The Bottom Line: The real scoop on those kicker checks

I've heard all the rumors about the "economic stimulus" checks approved by Congress in recent weeks. Today I set out to check those rumors out. After speaking with my sources at the Internal Revenue Service and reading through the Joint Committee on Taxation's write-up of the "Economic Stimulus of 2008" for the Senate Committee on Finance, here's what I found out:

1) You will not have to pay back the kicker amount or even claim the kicker amount on next year's taxes.

2) You will only get a check if you:

____ Have a U.S. Social Security number.

____ File your 2007 taxes between now and the six-month extension deadline of Oct. 15, 2008. 

(A number of online services have free filing capabilities for families making less than $54,000 per year; find the list at irs.gov. Additionally, the I.R.S. has created a marked-up version of the 1040A form that shows you the sections you'll only need to fill out to collect the stimulus check if you usually don't file.)

____ Are not claimed as a dependent on someone else's return. 

____ Made more than $3,000 in household earned income during 2007 or owe the federal government $1 or more in taxes for 2007 -- even if earned income is below $3,000.

____ Made less than $174,000 in married-filing-jointly earned income or $87,000 in individual income during 2007.

("Earned income" is the combined amount you made from wages, net self-employment income, Social Security, nontaxable combat pay, certain Railroad Retirement benefits, and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. Dividends, interest, capital gains, Supplemental Security Income, and non-veterans or non-Social Security pension income such as those from Individual Retirement Accounts are not considered earned income.)

3) If you can check off all of the qualifications above, then the amount you receive depends on a few factors.

        Factor 1. Do you have children under the age of 17 that you're claiming as a dependent? If so, then you'll receive $300 for each child.

        Factor 2. Are you over age 17? You'll receive $300.

        Factor 3.  Do you owe taxes on this year's return? Your stimulus check will be increased by the amount of tax you owe, up to $300 additional per filer. (For example, if you owe $534 on your 2007 return, then your stimulus amount is increased by $234, the amount you paid over and above $300.)

        Factor 4. Did you make more than $75,000 in net income per household filer in 2007? If so, then your rebate will be reduced by 5 percent of whatever you made over that $75,000 amount. (For example, if you made $80,000, then the overage would be $5,000. Five percent of $5,000 is $250, which means the amount you receive on your stimulus check will be $250 less then it otherwise would have been.")

         Factor 5. Do you have any unpaid federal or state income taxes, for this year or years previous? Do you have past-due student loans or child support? If so, your kicker may be reduced by that unpaid amount. (In other words, if you have unpaid federal or state obligations, if factor 5 applies then consider those debts paid down.)

Factor all of these answers together, and you'll have the dollar amount of your stimulus check. However, you'll receive a notice within the next few months that tells you exactly how much the I.R.S. has calculated for your "bonus." Checks or direct deposits for those amounts will be sent out beginning in May.

4) Other things to consider are this:

     * The I.R.S. website says the agency will be sending out advance notices to everyone eligible for kick backs; the notice should include the amount and approximate processing date of payment. Save this notice with your 2008 records.

     * If you did not qualify for a stimulus check or qualified for only a reduced check, the I.R.S. website says that you may be able to use the notice it sent out to qualify for a "special benefit" when filing next year's taxes. Details on that will be included on a worksheet with the 2008 tax instructions. (Note that, this year at least, the net-self-employment income rule and the 2007-tax-payment requirement makes those who earned less than $3,000 and use deductions to lower their taxable amount to $0 or who report a 2007 self-employment loss ineligible for a credit. However, you could receive the aforementioned "special benefit" in 2009 for some or all of the missed stimulus amount.)

     * Tax refund checks will be sent separately from the stimulus checks.

     * If you opt for direct deposit of your tax refund, your stimulus amount will be directly deposited as well.

     * Stimulus checks won't be factored in when determining eligibility for income-based government benefits, such as Social Security benefits and food stamps.

     * If you used a tax service and opted for a loan rather than wait for the rebate (an expensive option), you'll receive your stimulus payments only through the mail.

     * If you've already filed for 2007, and have omitted non-taxable income like Social Security and pension benefits that would have raised your income above the $3,000 level, you can amend your return to qualify for the stimulus check. (Note: The I.R.S. website says that adding these benefits on an amended tax return will not increase an individual's tax liability but will establish eligibility for the stimulus payment.) Use IRS Form 1040X to amend your return.

		Jennifer D. Meacham, Gather Money Correspondent
	Jennifer's column, "The Bottom Line," is published every week to the Gather Essentials: Money channel. Jennifer is a business and personal finance columnist who covers money matters for RedwoodAge.com and real estate news for RISMedia, and co-authored the best-selling retirement investing guide "IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment" (Square One Publishers, New York). Keep up on the latest news and analysis into how you can take control of your business and personal financial future by joining Jennifer's "Self-Directed Investing 101" network.

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