Ask the taxman
You've got tax questions, the IRS has answers and we get you connected. We revisit a February segment where Frank Keith of the IRS answered your refund questions.
A 1040 tax form (iStockPhoto.com)
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TEXT OF INTERVIEW
Tess Vigeland: I can blame my nucleus accumbens, but this year I can also blame my government for encouraging me to spend, spend, spend.
Those economic stimulus checks will be on their way in May. Uncle Sam would love nothing better than for us to take them to the nearest strip mall, but we're still getting a lot of questions from you about those checks.
The IRS is, too. It's getting an extra 50,000 calls a day beyond what it usually gets this time of year, so we decided to re-air an interview from earlier this year with Frank Keith.
He's a spokesman for the IRS and we asked him to take some questions from listeners.
Gary: Hi, my name's Gary in Boise, Idaho. I haven't heard whether the upcoming stimulus checks will be tax-free or not. Thank you.
Vigeland: Alright, well, there you go Frank. This is a very common question, whether taxes will actually be taken out of what's a tax rebate?
Keith: Well, the rebate's not taxable, so you wouldn't report it next year on your tax return. It's also important to know that the rebate won't affect any federal benefits programs such as Social Security or veteran's benefits that the taxpayer might be receiving.
Vigeland: Alright, well let's hear another question about taxes on the tax rebate:
Graham: Hi, this is Graham from Oconomowoc, Wisconsin. I heard that the rebate that we're getting is just an advance on our 2008 tax return. Is that true?
Keith: People are afraid that there refund check next year is going to be reduced dollar-for-dollar by the amount of this stimulus payment they're getting...
Vigeland: Right.
Keith: ....and that's simply not the case. The amount of the check that they get this year won't reduce in any way the refund they'll be entitled to next year.
Vigeland: Alright. Let's go to caller number three and this has to do with what happens if you didn't make any money last year:
Chan: My name is Chan and I live in Ocoee, Florida. My parents are receiving Social Security and do not file taxes. Should they have filed a 2007 tax return in order to receive the tax rebate?
Keith: Well, I'm going to make an assumption that his parents receive over $3,000 a year in Social Security...
Vigeland: OK.
Keith: They absolutely should file a 2007 tax return because they would also be entitled to a rebate. The similar situation exists for people who receive certain veteran's benefits. As long as they have at least $3,000 of veteran's benefits, they also will qualify.
Vigeland: Alright, you mention the $3,000 figure and we have another question about that one:
Patty: Hi, this is Patty from Dayton, Ohio. I'm confused by the term "married couple." Do stay-at-home parents earning less than the minimum $3,000 factor in to these rebates?
Vigeland: OK, you have a married couple that you would assume would be eligable for the $1,200 rebate, but one of them is a stay-at-home parent, so for the household, as long as they're above the $3,000 threshold, they're going to get a check?
Keith: That's correct. The rules apply... on a joint return, you would combine the income, so for instance, the $3,000 qualifying income limitation, that would be the total on the return. It could be earned by the husband, the wife or some combination.
Vigeland: OK, and one final question from Mark in Riverton, Connecticut. The full tax rebate applies to couples with incomes under $150,000. Can you tell him what line on the 1040 form the income is referring to?
Keith: It's the very, very bottom number on the front page of the tax return.
Vigeland: IRS spokesman Frank Keith speaking with us in February.
