May
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How the Amount of the Stimulus Payment Is Determined
May 6, 2008 |
It seems a lot of people still have questions about how the amount of the stimulus payment is determined. The IRS provides a calculator on it’s web site. So it’s easy to find out how much should should get, but it’s not so easy to see why you are getting that amount.
The IRS Stimulus Payment Calculator
You can find the IRS stimulus payment calculator here. Remember, this calculator only provides an estimate of your stimulus payment.
Because this is just an estimate, your actual payment amount may vary. For instance if you owe child support or back taxes, the government (IRS) will take the amount you owe out of your stimulus payment. You’ll get what’s left over, if there is anything.
How is Your Payment Determined?
I’ve covered some of the details of the economic stimulus package before. However, because I still get a lot of questions, I’ll cover it again.
First - Do You Qualify?
First of all, you have to qualify. To qualify you have to have at least $3,000 in income. This income has to be reported to the government on your 2007 tax return. The IRS uses your tax return to determine your eligibility. If you do not file a tax return you are not eligible for the stimulus payment.
Please see this previous article about special cases like Social Security Disability and Retirement income.
If you have at least $3,000 in income then you qualify for the minimum payment of $300. The maximum payment is $600. To qualify for the maximum payment you had to owe the government taxes. This doesn’t mean you had to write a check to the IRS at tax time.
You Qualify - So How Much Will You Get?
When you completed your 2007 taxes you had to calculate your tax liability. This is how much you should pay the government based on your income. Then to figure out how much you owe the government you subtract any tax credits and federal withholding (the money your employer takes out of your paycheck and sends to the government).
If you are single and filed Form 1040, your net income tax liability is on line 57 plus line 52. If this amount is at least $600 then you should qualify for the full $600 individual payment.
If your are married and filed a 1040 your net income tax liability (line 57 plus line 52) must be at least $1200 to qualify for the full $1200 payment.
Your net income tax liability is one of the following:
- On Form 1040, the amount shown on Line 57 plus the amount on Line 52
- On Form 1040A, the amount shown on Line 35 plus the amount on Line 32
- On Form 1040EZ, the amount on Line 10.
Lines 52 and 32 are for the child tax credit. You get to add that back in to qualify for the payment. That’s very nice of the government, isn’t it?
How Much are Your Kids Worth?
Raising kids is an expensive endeavor. It’s nice that government gives you a little credit. So how much do you get for your kids?
First your child had to younger than 17 at the end of 2007. Second they have to have a valid social security number. Third, you have to claim them as a dependent on your tax return. Basically, the child has to qualify under the Child Tax Credit Rules. So if you were able to claim a child tax credit for the child then you will most likely get a $300 stimulus payment for them also.
Owe Money? It Can be Taken Out of Your Stimulus Payment
If you owe the government money it can be taken out of your stimulus check. This includes money for child support, student loans and back taxes. The IRS will send you a letter if they take any of your stimulus payment. So if you receive less than what you think you should have, look for a letter from the IRS for an explanation.
Make too Much?
If you make too much money, you’re stimulus payment will be reduced or eliminated completely. (Take that over-achievers!) The stimulus payment begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples (filing jointly) with AGI over $150,000.
Your Adjusted Gross Income is the amount shown on:
- Form 1040, Line 37
- Form 1040A, Line 21, or
- Form 1040EZ, Line 4
The stimulus payment is reduced by 5% of the income above the AGI threshold. That is take your AGI subtract the threshold (either $75000 or $150000) and take that times .05. If you make a million dollars a year, you wont’ get a stimulus payment. If you make $155,000 your payment will be reduced by $250.
The IRS Explanation
This is the exact IRS payment explanation. If I left anything out, this should cover it.
Your stimulus payment is equal to your net income tax liability, but no more than $600, if you are single, or $1,200, if you are married filing a joint return.
If you had no net income tax liability for 2007, you are usually getting a minimum payment of $300, if you are single, or $600, if you are married filing jointly, as long as you had qualifying income of at least $3,000 in 2007. To figure your qualifying income, add together the following amounts:
* Wages that are reported on Form W-2.
* Net self-employment income that is taken into account in computing taxable income.
* Social Security benefits reported in box 5 of the 2007 Form SSA-1099 you received in January 2008. If you don’t have this form, you can estimate your annual benefit by multiplying your monthly benefit by the number of months (usually 12) you received benefits during 2007.
* Certain Railroad Retirement benefits reported in box 5 of the 2007 Form RRB-1099 you received in January 2008.
* Veterans’ benefits received in 2007, including veterans’ disability compensation and disability pension or survivors’ benefits received from the Department of Veterans Affairs. You can estimate your annual benefit by multiplying your monthly benefit by the number of months during 2007 you received benefits.
* Nontaxable combat pay if you chose to include it as earned income on your 2007 return.Note: Supplemental Security Income (SSI) is not considered qualifying income and is not included for the purpose of establishing eligibility for the stimulus payment.
Additional Amounts for Qualifying Child: If you qualify for the basic amount, you may receive an additional $300 for each qualifying child. To qualify, a child must be younger than age 17 and have a valid Social Security number.
Phase Out: Your payment is reduced, or you may receive no payment at all based on your income level. The stimulus payment begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds. Your AGI is the amount shown on:
* Form 1040, Line 37
* Form 1040A, Line 21, or
* Form 1040EZ, Line 4
Categories Government Taxes
Tags Economic Stimulus Government IRS Stimulus Payment TaxesRelated Posts
- Stimulus Payment - Make Too Much? You Might Not Get One
- Economic Stimulus Payment - Child Support Questions
- Is the Economic Stimulus Payment Taxable Income?
- IRS Stimulus Payment: How Much Will You Get?
- Stimulus Payment - Some Will Get Second Chance To Qualify
Comments
7 Comments so far
[...] see my detailed explanation of the the amount stimulus payment is determined if you have more [...]
[...] Decreased Income (See the phaseout details here) [...]
When my husband and I filed our 2007 taxes we actually owed in state taxes and was given a payment plan of $140.00 over 5 months. Will the IRS take all the money owed out of the stimulus refund or is that a seperate issue?
my ss# ends in 03 and i am getting a paper check. i keep checking the irs website “wheres my stimulus payment” and it keeps saying the “sorry unable to locate info” i got about $6500 from federal this year. can the amount of my refund determine if i am getting a stimulus or not?
[...] see my detailed article on how the stimulus payment is calculated. That article includes payment calculations for all income [...]
If I made less than 500.00 in 2007, but I filed my taxes. Will I get a stimulus payment?
Leroy,
No.