March 1, 2008

Dear _FIRST_NAME,

Since my last email, you may be spreading the word to your retired friends and relatives, letting them know that they must file a tax return for 2007 in order to qualify to receive an economic stimulus payment.

Low income recipients of social security benefits (as well as certain veterans' benefits and certain railroad retirement benefits) should be eligible to receive $300 (single return) or $600 (joint return), but they must file a tax return, even if it's not otherwise required.

The IRS has just come out with specific instructions for folks in this situation.

Here's the main thing to remember:

Submit a Form 1040A and write "Stimulus Payment" across the top of the form.

To see what I mean, click this link to view a sample 1040A from the IRS website.

The rest of the instructions from Notice 2008-28 are pretty basic: enter name, address, social security numbers, etc.

These points are worth noting, however:

>>Enter wages and other compensation (including net earnings from self-employment) received in 2007 on line 7 of Form 1040A. This is the wage line on the tax return and, in this special situation, net earnings from self-employment under $400 go here, too. (Anyone with net earnings from self-employment of $400 or more is required to file a tax return and should follow normal tax reporting rules, not the rules described in this email.)

>>Enter qualifying income received in 2007 in the form of social security benefits, Tier 1 railroad retirement benefits, and certain veterans' disability or survivor benefits on line 14a of Form 1040A. Individuals who do not have documentation of the exact amount of these government-provided benefits may estimate their annual benefit by multiplying their monthly benefit, before any deductions for withheld taxes or Medicare premiums, by the number of months during 2007 that they received the benefit.

>>Members of the U.S. Armed Forces should enter any nontaxable combat zone compensation received in 2007 that they elect to treat as earned income on line 40b of Form 1040A.

>>Complete lines 44b through 44d of Form 1040A to request direct deposit of the economic stimulus payment into an account at a bank or other financial institution.
The account must be in the eligible individual's own name.

The IRS will treat a Form 1040A prepared in the specified manner as a valid
claim for refund in the amount of the 2008 economic stimulus payment.

Sincerely,

Rebate check update for low income recipients of social security and other benefits

The instructions at left do NOT apply to anyone required to file a tax return.

The vast majority of Americans must file a tax return because they have gross income for 2007 which exceeds the sum of their exemption amount plus the applicable standard deduction, or they have net earnings from self-employment of $400 or more. Additionally, some eligible individuals who are not required to file an income tax return nevertheless file to obtain refunds of withheld tax. These folks should prepare and file their tax return in the normal fashion.

Ready for spring anyone?
I love to see the daffodils coming up.