or social security?

Dan
Dan
12 years ago

Tyler and icup,

The rebate is an advance on a new credit created for 2008. The money doesn’t have to be repaid. I explain more in my article:
http://moneymyths.org/blog/2008/02/14/tax-rebate-confusion/

Tablespork
Tablespork
12 years ago

So since I have a baby on the way this year, I’ll be able to claim an extra $300 credit on my return next year?

Dan
Dan
12 years ago

Tablespork,

Yes, you’ll get the $300, but this is how it will work: You will claim the new dependent. This will increase your credit under the stimulus act. Then you will subtract the rebate you received, leaving the $300. Same end, but the process is important. It’s not an extra credit, there is just one credit calculated on your 2008 taxes. The rebate is an estimate based on 2007.

Rich Money Million
Rich Money Million
12 years ago

What I’m most curious about is HOW most people plan to use the money that they’re going to get! Are you going to save it, invest it, spend it, hide it under your mattress? JD, you should add a poll widget so that people can vote on what they’re planning on doing with the cash. Personally, I plan to use it to pay off some debts.
-Rich.

riley
riley
12 years ago

Rich man million asks how most people plan to use the money. According to surveys done, most say they will save it or pay off debts. But here is what “most” will really do with it. A friend works at Walmart. Last weekend they had a huge run on big screen tvs and other electronics. For three days in a row, electronics sales were running over 60% above the same period last year. The news that the rebates are coming already has people spending it! My friend helped several of the big screen tv buyers haul and load these big… Read more »

RacerX
RacerX
12 years ago

Ther was a report that they expect 45% to go to paying debt and 30% to savings, 25% to buying new stuff!

Bill
Bill
12 years ago

Patty,

you do not need earned income to be eligible for the “pre-bate”

your investment income qualifies you

so even trustafarians qualify

chris
chris
12 years ago

just enter 3001 into the net income tax liability field (unless you actually were liable for less than 3001) and you’ll get the right amount. any number over 3001 doesn’t change the result

TheMightyQuinn
TheMightyQuinn
12 years ago

Man, if i had 99 kids i’d be getting over $30k!

Rich
Rich
12 years ago

Site is down, now.

Chris
Chris
12 years ago

@TheMightyQuinn – not possible from one wife, therefore child support payments would totally swallow up any extra income 😉

Don
Don
12 years ago

What’s more interesting to me than this calculator, is what my taxes are going to look like next year. If I read things correctly, the rebate is going to wipe out my federal tax completely.

I’m normally a person who takes the child tax credit and the saving for retirement credit. You can’t take more credit than you have tax, so if my read is correct, I’m going to want to do less pre-tax saving next year and more after-tax saving. That was a bit of a surprise for me.

Josh
Josh
12 years ago

1200, woohoo! All going toward my student loan as emigrant direct % is now less than my student loan % :(. But that means I’ll be 100% debt free by EOY.

The Happy Housewife
The Happy Housewife
12 years ago

J.D.-
Thanks for the heads up, looks like we’ll be getting a nice check this summer.

sarah
sarah
12 years ago

Can anyone clarify for me if both federal income tax and self employment tax count. I read the IRS web site and the examples all list ‘federal income tax.’ we pay no federal income tax but do pay self employment tax exceeding $4000 annually.

Nathan
Nathan
12 years ago

This calculator is based on a previously drafted stimulus package, not the actual signed one. A more accurate determination can be seen by hopping over to Kiplinger’s

Flexo
Flexo
12 years ago

Nathan: This calculator is based on the final bill passed by Congress and signed by President Bush.

Nathan
Nathan
12 years ago

Thanks for the clarification. I get the correct calculation now, whereas earlier today I must have either entered a number incorrectly, or it worked differently at that point. Earlier, it seemed to put a cap at 1500, in spite of the fact that I have 3 kids.

Minimum Wage
Minimum Wage
12 years ago

I was really looking forward to using the rebate as an emergency fund, but no such luck.

Bhadran
Bhadran
12 years ago

I cam US for the first time in Sept 2007 and this is the first time I a filing the returns. Is it true that I wont be eligible for this stimulus return as I haven’t filed returns in the previous year? Can you please hel me with an answer….

Minimum Wage
Minimum Wage
12 years ago

I’m pretty sure you’re still eligible if you’re filing for the first time.

Dan
Dan
12 years ago

Bhadran, It depends. Eligibility for the credits is based on 2008 tax returns, so as long as you earn inside the min/max limits in 2008, you will receive the credit.

The advances that are scheduled to go out as early as May are based on 2007 tax returns. If your 2007 tax return doesn’t meet the qualifications, then you will get the credit you qualify for when you file your 2008 taxes next year. If your 2007 tax return does qualify, you’ll get the advance.

Thomas
Thomas
12 years ago

The form allows for more than two qualifying children. I do believe only two are allowed. So if you have three kids, people would be likely to write a three which would skew the result. That is what I did the first time around. If I am right it might be best to put a limit on that field or calculate as two if the number is equal than greater than two. If I am wrong, I will be happy with the extra 300 🙂

SUE
SUE
12 years ago

if a person owes and is not getting a refund on their 2007 taxes are they still eligible for a check? i owe 3000 on fed taxes so does that knock me out?

