Some low-income workers and recipients of Social Security, certain veterans' benefits and certain Railroad Retirement benefits may qualify for economic stimulus payments this year from the federal government.
In most cases, payments will range from $300 to $600 for individuals and $600 to $1200 for joint filers. Taxpayers may receive $300 for each qualifying child.
Most taxpayers do not need to take any extra steps to receive the payment beginning in early May.
But there are some exceptions.
Certain Benefits Count toward Qualifying Income
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.
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 following 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.
Railroad Retirement benefits reported on the 2007 Form 1099-RRB, which recipients would have received in January 2008.
People are allowed to estimate their annual benefit by taking their monthly annual veterans' benefit, multiplying it by the number of months during the year they received benefits, and entering the number on Line 20a of Form 1040 or Line 14a of the Form 1040A.
People should note that Line 20a of Form 1040 and Line 14a of the Form 1040A are designated for Social Security. To qualify for the economic stimulus payments, these lines should also be used to include any qualifying Railroad Retirement or veterans' benefits.
For Those Who Have Already Filed
Free Tax Help Available
Individuals who need to file a return this year to receive a stimulus payment may be able to take advantage of thousands of free tax preparation sites nationwide for low-income and elderly taxpayers.
The Volunteer Income Tax Assistance (VITA) program provides help to low- and moderate-income taxpayers. Call 1-800-906-9887 to locate the nearest VITA site.