Smart Money Choice$

As you might well imagine by now, tax season is off to a roaring start around here.  But there seems to be a positive spirit all around, for a change.

Could it be because of the “free money” the new Economic Stimulus Act that President Bush signed into law on February 13th will bring most taxpayers? If you haven’t heard the particulars yet, here’s a quick summary that will likely put a smile on your face too.

The new tax law is designed to put money into the pockets of American taxpayers to help stimulate the struggling economy. The IRS has promised to begin mailing the rebate checks by late spring and continue throughout the summertime.

The rebate amount is based on your 2007 tax return. So taxpayers who are not otherwise required to file a tax return may want to file a return this year. That’s because even if you are eligible to receive a rebate, if you don’t file a tax return for 2007, you won’t get a rebate check.

Who’s Eligible for the Rebate?

Generally, taxpayers who meet the following requirements will qualify for the rebate:

• A valid Social Security number
• Not claimed as a dependent on someone else’s tax return
• Have at least $3,000 in “qualifying” income (that includes income from wages, self-employment, Veteran’s disability and/or Social Security payments)

How Much Is The Rebate?

• The minimum rebate amount is $300 ($600 for couples filing joint returns)
• The maximum rebate amount is $600 ($1,200 for couples filing joint returns)

How Much Will You Get?

Most taxpayers will receive two notices in the mail from the IRS. The first will explain the payment program. The second will confirm your eligibility, your payment amount, and when you can expect to receive the payment. Save this notice because you will need it for the preparation of your 2008 tax return!

If you are receiving a refund on your 2007 tax return and elected to get your refund via direct deposit, your rebate will also be directly deposited into the same bank account. Otherwise, you will get a check in the mail.

Parents Get an Additional Child Credit

If you receive at least $1 of the rebate, you will also receive an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.

Businesses Get A Break In 2008

For 2008, this same tax law will give the following reductions to your business tax burden:

• Section 179 expensing limit increases to $250,000
• Special bonus depreciation of 50% will be available on certain property, including software and leasehold improvements.
• Bonus depreciation will be allowed under the alternative minimum tax (AMT) as well.

As is always the case, there are a lot of little details in this new tax law, so if you want to get into more of the nitty gritty, here’s where you can get it:

• Fact Sheet – Sample Scenarios of How The Rebate Will Work (PDF document)
• IRS Rebate Info Center – All the up-to-date details from Uncle Sam himself
• News Briefling Audio – Save time and listen to the February 22nd news briefing right from your computer (MP3 file)

So be sure to file your 2007 tax return on time this year, and get your rebate money as soon as May!