The Economic Stimulus Act of 2008

FREE MONEY- LET'S PARTY!!!

President Bush signed the Economic Stimulus Act of 2008 this past Wednesday.  It has been all over the news for the last month.  Our government is giving us free money and they want us to spend it!

Most of us are getting a credit on our 2008 income taxes when we file our 2007 income tax returns! (Huh?) It's simple. File your 2007 income tax return and the IRS will do the rest.

Here's the particulars. If your adjusted gross income is less than $75,000 for individuals and $150,000 for married couples filing jointly, you will qualify for a rebate up to $600 each (i.e., $1,200 for married couples) plus $300 for each qualifying child.  You have a qualifying child if that child qualifies for the child tax credit. You may qualify for a partial credit if your income exceeds $75,000 or $150,000 (if married) as long as your adjusted gross income does not exceed $87,000 or $174,000, respectively.  To calculate your rebate, Kiplinger has a calculator on their website to help you determine the rebate amount. Click here. If you are a client of Potts & Company, we will calculate it for you when we prepare your return.

If your 2007 tax liability is less than $600, or $1,200 for joint filers, your rebate will equal the greater of your tax liability or $300 (plus $300 per qualifying child.) Aren't income tax calculations simple?

If you have no tax liability in 2007, you can try again when you file your 2008 income tax return. Remember, it is a rebate based on your 2008 income tax liability.  Sending checks in 2007 is just an advance credit payment of a 2008 credit.

Rebate checks will be mailed beginning in May 2008 and continue through the summer.

The Economic Stimulus Act of 2008 is even more exciting if you own a business!  It includes a more generous Section 179 deduction and 50% bonus depreciation.  Stay tuned. Details next blog post- in a day or two.