The Check's in the Mail

The Check's in the Mail

Below you will find the details of the recently enacted tax rebate checks.As you can see from this summary, even the simplest of ideas can end up being complex.

Congress Passes Economic Stimulus Act of 2008  

On Feb. 7, both the Senate and House of Representatives passed H.R. 5140, the "Economic Stimulus Act of 2008" (Stimulus Act).

New Rebate. An eligible individual will receive a basic rebate equal to the greater of: (1) his net income tax liability up to a maximum of $600 ($1,200 for a joint return); or (2) $300 ($600 for a joint return) if either (a) the taxpayer's qualifying income is at least $3,000; or (b) his net income tax liability is at least $1 and gross income is greater than the sum of the applicable basic standard deduction amount and one personal exemption (two personal exemptions for a joint return). Qualifying income is earned income generally, veterans' disability payments (including payments to survivors of disabled veterans), and social security benefits. There will be an additional $300 per-child credit amount. The amount of the rebate (both the basic and the child's amount) phases out at a rate of 5% of adjusted gross income (AGI) above $75,000 ($150,000 for joint returns). The rebate won't be available if an individual's tax return does not include valid identification numbers (Social Security Numbers issued by the Social Security Administration). 

Boosted Sec. 179 expensing. For tax years beginning in 2008, the Stimulus Act increases the $128,000 expensing limit to $250,000 and boosts the overall investment limit from $510,000 to $800,000.

Bonus first-year depreciation. The Stimulus Act generally permits a bonus first-year depreciation deduction of 50% of the adjusted basis of qualified property acquired and placed in service after Dec. 31, 2007, and before Jan. 1, 2009. The otherwise applicable “luxury auto” cap on first year depreciation increases by $8,000 for vehicles that qualify. In general, property eligible for bonus depreciation consists of: (1) tangible property with a recovery period not exceeding 20 years; (2) purchased computer software; (3) water utility property; and (4) qualified leasehold improvement property. Bonus depreciation will be allowed for alternative minimum tax (AMT) as well as for regular tax purposes.