Dan
Dan
12 years ago

Sue,

The only thing 2007 taxes is used for is to determine eligibility for advance payment. Your 2008 tax situation will determine whether or not you receive the credit if your 2007 doesn’t qualify you. If you owe $3,000 in federal taxes, you will qualify as long as you aren’t single earning over $75,000 or married earning over $150,000. As long as you don’t exceed those limits, you appear qualified for the advance payment as well.

Jacki
Jacki
12 years ago

Hmm ! I am confused ..I am filing married jointly and with 2 kids should get $1200 300 for each child which = $1800 – the calculator gives me $1200 – anyone know why ??

Dwain
Dwain
12 years ago

I am american with ss number, two kids both have ss number. My wife has a ITIN #, but irs states I will not get rebate check, because we filed jointly. What about myself and two kids who are born americans all with a valid ss #. Only reason my wife is still using itin I’m in military and we have yet moved to usa. Am I reading this plan correctly?

chris
chris
12 years ago

I’m very excited to get some of my own money back. My wife is a full time student and our only debts are the mortgage and student loans. I made $46,633 last year with 2,014 tax liability; so we’ll get the full $1200 which will go to a furnace and installing the duckworth in our house. Our regular tax refund of $4,186 (oregon and fed) will go to pay student loans.

eamonn
eamonn
12 years ago

My wife and I file jointly, although she’s a stay at home mom (3 kids). I made about $110,00 last year. Because she doesn’t have an income, are we out of luck? Thanks.

Paul C
Paul C
12 years ago

Sarah (26.), the popular tax software I’m using calculates the rebate, and appears to NOT count self-employment tax. So my guess is you’ll get the minimum payment, $300 per person, based on your having > $3000 self-employment “qualifying” income. Unless your AGI is too high (since your schedule C earnings show up in your AGI). The possibly good news is that the economic stimulus law also increased Section 179 limits for 2008 and added some sort of increased depreciation. So I guess you’re being stimulated to buy $250,000 of business equipment 🙂 (Google “economic stimulus business deduction” for info). eamonn,… Read more »

eamonn
eamonn
12 years ago

Paul C, thanks for your reply, I hope you’re right!

Brian
Brian
12 years ago

Confusing about the qualifying child. If you go to the IRS site it says that you can claim a child as a dependent as long as they are under age 19, but in order to claim “child tax credit” they have to be under age 17 at the end of the tax year. So, I claim my son who turned 17 mid-November, as a dependent, supporting him 100% of the year, and can’t claim tax credit for him. He is still depending on my support 100% until he graduates from high school or gets a job, and if he is… Read more »

Bobby
Bobby
12 years ago

Brian, “Child” for tax credit is not the same as for dependant for deduction. Under certain conditions, your child can be your dependant for life. The qualifications for dependants are much more permanent in terms of tax law history; the credit is subject to congressional whim and therefore no attempt is made by congress to equalize the two. My question is this: I have pension income and capital gain income only. Due to donations and 3 child tax credits, we pay no income tax. Would I still receive the child related rebates if I pay no income taxes? Should I… Read more »

Dan
Dan
12 years ago

My baby was born on 03/23/08, is she entitle to stimulus rebate?

Liz
Liz
12 years ago

I’m confused about one thing. PLEASE HELP!!! My husband and I were able to claim one child each from previous marriages. His child lives with the mother (no child tax credit but claimed as dependent) my child, I share true 50/50 custody with the father (no tax credit but claimed as dependent). Will we get anything for the children since they were claimed as dependents even though we couldn’t claim the child tax credit? I talked to H&R block, who did our taxes, and they said they base it on dependents claimed but everything I’m finding also mentions something about… Read more »

puzzled
puzzled
12 years ago

I sold my artwork last year at the town library for the month of April 2007, and received a 1099 from them (the library handled all the sales and kept 10% of the proceeds). The amount (in box 7) on the 1099 is just under $3000. I also sold another couple of paintings totaling $600. So my “gross profit” was $3600. Does that mean I qualify for any sort of stimulus rebate? I don’t operate as a standard “business”, so I’m not sure what to do. Is my “qualifying income” calculated after I deduct expenses? I’m lost. And broke. I… Read more »

puzzled
puzzled
12 years ago

Forgot – I did not earn any income or file taxes in 2006

Courtney
Courtney
12 years ago

My baby was born in January 2008. Will I get a rebate for him as well?

smhoo
smhoo
12 years ago

Please help me figure this out. We do not qualify for the stimulus based on 2007 taxes because we cashed in a large nest egg in order to move into a (small!) house in a decent neighborhood. The capital gains put our gross income over $200,000 – hence the rebate shrinks to zero.

But in 2008, with all of our savings sunk into our house, we will be back down to $120,000.

If this is a “pre-bate” for 2008, will we get anything ever? (We sure could use it, trying to pay for housing in California…)

Sour Grapes
Sour Grapes
12 years ago

Why does the government treat citizens so unequally? I’m not getting a rebate, even though I am your prime spending demographic. I make a nice living, yes, but it’s not THAT nice, and I pay a bunch of taxes every year. And yet, I’m punished for my success, despite the fact that friggin’ Hurricane Katrina knocked me on my rear financially, and every cent I earn is going toward my recovery, which I am far from achieving. So, enjoy your rebates. I’m going to grump in the corner and resent the government’s unfair populist policies. GRRRRRRRR!!!!! (Please know, that I… Read more »

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