The Internal Revenue Service has begun to transfer economic stimulus payments to millions of Americans, some of whom may have already seen payments in their bank accounts.

 

The IRS will issue payments of up to $600 ($1,200 for married couples) plus $300 for eligible children younger than 17, throughout the spring and summer. The first wave of payments will go to people who opted for direct deposit on their 2007 income tax returns.

 

“People who chose direct deposit will receive their economic stimulus payments the quickest,” IRS Commissioner Doug Shulman said. “We know there are many people who are eligible for an economic stimulus payment who have not filed a tax return. If you think you may be eligible, even if you don’t normally file a tax return, please check it out. And, use direct deposit to get your payment faster.”

 

Whether a taxpayer opted for direct deposit determines how soon the payment will arrive. The first cycle of paper checks will be mailed starting May 9.

 

Even people who normally do not have a filing requirement may be eligible for the stimulus payment. People who have no filing requirement must have at least $3,000 in qualifying income. Qualifying income includes any combination of earned income, nontaxable combat pay they elect to include in earned income and certain payments from Social Security, Veterans Affairs and Railroad Retirement.

 

People with at least $3,000 in qualifying income may qualify for an economic stimulus payment of $300 ($600 for married couples) plus the $300 per qualifying child payment. However, they must file a 2007 income tax return by October 15, 2008, to receive a stimulus payment. They can use the simple Form 1040A and provide basic information. Form 1040A is available on IRS.gov, the official IRS Web site.

 

The payment is reduced, or you may receive no payment at all based on your income level. The stimulus payment begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds

 

The payment schedule announced earlier this year is for people who filed early enough to have their tax returns processed by April 15. People who did not submit a return in time for it to be processed by April 15 may see their stimulus payments later than the scheduled dates.

 

Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008:

Direct Deposit Payments
If the last two digits of your Social Security number are:	Your economic stimulus payment deposit should be transmitted to your bank account by:
00 – 20	May 2
21 – 75	May 9
76 – 99	May 16
Paper Check
If the last two digits of your Social Security number are:	Your check should be in the mail by:
00 – 09	May 16
10 – 18	May 23
19 – 25	May 30
26 – 38	June 6
39 – 51	June 13
52 – 63	June 20
64 – 75	June 27
76 – 87	July 4
88 – 99	July 11

 

Some taxpayers may receive smaller economic stimulus payments than they anticipated. By law, the stimulus payments are offset to satisfy past-due taxes, student loans, child support and certain other debts.

The easiest way to figure the amount is to use the Economic Stimulus Payment Calculator on the IRS Web site (www.irs.gov). Essentially, there are two parts to the stimulus payment: a basic amount based on tax liability, filing status or other qualifying income, if there is no tax liability, and an additional amount based on whether a qualifying child is reported on the return.

 

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Megan Broomfield, CPA is a principal with Mengel, Metzger, Barr & Co. LLP.  She can be reached at 585/423-1860 or Mbroomfield@mmb-co.com.