The economic stimulus package payments are on their way to millions of Americans. The IRS has gone out of it's way to ensure everyone knows about it. Those with low incomes can file their taxes online for free just to qualify for the stimulus payment. But what if you make too much and how much is "too much" really?
How Much is Too Much?
The threshold is either $75,000 (single) or $150,000 (married filing jointly). After that amount your stimulus payment begins to "phase out."
However, the phase out threshold is actually based on your adjusted gross income (AGI). Your AGI can be found on your tax return.
Your Adjusted Gross Income is the amount shown on:
- Form 1040, Line 37
- Form 1040A, Line 21
- Form 1040EZ, Line 4
The stimulus payment is reduced by 5% of the income above the AGI threshold. To calculate this amount take your AGI amount and subtract the threshold (either $75000 or $150000) and take that times .05.
Calculate the Phase out amount
- Adjusted Gross Income (AGI)
- - Phase out Amount ($75,000 or $150,000)
- x .05
- = The amount your stimulus payment is reduced by
For example: if you make $155,000 your payment will be reduced by $250. If you make a million dollars a year, you wont’ get a stimulus payment.
What the IRS Says
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
Source: IRS Economic Stimulus Payment Q&A
Why Do High Income Earners Get Less?
The Economic Stimulus Package was designed to stimulate the economy by getting money into the hands of those most likely to spend it. That's why I believe that high income earners are phased out. More than likely, the stimulus payment will make so little impact on high income earners spending habits that it won't be worth the effort to send them the money.
Is that fair? Fair and government are concepts that don't usually belong together. I personally believe this stimulus package is nothing more than a political stunt in an election year. While it will help some people (free money is always welcome), the policy is highly questionable.
Who is Paying for This Stimulus Package?
The government can't just make money. The US government already has massive debt. Wouldn't a better policy aim to reduce the government debt? Someday someone is going to have to pay off that debt. Oh well, why worry about such things? I'm sure that new LCD TV at Best Buy is worth mortgaging our childrens' future.
Other Questions?
Please see my detailed article on how the stimulus payment is calculated. That article includes payment calculations for all income ranges.
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Comments
5 Comments so far
My last numbers of my SS is 21, until to this day I have not received my tax rebate. I filed on time and direct deposit. I only made $46,000 and I have three dependents. It's kind of funny, because even my son did not get his. He filed on time and direct deposit his last two numbers are 49 and my brother too, his two digits are 26. It's odd that non in my family got theirs yet. Still more relatives that haven't got theirs yet either.
I have yet to find an answer to my question in all the IRS resources. If you made enough last year that you were not able to take the child tax credit, even though your children qualify on all points not related to income and were listed correctly with SS# on your tax form, will you receive any stimulus credit for them (which will be phased out accordingly, of course, due to a higher income)? We are getting a laughable amount from the IRS, because they are saying we have zero qualifying children. Is this correct, or are we one of the 350,000 families whose checks were calculated incorrectly?
Kendra,
Have you already used the stimulus calculator at http://www.irs.gov/app/espc/ ?
Chris, yes I did, and the result was $900 more (3 kids' worth) than we are actually getting, according to the "where's my check" information. I have a call into our CPA, but I haven't heard back yet.
Yeah this is sad we pay so many taxes and yet no can answer the dam phone in the IRS office for information on the stimulus payment. I need that money for my new 65″ LCD from Best Buy!! So Fat ass in the government is sitting on my frigging check!!!!! Got to love the government they work 8:30 to 4pm plus a 2 hour lunch and don't forget the 30 min some breaks because of all of the stress in the environment.