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Subject Author Date
Stimulus Package Question - low income with children John D. Goulden 04-04-2008
Posted by Phil Marti on April 6, 2008, 5:45 pm
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>> Incorrect. The 2008 credit is refundable, just like EITC.
>
> But the law says
>
> <Quote>
>
> `(a) In General- In the case of an eligible individual, there shall be
> allowed as a credit against the tax imposed by subtitle A for the
> first taxable year beginning in 2008 an amount equal to the lesser
> of--
>
> `(1) net income tax liability, or
>
> `(2) $600 ($1,200 in the case of a joint return).
>
> </Quote>
>
> Since they use the word "lesser", that seems the credit is non-
> refundable.

Well, yeah, if you stop reading there. You have to think of reading stat
language like reading a mystery. Even though you think you have it figured
out, you'd better keep reading.

In (b)(1) we find the $300 minimum for eligible taxpayers. In (b)(2) we
uncover just exactly what an eligible taxpayer is. (OP's description fit
the definition of an eligible taxpayer because he had at least $3,000 of
"qualifying income," as defined in (e)(1).)

But wait, call in the next 15 minutes, and there's more!

In (c) we find "Treatment of Credit," which tells us that it's treated "as
allowed by subpart C of part IV of subchapter A of chapter 1." Guess what.
That's refundable credits.

--
Phil Marti
Clarksburg, MD

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Posted by removeps-groups@yahoo.com on April 5, 2008, 1:09 am
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 On Apr 4, 6:04 pm, "removeps-gro...@yahoo.com" <removeps-
gro...@yahoo.com> wrote:

> If this is the case, then a good strategy will be to find work in 2008
> so that the 2008 earned income is at least 3k, and the total income is
> larger than the standard deduction + exemption + ($600/10%).
> Explanation by example: A single filer would only pay tax on income
> above $8750, and the tax rate is 10%. 10% of $6000 is $600. So if
> they earned 8750+6000=14750, then they would owe $600 tax, but then
> they would get the economicstimulusrebate and their tax would be
> $0. However, other non-refundable credits such as the credit for the
> elderly or disabled would reduce thestimuluscheck credit, in which
> case the strategy should be to increase income even further.
>
> In addition, the filer might qualify for the earned income tax credit
> as well, which thankfully is refundable (you get money back).

So I thought of this:. If they follow the above strategy, their earned
income may increase, but then their EITC may decrease, so it may be
good to work just enough. For a single filer with 14750 in income,
the EITC would be zero though the stimulus check would be 600.
However, if their income was 6250, then the EITC would be 428
(assuming all of it is earned income), and how much would the stimulus
check be?

========================================= MODERATOR'S COMMENT:
$300 if not a dependent.

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Elle on April 4, 2008, 8:25 pm
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> An individual has earned income, but not enough to be
> eligible for a stimulus payment (or even be required to
> file). The individual does have dependents. A 2007 return
> was filed so that that individual could get witholding
> back (not much) and some EIC (a bit under a thousand).
>
> Will this indivudual get $300 each for the two dependent
> children even though the indivudual doesn't qualify for a
> stimulus payment?

The parent needs to have at least $3000 of qualifying income
to receive the rebate. Qualifying income would include W-2
wages, self-employment income, and Social Security. If all
the parent had was wages, then based on the EIC number you
give above, it appears his/her qualifying income is close to
$2500. In which case s/he gets no rebate.

The calculator linked at the site below is helpful:
http://www.irs.gov/newsroom/article/0,,id=177937,00.html#Calculator

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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