On Thursday, the Senate finalized H.R. 5140, the "Economic Stimulus Act of 2008" and sent it off to President Bush for his expected approval this week. There were a few changes made from the original House proposal but it is largely the same. In summary:
1. We will receive the greater of a) 2007 federal income taxes paid to a maximum of $600 (single) and $1200 (married) or b) $300 (single) and $600 (married). To be eligible you must have paid at least $1 in 2007 taxes or had $3000 in employment income + veterans' disability payments + social security payments.
The major change is that rebates are now allowed for disabled veterans and seniors living mostly on Social Security who do not have earned income.
2. If you receive $1 or more in rebate and have kids, you get another $300 per kid. This is based on your 2007 tax return, so the rebate applies to kids on hand as of 12/31/07. Any new bundles of joy circa 2008 will not get you more rebate.
3. The rebates still start phasing out at 5% of adjusted gross income (AGI) starting at $75K (single) and $150K (married). So effectively if your AGI is greater than $87K (single) or $174K (married), then no rebate for you! The phase-out applies to both the basic credit and the child credit.
The only other "no rebate" scenario is if your tax liability was zero and your wages/disability/social security was less than $3000.
4. No credits will be issued for anyone without a valid Social Security Number on the 2007 tax return.
5. The rebates are not considered taxable! Well that's good news!
6. For single family home loans made between 7/31/07 and 12/31/08, the Act raises the conventional loan limit from $417,000 to $729,750. FHA loan limits will also be increased to as much as $729,750 or even $829,750 if warranted based on market conditions until 12/31/08. This should provide some help to homeowners who need to refinance into something more affordable this year.
This is incentive to file your 2007 taxes on time, as rebates are expected starting in May. And hopefully the $106 billion in rebates and $45 billion in business tax incentives this will cost in 2008 will truly help stimulate our economy! I bought Apple stock recently in anticipation that everyone will buy another iPod with the extra cash this summer!
For more detailed information, visit the Senate Finance Committee website by clicking here.