Most reports of the proposed 2008 Economic Stimulus Plan state that the rebates will be phased out for taxpayers with high incomes. The only details normally reported is that phase-outs begin at $75,000 for individuals and $150,000 for couples.
Here’s how it will actually work:
Figure out your rebate (including child credits) as if there were no limits. Then subtract 5% of the amount your income is over the limits for an individual or couple.
As an example, let’s say you and your spouse combined to make $190,000 last year and you have 3 kids. You would expect a rebate of $1200 plus $300 per kid, or $2100 total. Now calculate 5% of the amount you exceeded the limit by. ($190,000-$150,000) = $40,000 x 5% = $2000. So your expected rebate would be reduced by $2000, due to your earnings above the limit, and you’d get $100.
Remember that the plan has yet to be approved, so these details are tentative and subject to change.
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February 8th, 2008 at 2:41 pm
When you say “make”, are we talking Adjusted Gross Income, Modified Adjusted Gross Income (such as IRA contribution limits and AMT are tied to) or something else?
February 8th, 2008 at 5:32 pm
Make means Adjusted Gross Income. Contributions to IRA and 401(k) retirement accounts and health savings accounts would not count toward the income limit.
February 11th, 2008 at 9:38 am
Is there an age limit for”children”? Mine, both dependents in 2007, are 17 and 21.
February 11th, 2008 at 10:33 am
The qualification of a “child” for the Economic Stimulus package is the same as for the Child Tax Credit.
Namely, the child must have a tax identification number (normally a Social Security number) and must be:
1. A dependent (or qualified for the dependency deduction)
2. Related to the taxpayer (son, daughter, stepson, stepdaughter, or an eligible foster child)
3. Under the age of 17 as of the end of the year. This means that if your child turns age 17 during the tax year, the child is not eligible for the child tax credit. This is true even if his or her 17th birthday falls on Dec. 31. If the child is age 17 anytime during the year, he or she is not qualified for the credit.
4. A citizen, national, or resident of the U.S.
So I’d say you won’t get anything for the 21 year old and would only get the $300 if your other child turned 17 after December 31st, 2007. I’m sure that’s not what you were hoping to hear, but that’s how I interpret the rules.