May
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Is the Economic Stimulus Payment Taxable Income?
May 8, 2008 |
Is the economic stimulus payment (rebate) considered taxable income? A few readers have asked that question so I figured I’d address it.
Economic Stimulus Payment is NOT Taxable Income
The simple answer is that the economic stimulus payment (rebate) is not considered taxable income by the IRS. So you won’t have to count the stimulus payment in your income for your 2008 taxes. However, you should keep track of how much you received.
Why Not?
The stimulus payment is actually a special advanced tax credit based on your 2008 tax return. Since those returns have been filed yet the IRS is estimating your tax credit based on your 2007 tax return.
This is why so many people are confused. They’ve heard the stimulus payment is associated with their 2008 taxes. Technically, it is, but practically it’s not unless you didn’t get your full payment this year.
Keep Your Stimulus Payment Letters
If you didn’t get the full amount this year you may qualify next year. Make sure you keep all the letters the IRS sends you regarding the stimulus payment (rebate). The most important one is the letter that lists the payment amount. This will be useful when filing your 2008 taxes.
What the IRS Says
From the IRS Stimulus Payment Site:
Q. Is my stimulus payment taxable?
A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment.
Q. If my stimulus payment is not going to affect my 2008 tax refund or increase the tax I owe next year, why is it I need to retain the letter that lists how much I received?
A. In the event you do not qualify for the full amount on your 2007 return but you do on your 2008 return, you will need to have the letter as a record of the amount you previously received. [New 4/11/08]
Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?
A. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.
Categories Ask WealthyReader Government Taxes
Tags Economic Stimulus Government IRS Stimulus Payment Tax Return TaxesRelated Posts
- IRS Stimulus Payment: How Much Will You Get?
- Stimulus Payment - Make Too Much? You Might Not Get One
- Will There be a Second Stimulus Package or Payment?
- IRS Economic Stimulus Payment Article Index
- IRS Where’s My Stimulus Payment Web Page
