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Those $600 rebate checks about to spew forth from the Treasury as part of a $168 billion economic stimulus plan are an advance on a 2008 tax credit. We explain how this works after the jump.
The rebate is tied to your 2007 tax return. Your rebate will be delayed if you file for an extension, so get your documents in order by April 15. Everyone with an adjusted gross income between $3,000 and $87,000 gets a rebate—but its value decreases by $50 for every $1,000 earned above $75,000.
The rebate is initially worth $300 but rises to match the tax you owe up to $600. Here is the key part:
In April 2009 or thereabouts, when you file your taxes for 2008, [the IRS] will run the calculation for the stimulus rebate again. If the results show that you would have received more (due to an additional child, for instance), you will be sent the difference (or owe less on your final tax bill). If your results show that you would have received a smaller rebate, then you get to keep the difference.
So the rebate is an advance credit for a one-time tax cut that applies to our 2008 taxes. Simple, right? If you don't qualify in 2007, but do qualify in 2008, you can still claim the credit when you file your return next year. If you qualify this year, but not next year, congratulations, you win, enjoy your free money.
