An individual has earned income, but not enough to be eligible for a stimulus payment (or even be required to file). The individual does have dependents. A 2007 return was filed so that that individual could get witholding back (not much) and some EIC (a bit under a thousand).
Will this indivudual get $300 each for the two dependent children even though the indivudual doesn't qualify for a stimulus payment?
No. The additional payment per qualifying child applies only if the taxpayer qualifies for a payment in the first place.
"John D. Goulden" wrote
The parent needs to have at least $3000 of qualifying income to receive the rebate. Qualifying income would include W-2 wages, self-employment income, and Social Security. If all the parent had was wages, then based on the EIC number you give above, it appears his/her qualifying income is close to $2500. In which case s/he gets no rebate.
The calculator linked at the site below is helpful:
If one does not qualify for the stimulus check based on their 2007 return figures, can they still qualify for the stimulus check in
2008? My understanding is that they can, and the stimulus check will appear as a credit on their 2008 return which will be filed usually by April 15 2009, and the credit will be non-refundable (meaning it can reduce your tax to zero, but you won't get money back).If this is the case, then a good strategy will be to find work in 2008 so that the 2008 earned income is at least 3k, and the total income is larger than the standard deduction + exemption + ($600/10%). Explanation by example: A single filer would only pay tax on income above $8750, and the tax rate is 10%. 10% of $6000 is $600. So if they earned 8750+6000750, then they would owe $600 tax, but then they would get the economic stimulus rebate and their tax would be $0. However, other non-refundable credits such as the credit for the elderly or disabled would reduce the stimulus check credit, in which case the strategy should be to increase income even further.
In addition, the filer might qualify for the earned income tax credit as well, which thankfully is refundable (you get money back).
For reference, the law is at
Yes.
Incorrect. The 2008 credit is refundable, just like EITC.
So I thought of this:. If they follow the above strategy, their earned income may increase, but then their EITC may decrease, so it may be good to work just enough. For a single filer with 14750 in income, the EITC would be zero though the stimulus check would be 600. However, if their income was 6250, then the EITC would be 428 (assuming all of it is earned income), and how much would the stimulus check be?
========================================= MODERATOR'S COMMENT: $300 if not a dependent.
But the law says
`(a) In General- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2008 an amount equal to the lesser of--
`(1) net income tax liability, or
`(2) $600 ($1,200 in the case of a joint return).
Since they use the word "lesser", that seems the credit is non- refundable.
Well, yeah, if you stop reading there. You have to think of reading stat language like reading a mystery. Even though you think you have it figured out, you'd better keep reading.
In (b)(1) we find the $300 minimum for eligible taxpayers. In (b)(2) we uncover just exactly what an eligible taxpayer is. (OP's description fit the definition of an eligible taxpayer because he had at least $3,000 of "qualifying income," as defined in (e)(1).)
But wait, call in the next 15 minutes, and there's more!
In (c) we find "Treatment of Credit," which tells us that it's treated "as allowed by subpart C of part IV of subchapter A of chapter 1." Guess what. That's refundable credits.
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