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Remember those economic-stimulus checks the government was handing out last year? Many taxpayers didn't qualify for the full amount -- or for any payment at all -- because their 2007 income exceeded a certain threshold.
But many people who lost their jobs in 2008, or whose incomes fell for some other reason, will get a second chance this year through a little-noticed tax-law twist.
Like many others, Colleen Kilbreath of Westminster, Colo., thought eligibility for the program was based solely on what she had reported on her tax return for 2007, and she had assumed she wouldn't get anything because her income for that year was too high. Kilbreath, a construction-project manager, was laid off in June "and could really use the assistance," she wrote in a recent e-mail.
For 2008, she says, her adjusted gross income will be about $50,000, well below the law's threshold, which means she should qualify for a recovery rebate credit when she files her 2008 return in April. Kilbreath says she didn't know the law worked that way. "I'm sure there are a ton of us out there that are in the dark."
Under the economic-stimulus law, which was enacted last February, eligibility for this tax break is based on your income and other factors, such as family size, as reported on your federal income tax return for either 2007 or 2008, says Mark Luscombe, a principal tax analyst at CCH, a Riverwoods, Ill., tax publisher.
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Thus, if you weren't eligible based on your 2007 return or received less than the maximum amount, you still might qualify for a rebate credit on your 2008 return, to be filed in 2009, Internal Revenue Service officials say. Other people, such as a family with a child born in 2008, may also be eligible for a credit on their 2008 returns, Luscombe says.
Huge amounts of money are involved. About $10 billion will be distributed this year in rebate credits, Treasury Department spokesman Andrew DeSouza says. The Treasury won't send out separate economic-stimulus payments, as it did last year. Instead, those eligible will claim the rebate credit on their 2008 returns. That will affect how much of a refund they'll get or how much they'll owe Uncle Sam.
With the economic slump deepening, the extra help will come in handy in many households. According to the Labor Department, the unemployment rate rose to 6.7% in November, up 2 percentage points from a year earlier, and many forecasters expect it to climb above 8% by the end of this year.
Pressure is growing in Congress for additional economic-stimulus measures, with legislation expected soon after Barack Obama is sworn in as president.
Continued: More than $95 billion in rebates
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