Tax rebate FAQs

Will I get more for my child?

In many cases, there is a rebate bonus for children. But not for all kids.

For rebate purposes, a qualifying child is one who is younger than 17. That means that taxpayers who claim an older college student as a dependent won't get the extra money.

Neither will college kids themselves be happy. The rebate bill specifically makes dependents, or even those who could be claimed as a dependent, ineligible for the rebate. So students who can be claimed by parents won't get rebates even if they held jobs outside class that otherwise would have qualified them for the money.

"The kid may have $3,000 in income, but his parents are paying much more for his college expenses, so he's a dependent," says Bob D. Scharin, RIA senior tax analyst for Thomson Tax & Accounting. "It does seem unfair that the child can't claim the rebate."

Who won't get a rebate?

In addition to the unlucky older kids and their parents, a few other folks are left out of the rebate mailing.

Nonresident aliens are excluded. So are trusts and estates.

And wealthier taxpayers also face some rebate limits. Your rebate amount will begin phasing out if you're a single filer with an adjusted gross income, or AGI, of more than $75,000; more than $150,000 for married couples filing jointly.

These taxpayers will find their rebates reduced by $50 for every $1,000 above the income limit. That means the $600 rebate will be eliminated for individuals with an $87,000 AGI; it will be zeroed out for married joint filers with an AGI of $174,000.

What do I need to do?

Most of us just need to file and wait. "Fill out your 2007 return as usual," says Scharin.

Mark Luscombe, principal federal tax analyst for the tax software and publishing company CCH, says some folks, however, might be more proactive.

"A few people who otherwise wouldn't file might want to consider doing so this year," he says. "By filing, you're saying 'Here's my return. I have no taxes due, but by the way, please note that I have $3,000 in earned income.' It's a way of waving your hand to make sure you get your rebate."

The initial speculation was that the IRS would work with the Social Security Administration to get these folks, who were added to the rebate rolls by a Senate amendment, their money.

However, the IRS decided to make taxpayers take charge of getting their rebates and it wants official tax paperwork. That means that filers who ususally do not have to send in a return because they don't make enough money or who have only nontaxable retirement income must file a 1040 to get their rebate.

You can find more on this process in Bankrate's tax blog, Eye on the IRS.

When can I expect my money?

With all that money added to the government agencies' budgets, you'd think they could get the checks out quickly. That's not necessarily so.

Because this law took effect during filing season, and one that already was slowed because of previous alternative minimum tax legislation passed late last year, the IRS will not be able to start issuing checks until May. That will give them time to process most of the 1040s that arrive by the April 15 deadline.

And if you ask the IRS for more time to finish your 2007 return, expect to also wait on your rebate. "Filing for an extension, and not actually filing your return until the Oct. 15 deadline for extended returns, will delay your rebate," says Luscombe.

In 2001 -- the last time the agency issued such checks -- they were distributed based on taxpayer Social Security numbers. Those payments seven years ago also were mailed, but this year if you asked for any refund money to be directly deposited, your rebate check will be put straight into your bank account, too.

In fact, if you're filing just to get the rebate as is the case with many senior citizens and lower-income individuals, you can enter your account information on the return to have your rebate money directly deposited.


And as rebate issues continue to evolve, the IRS is posting them to a its speical Web page.

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