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February 14, 2008
TAX REBATES – HOW MUCH WILL YOU GET?
Before I get into the new tax rebate information, I’d like to clear up one item regarding what seniors need to provide to their tax preparer regarding the new Massachusetts income tax health insurance requirement. Seniors who have Medicare coverage do not need to provide form 1099-HC to their tax preparer. The only thing you need is your Social Security 1099 statement showing that you have Medicare. Others, who do not have Medicare, will need to provide their tax preparer form 1099-HC or risk losing the benefit of their personal exemption on their Massachusetts income tax return.
Now, to the tax rebates. Last Thursday, the House passed a Senate modified version of the Bill that they had earlier passed. And thanks to the Senate, seniors and others that do not have any earned income will be able to share in the rebates. Earned income is money that you earn from working. The original House version only allowed rebates to those with earned income. The Senate made it possible for seniors, whose only income is Social Security to share in the rebates.
HOW MUCH WILL I GET? Individuals who pay income taxes will get $600 ($1,200 for joint returns), plus $300 for each dependent child. Those who make at least $3,000, but do not file or pay taxes will receive $300 ($600 for a joint return).
These credits will be reduced by 5% of so much of the taxpayer’s adjusted gross income exceeding $75,000 ($150,000 in the case of a joint return). This means that a single person with an adjusted gross income of $87,000 or more will not receive the rebate. Married couples with adjusted gross income of $174,000 or more will also not get the rebate.
WHEN WILL I RECEIVE MY CHECK? According to Treasury Secretary Henry Paulson, rebate checks could start going out as early as May and most taxpayers should have their checks by July.
Individuals who are receiving money under any Federal Program or Federally Assisted Program should note that any money received shall not be taken into account as income or as resources for the month of receipt and the following 2 months for purposes of determining eligibility for benefits or assistance.
The idea behind this law is to promote economic stimulus. The government wants us to spend this money. What will you do with the money? Many analyst feel as though people will use the money to pay off some debt. Given that the Federal Reserve has just announced that nationally, credit card debt has risen to $943.5 billion, up $68.1 billion from last year, paying off some debt seems a likely outcome.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org