February 11, 2009 3:12 PM
- Text
Don't Rush To Spend That Rebate Check
(MarketWatch)
Most Americans will soon receive rebate checks from the IRS worth anywhere between $300 to $1,200 or more, and many businesses have already launched marketing campaigns hoping to lure those potential customers.
Yet, many folks will not be eligible for a check at all and could end up in a bind if they've already hit the mall and put extra charges on their credit cards, counting on the rebate cash.
The global tax firm of Grant Thornton says if you belong to any of the following six categories of taxpayers, you should think twice before charging a purchase with plans to pay it off with that "free" government money. You may not be eligible for a rebate -- or at least not for a full or timely one -- if:
You owe the tax man money.
The IRS has acknowledged that it will deduct from all rebate checks any federal tax debt. The agency will also withhold on behalf of all 50 states, and even Puerto Rico and American Samoa, any money owed in state or territory taxes. If you owe back taxes to the IRS or any state government, you could see your rebate reduced or gone altogether.
You make too much money.
The rebate payments will begin to phase out for individuals with gross incomes above $75,000, and for married couples filing jointly with incomes over $150,000. If your adjusted gross income is above those levels, calculate your rebate carefully before going on a spending spree. Payments to high-income taxpayers will be reduced by 5% of all income above the phase-out thresholds.
You don't make enough money.
If you have less than $3,000 in qualifying income, don't expect a rebate. Only those with $3,000 or more of income will be eligible. However, you will be able to count income typically exempt from taxation, like Social Security or veteran's benefits, to reach that minimum.
You don't file a tax return.
If you don't file a tax return, you won't receive a rebate. Many people with low incomes are not required to file a return, but will need to in order to receive a rebate. If you have over $3,000 in qualifying income, file a return even if you don't have to.
You're just unlucky.
The IRS's recently released rebate payment schedule is based on the last two digits of return filer's Social Security number. However, the IRS warns that a small percentage of tax returns will require additional time to process. For these returns, stimulus payments will not be made according to schedule. Taxpayers who put purchases on their credit cards in anticipation of a quick rebate check may be forced to pay unexpected interest if their return processing is held up.
You don't have a valid Social Security Number.
Some taxpayers without Social Security numbers file tax returns using an IRS-generated Individual Taxpayer Identification Number. These people will not be eligible for a rebate. If married and filing jointly, each spouse must have a valid SSN to receive the rebate.
By Marshall Loeb
Yet, many folks will not be eligible for a check at all and could end up in a bind if they've already hit the mall and put extra charges on their credit cards, counting on the rebate cash.
The global tax firm of Grant Thornton says if you belong to any of the following six categories of taxpayers, you should think twice before charging a purchase with plans to pay it off with that "free" government money. You may not be eligible for a rebate -- or at least not for a full or timely one -- if:
You owe the tax man money.
The IRS has acknowledged that it will deduct from all rebate checks any federal tax debt. The agency will also withhold on behalf of all 50 states, and even Puerto Rico and American Samoa, any money owed in state or territory taxes. If you owe back taxes to the IRS or any state government, you could see your rebate reduced or gone altogether.
You make too much money.
The rebate payments will begin to phase out for individuals with gross incomes above $75,000, and for married couples filing jointly with incomes over $150,000. If your adjusted gross income is above those levels, calculate your rebate carefully before going on a spending spree. Payments to high-income taxpayers will be reduced by 5% of all income above the phase-out thresholds.
You don't make enough money.
If you have less than $3,000 in qualifying income, don't expect a rebate. Only those with $3,000 or more of income will be eligible. However, you will be able to count income typically exempt from taxation, like Social Security or veteran's benefits, to reach that minimum.
You don't file a tax return.
If you don't file a tax return, you won't receive a rebate. Many people with low incomes are not required to file a return, but will need to in order to receive a rebate. If you have over $3,000 in qualifying income, file a return even if you don't have to.
You're just unlucky.
The IRS's recently released rebate payment schedule is based on the last two digits of return filer's Social Security number. However, the IRS warns that a small percentage of tax returns will require additional time to process. For these returns, stimulus payments will not be made according to schedule. Taxpayers who put purchases on their credit cards in anticipation of a quick rebate check may be forced to pay unexpected interest if their return processing is held up.
You don't have a valid Social Security Number.
Some taxpayers without Social Security numbers file tax returns using an IRS-generated Individual Taxpayer Identification Number. These people will not be eligible for a rebate. If married and filing jointly, each spouse must have a valid SSN to receive the rebate.
By Marshall Loeb
-
Tucker Reals Tucker Reals is a senior news editor and overnight site editor for CBSNews.com, based at CBS News' London bureau.
Latest Now in MoneyWatch
- Moving in together: Are you ready?
- Are CEOs psychopaths?
- Valentine's Day can improve health, longevity
- Why emotional intelligence does not a leader make
- Apple, Microsoft deliver one-two punch to Intel
- Is investing rigged to favor pros?
- Q&A: The Greek financial crisis
- Greek citizens may veto austerity plan
- Greek pols approve harsh austerity after riots
- Unpopular austerity package ignites Greece protests
- This week: Budget, Greece, housing, and inflation
- Previewing Obama's 2013 budget: Politics rule
- Clashes as Greek Parliament debates bailout law
- Ohio unemployment hits 3-year-low
- Jill on Money: Retirement investing, allocation, long term care
- Could "web-lining" be dangerous?
- Insurers respond cautiously to contraceptive plan
Latest CBS News Headlines
on Facebook Most Discussed Stories
on CBS News
- Are CEOs psychopaths?
- GE to hire 5,000 veterans over next 5 years
- Pastor's daughter accidentally shot at church
- Report: Russian sub had nukes during December fire
on Facebook Most Discussed Stories
on CBS News
