Building Economic Futures for Americans with Disabilities
Real Economic Impact Tour
2008 Economic Stimulus Payment
Outlined below are the key components of the Economic Stimulus Act of 2008 with particular emphasis on the impact to people with disabilities whose main source of income is public benefits. For additional information, please visit www.irs.gov/irs/article/0,,id=177937,00.html.
Where's my Stimulus Payment?
- If you are waiting to receive your Stimulus Payment and would like more information about the payment schedule or when your payment can be expected, you can go to http://www.irs.gov/individuals/article/0,,id=181665,00.html.
Key Points in Legislation
- Starting in May, the IRS will begin sending stimulus payments to an estimated 130 million taxpayers.
- The vast majority of taxpayers don’t need to anything more than file a 2007 tax return. The IRS will then do all the rest, including determining eligibility and stimulus amounts.
- The stimulus payments could be as much as $600 for single filers and $1,200 for joint filers. In addition, taxpayers may be eligible to receive an additional $300 per qualifying child. Stimulus amounts begin phasing out at Adjusted Gross Income levels of $75,000 for a single filer and $150,000 for those filing jointly.
- Normally, certain Social Security, Railroad Retirement benefits and certain veterans’ payments are not subject to income tax. However, the economic stimulus law passed in February contains a special provision allowing Social Security recipients and recipients of certain veterans’ benefits and certain Railroad Retirement benefits to count those benefits toward the qualifying income requirement of $3,000 and thereby qualify for the stimulus payment.
- In other words, low-income workers who had at least $3,000 in earned income in 2007 but do not otherwise earn enough to be required to file a federal tax return need to file a return in order to get the stimulus payment. Likewise, Social Security recipients, veterans and retired railroad workers who might not otherwise need to file a tax return must do so to receive the economic stimulus payment.
- Dividends, interest and capital gains income is not included when determining qualifying income.
- Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.
- Non-veterans or non-Social Security pension income (such as those from Individual Retirement Accounts) is not included in qualifying income.
- In addition, the IRS emphasizes the stimulus payments which are spent will not count toward or negatively impact any other income-based government benefits, such as Supplemental Security Income benefits, food stamps and other programs. The law authorizing the stimulus payments excludes these payments from being counted as income and excludes them from being counted as resources for two months after their receipt.
- Signatures: The following is the specific language from IRS Publication 17 regarding signature requirements: Unable to sign. If the taxpayer is mentally incompetent and cannot sign the return, it must be signed by a court-appointed representative who can act for the taxpayer. If the taxpayer is mentally competent but physically unable to sign the return or Power Of Attorney, a valid "signature" is defined under state law. It can be anything that clearly indicates the taxpayer's intent to sign. For example, the taxpayer's "X" with the signatures of two witnesses might be considered a valid signature under a state's law.
- Question: When some people who are in nursing homes and receive Medicaid, their SS/SSDI/VA benefits must be turned over to the nursing home. Must this Economic Stimulus money they receive also need to be turned over to the nursing home? Answer: No, the nursing home doesn't get to take the money, nor to decide how a resident might spend it! Even if it remains in a resident's savings beyond the 60 days past the month of receipt and kicks the resident over the applicable state Medicaid asset level, the issue would be a Medicaid eligibility question, not how the nursing home wants the money spent.
- The IRS and Treasury will be working closely with the Social Security Administration and the Department of Veterans Affairs along with beneficiary organizations to ensure that all eligible individuals know what to do to receive a stimulus payment. In many cases, the taxpayer will be able to use the short tax return Form 1040A.
- This means a taxpayer who had, for example, $500 in earned income and $2,500 in any combination of the benefits described above can count those benefit payments toward his or her qualifying income to reach the $3,000 earned income requirement, even though the individual would not otherwise owe taxes on such income.
- For purposes of meeting the qualifying income requirement, the benefits need to be reported in any combination on Line 20a of Form 1040 or Line 14a of the Form 1040A.
- Social Security benefits reported on the 2007 Form 1099-SSA, which people would have received in January 2008. People who do not have a Form 1099 may estimate their annual Social Security benefit by taking their monthly benefit, multiplying it by the number of months during the year they received the benefits, and entering the number on Line 20a of Form 1040 or Line 14a of the Form 1040A.
- Some recipients of the benefits described above may have filed a 2007 tax return reporting at least $3,000 in qualifying income. They do not need to do anything else. They will begin receiving their stimulus payments in early May.
- Others may need to amend a previously filed tax return to include benefits to reach the $3,000 qualifying income level. Adding these benefits on an amended tax return will not increase an individual’s tax liability but will establish eligibility for the stimulus payment. Taxpayers can use IRS Form 1040X to amend a tax return in order to qualify for the stimulus payment. Form 1040X cannot be filed electronically and must be filed on paper and mailed to IRS.
- Individuals will not owe tax on the payment when they file their 2008 federal income tax return. They should keep a copy of the IRS letter they will receive later this year listing the amount of the payment. They will need to know this amount next year when you filling out the 2008 return. The stimulus payment will not reduce or increase their refund when they file their 2008 return.
- Stimulus payments will be subject to offset against outstanding tax and non-tax liabilities in the same fashion as regular tax refunds.
IRS is posting the most current information at www.irs.gov/irs/article/0,,id=177937,00.html as it becomes available. In addition IRS is preparing a wide array of marketing tools for partners to use in communicating with the disability population in their cities. The Real Economic Impact Tour website at www.reitour.org is also being updated regularly with topics of special interest to people with disabilities. As the Tour cities are developing marketing materials they will be posted to the REI Tour site for adaption by other cities.
Definitions: SSA pays disability benefits under two programs – SSDI and SSI:
- The Social Security Disability Insurance (SSDI) program pays benefits to an individual and certain family members if that individual worked long enough and paid Social Security taxes. The benefits paid are an entitlement earned by the worker. Such entitlements include:
- An individual's adult child if the adult child has a disability that started before age 22.
- A spouse of a retired, disabled or deceased individual.
- Unmarried children under 18, or up to age 19 if they are attending high school full time, of a retired, disabled or deceased individual.
These benefits are reported to the recipient on Form SSA-1099 in the same manner that Social Security retirement benefits are reported.
- The Supplemental Security Income (SSI) program pays benefits to disabled adults and children who have limited income and resources. SSI benefits also are payable to people 65 and older without disabilities who meet the financial limits. This is a "need- based" program in much the same manner as TANF or Food Stamps.
These benefits are generally not reported to the recipient unless the recipient requests them and then they are reported in letter format – not on a numbered form.