Guest guest Posted January 26, 2008 Report Share Posted January 26, 2008 What Does it Mean to Me? The Economic Stimulus Package – The Breakdown As a tax preparer, I have received several calls regarding the Economic Stimulus package that has been making headlines over the last several days. Most people want to know the bottom line – “what’s coming to me?” So here are the basic, bare bones answers that I’ve been giving my clients regarding the Economic Stimulus Package. How much? Up to $600 for Individuals Up to $1,200 for couples. An additional $300 for each dependent child. Who? To get the maximum $600 (or $1,200 payment for couples), people must have paid federal income taxes in 2007 and had earned income of at least $3,000. Those who made at least $3,000 but didn't pay any federal income tax would get $300 per individual ($600 per couple). Income limits Phase out begins at an adjusted gross income (that’s line #37 from your Form 1040) of $75,000 for individuals and couples with incomes of more than $150,000. Adjusted gross income higher than $87K (or $174K for couples)? Unless you have children, you are not eligible. Income caps will be slightly higher if you have children, but those numbers aren’t available yet. When? The first checks could start going out in May. Most people should have them by July. The fine print I’ve seen both that this is an advance (like the one back in 2003) and that this is a refund (like we paid for an expensive and inefficient government and some of the purchase price is being refunded!). So, we’ll have to wait for the specifics on this. Then how will they know who is eligible? The government will go by the returns filed this spring for tax year 2007. If you’ve moved! Notify the IRS by doing one of two things 1. File your 2007 taxes and use your new address. The IRS will automatically update your address. Or, 2. Completing Form 8822, the address change request form http://www.irs.gov/pub/irs-pdf/f8822.pdf or order it by calling (800) 829-3676. What are you doing with the money? This is not a windfall folks. The Feds are handing out this money (quiet possibly next year’s money, I might point out –again) for one reason and one reason only….to get you to spend it! If you’re living paycheck to paycheck, so what! Get that flat screen! If you are drowning in debt, who cares! Go on that vacation! Sacrifice your children’s future for the good of the country! Why else would they give this money to people who don’t even pay taxes (those who’ve made less than $3,000)? Smart moves · Pay down any credit card debt · Save it for an emergency. I’ll be putting mine right into my Roth IRA, because my retirement needs some stimulating! Small business owners! Business will get some tax breaks too. · 50% bonus depreciation on new equipment in the year that it is placed in service. · Small businesses are currently able to take tax deductions on the first $125,000 they spend on new equipment (The Section 179 expense). That will be raised to $250,000. Homeowners! A one-year increase in Freddie Mac's and Fannie Mae's conforming loan limits to $729,750, and a permanent increase in the FHA loan limit to $729,750 is included in the package. Why it matters – Loans above $417,000 are classed as “jumbo” loans which carry higher interest rates. By raising the limits, more homeowners will qualify for government –backed mortgage loans. Higher loan limits, will mean: · Many homeowners will be able to refinance into more affordable loans · Fewer borrowers will have to turn to subprime loans – especially when they can get lower interest loans from the FHA. There are a lot different thoughts and predictions about what this whole package will do. I think that it’s ironic that there have been millions of dollars spent on Public Service Announcements that encourage saving. Tax laws are partial to those of us who put money into our 401(k)s and IRAs. Years of harping over the fact that Social Security will no longer exist in a couple of decades. Now all of a sudden those of us in the “barely making it” income bracket are supposed to spend, spend, spend….hmm, but that’s just me. Change the way we think about money. Change the way we handle money. Change; and leave change for our children. Inherit Our Change LaTisha Watford Accountant IOC Tax & Accounting Making Change Happen latisha Never miss a thing. Make your homepage. Quote Link to comment Share on other sites More sharing options...
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