Rebate Fact and Fiction (Washington Post)

By Michelle Singletary

The recent economic stimulus bill passed by Congress and signed by the president promises checks in the mail to millions of taxpayers. But the question of how much you get — and when — will no doubt result in some confusion.

In an effort to clear up what to expect, the Internal Revenue Service has put up a useful page on its Web site, Included are a fact sheet, eligibility information for Social Security recipients, a question/answer section and payment examples.

For goodness' sake, use this information to learn what the payments mean to you. Don't rely on what you might find out from a friend, an e-mail or the Internet to determine whether you are due a payment and how much. Already, scammers are contacting taxpayers trying to elicit personal information using the stimulus payment as bait, the IRS said.

During a recent online discussion, one person trying to be helpful wrote: "Do you think that people realize that the stimulus package, a.k.a. tax refund, really counts against their 2008 return?"

Another reader was concerned about paying taxes on the stimulus payment.

"I've heard this is basically an advance on next year's taxes and we'll have to pay it back," the person wrote. "I usually owe taxes, so that has me worried."

Both are misinformed. First, this money is not taxable. And your stimulus payment will not reduce or increase any refund you are entitled to when you file your 2008 return.

The stimulus payment — some call it a rebate, others refer to it as a refund — is based on your 2007 tax return, but it is considered an advance on a 2008 tax cut. In most cases, payments will range from $300 to $600 for individuals and $600 to $1,200 for joint filers. Taxpayers may receive $300 for each qualifying child.

"It's like a one-time credit, not unlike the telephone tax refund people got," said Eric Smith, a spokesman for the IRS.

You remember the telephone excise tax refund payment, right? That was a one-time refund available on your 2006 federal income tax return. It was a refund of previously collected long-distance telephone taxes. In that case, the standard refund ranged from $30 to $60.

This time, if you don't qualify for a stimulus payment based on your 2007 return, you may still be due some money.

"You get two shots at this," Smith said. "Most people will get [a payment] this year. But if you don't qualify for the full amount or you don't qualify at all, you get a second shot based on your 2008 return."

The IRS says the 2008 tax instructions will include a worksheet to help people who did not qualify for a payment this year. It will also assist others to determine whether they should have gotten a higher payment.

To help explain the stimulus payments, the agency will send two notices to most taxpayers. The first notice will include basic information about the payments. The second will lay out your individual eligibility and cash amount. You will also get a schedule for when to expect your money. It would be smart to save the last notice, at least. You will need it in case of any discrepancy and for when you prepare your 2008 tax return next year.

Payments will begin to go out in May to more than 130 million individuals.

"Most taxpayers don't need to do anything other than file their 2007 tax return," IRS acting Commissioner Linda Stiff said in a media briefing about the stimulus package.

If you don't typically file a tax return but are entitled to a payment, let me emphasize that you must file a federal tax return for 2007 to get your money. This filing requirement also applies to some people who do not normally file, including many low-income people and people who receive Social Security and certain benefits from the Department of Veterans Affairs. It also affects people getting particular Railroad Retirement benefits.

If you have already filed your 2007 tax return and didn't include some income that may qualify you for a stimulus payment, just amend your return by filing IRS Form 1040X. If you haven't filed already, electing direct deposit will speed up your stimulus payment.

If you're still confused, get help from a legitimate source. If you have low to moderate income or you're a veteran, you can get free tax help through the Volunteer Income Tax Assistance program. Call 1-800-906-9887 to locate the nearest VITA site.

Many taxpayers can also get help from the Tax Counseling for the Elderly program, which provides free assistance to people 60 and older, as well as to low- and middle-income taxpayers. As part of the IRS-sponsored program, AARP offers Tax-Aide counseling at more than 7,000 sites nationwide. Call 1-888-227-7669 or go to for more information.