TEXT OF INTERVIEW
Tess Vigeland: Need a quick pick-me-up? I have three words for you: Tax. Rebate. Checks.
But judging from the e-mail we’ve been getting, there’s still a lot of confusion about them, so we’ve decided to go straight to the source: the taxman himself.
Or we should say a taxman. Frank Keith is a spokesman for the IRS and he’s agreed to answer your questions about the tax refunds.
Vigeland: Hi Frank.
Frank Keith: Hi, how are you?
Vigeland: I’m good, thanks and thanks for joining us. Let’s go ahead to our first caller:
Gary: Hi, my name’s Gary in Boise, Idaho. I haven’t heard whether the upcoming stimulus checks will be tax-free or not. Do you have any idea? Thank you.
Vigeland: Alright, well, there you go Frank. This is a very common question, whether taxes will actually be taken out of what’s a tax rebate?
Keith: Well, the rebate’s not taxable, so you wouldn’t report it next year on your tax return. It’s also important to know that the rebate won’t affect any federal benefits programs such as Social Security or veteran’s benefits that the taxpayer might be receiving.
Vigeland: Alright, well let’s hear another question about taxes on the tax rebate:
Graham: Hi, my name is Graham from Oconomowoc, Wisconsin. I heard that the rebate that we’re getting is just an advance on our 2008 tax return. Is that true?
Keith: I think there’s a lot of confusion, because people are afraid that there refund check next year is going to be reduced dollar-for-dollar by the amount of this stimulus payment they’re getting…
Keith: ….and that’s simply not the case. The amount of the check that they get this year won’t reduce in any way the refund they’ll be entitled to next year.
Vigeland: OK. Let’s go to caller number three and this has to do with whether you’re not actually making any money during this year:
Chan: My name is Chan and I live in Ocoee, Florida. My parents are receiving Social Security and do not file taxes. Should they have filed a 2007 tax return in order to receive the tax rebate?
Keith: Well, I’m going to make an assumption that his parents receive over $3,000 a year in Social Security…
Keith: …and since that’s likely to be the case, they absolutely should file a 2007 tax return because they would also be entitled to a rebate, even thought they don’t normally file and even though they don’t normally pay any taxes. The similar situation exists for people who receive certain veteran’s benefits. As long as they have at least $3,000 of veteran’s benefits, they also will qualify.
Vigeland: Alright, you mention the $3,000 figure and we have another question about that one:
Patty: Hi, this is Patty from Dayton, Ohio. I’m confused by the term “married couple.” Do stay-at-home parents earning less than the minimum $3,000 factor in to these rebates?
Vigeland: OK, you have a married couple that you would assume would be eligable for the $1,200 rebate, but one of them is a stay-at-home parent, so for the household, as long as they’re above the $3,000 threshold, they’re going to get a check?
Keith: That’s correct. The rules apply… on a joint return, you would combine the income, so for instance, the $3,000 qualifying income limitation, that would be the total on the return. It could be earned by the husband, the wife, or some combination.
Vigeland: OK, and one final question from Mark in Riverton, Connecticut. The full tax rebate applies to couples with incomes under $150,000. Can you tell him what line on the 1040 form the income is referring to? From what I understand, this is adjusted gross income. Where do you find that?
Keith: It’s the very, very bottom number on the front page of the tax return.
Vigeland: Well, Frank Keith, thanks so much for coming in and helping to clarify this tax rebate that everyone’s so excited about.
Keith: Well, thank you for inviting me.
Vigeland: Frank Keith is a spokesperson for the Internal Revenue Service.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.