*Chart Reflects Common Rebate Scenarios

Helpful information for Iowans on the economic stimulus package.

This January 29^th Congress passed a bipartisan economic stimulus bill that provides rebate checks of up to $600 per individual and $1200 per married couple, plus an additional $300 per child. On February 13^th President Bush signed this stimulus legislation into law.

IMPORTANT:  YOU MUST FILE A 2007 TAX RETURN TO BE ELIGIBLE FOR A REBATE (even if you normally don't due to your income falling below filing requirements)

The final provisions of the bill are the following:

REBATE CHECKS

• Qualifying families will receive a rebate check of between $300 and $600 (between $600 and $1200 for married couples filing jointly) plus $300 per child.
• Families will receive an amount equal to the $600/$1200 cap or their net income tax liability, whatever is less, but not less than $300, plus $300 per child.
• Families qualify if they receive income of at least $3000. Qualifying income is: earned income, Social Security benefits, disabled veterans benefits, and benefits for widows of disabled veterans.
• Families will receive an extra $300 for every child under the age of 17.
• For example, if you and your spouse file jointly and earn $6,000 a year, you will get a $600 check. But if you also have one child, you’ll receive $900. If you have two children, you’ll receive $1200. If you have six children, you’ll receive $2400.
• If you and your spouse file jointly and earn $90,000 a year, you will get a $1200 check. If you have six children, you will receive a total of $3000.
• You will need to file a tax return this year in order to receive a check. If you don’t, the IRS will not be able to find you. Thus, it is imperative that as many people as possible earning between $3,000 and the threshold for having to file a return (about $9,000 for a single filer and about $18,000 for joint filers) do file a return this year with the IRS.
• We must encourage Iowans to file tax returns. Not only would non-filers not receive rebate checks, but they would not receive an earned income tax credit, for which they may be eligible.
• Rebate checks will be phased out for families earning above $75,000 a year (or $150,000 for married couples filing jointly). For example, if a joint-filing married couple makes $165,000 a year, they will receive less of an amount than a couple making $145,000 a year. Families making more than the high-end of the phase-out range will not receive checks.
• Our men and women in uniform serving in Iraq, Afghanistan, and other foreign lands will be eligible to receive rebate checks.
• Treasury Secretary Henry Paulson estimates the IRS will begin processing checks in mid-May.
• United States citizens and resident aliens are eligible for the rebates.

TAX RELIEF FOR BUSINESSES

Temporary Enhanced Small Business Expensing:

• In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers may elect to write-off the cost of these expenses in the year of acquisition instead of recovering these costs over time through depreciation.
• Until the end of 2010, small business taxpayers are allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation).
• The package would double the amount that small business taxpayers may write-off to $250,000 for capital expenditures incurred in 2008 and would increase the phase-out threshold to $800,000 in 2008.

Temporary Bonus Depreciation:

• The package would allow businesses to quickly recover the costs of capital expenditures made in 2008 by allowing these businesses to write-off fifty percent of the cost of depreciable property (e.g., equipment, tractors, computers) acquired in 2008.
• In subsequent years, businesses will continue to depreciate the remaining cost of depreciable property under the current law-depreciation schedule.