With tax season coming to an end last week, the next big thing is the economic stimulus rebate which the government approved earlier this year. With that in mind, here is some information about the economic stimulus package, and how it will affect military members.Keep in mind, this information is gathered primarily from the IRS web page, and I am not a tax professional. So if you are in need of professional tax advice, please consult the IRS or a tax professional.

What is the economic stimulus package?

The economic stimulus package is a change in the tax code that will eliminate the 10% bracket from 10% to zero for the first $6,000 of taxable income in 2008. In order to spur the economy, the government made the rebate effective immediately, giving people more money to spend now. For more information about the rebate, read the economic stimulus explained.

Who is eligible for the rebate?

The economic stimulus rebate check is available to qualifying tax payers, based on IRS calculations. Single tax filers with adjusted gross income (AGI) less than $75,000 and couples filing jointly with AGIs less that $150,000 will qualify for full rebates. Those with AGI levels above the maximum will receive a reduced rebate based on a phase-out schedule.

Persons who do not owe income taxes, but earned at least $3,000 in wages, Social Security benefits, or veterans disability benefits, will get rebate checks of $300 for individuals and $600 for couples.

How much will I receive for the rebate?

Qualifying single filers (AGI less than $75,000) will get rebates of up to $600. Qualifying couples (AGI less than $150,000) will get rebates of up to $1,200, plus $300 per dependent child younger than 17, with no maximum number of eligible children. The rebate starts out at $300 per person, but rises to $600 per person to match the taxes you will pay based on your 2007 Adjusted Gross Income (AGI).

Your AGI is generally lower than your salary, and is based on your earnings after tax deductions such as 401(k) and Traditional IRA investments and other qualified deductions. However, if you earn above a set limit, you may receive less than $600. The tax rebate decreases by $50 for every $1,000 earned above $75,000.

What do I have to do to get my rebate check?

If you file taxes in 2007 and qualify for the rebate, it will be automatically sent to you. To receive the economic stimulus rebate, you are required file a 2007 tax return, either a form 1040, 1040A or 1040-EZ. If you are someone who normally doesn’t file a tax return (for example, a pensioner, retiree, of someone whose income is based on Social Security, military veteran’s disability, or other income), you will need to file a tax return in order to receive the rebate.

When will I get my economic stimulus rebate check?

If you filed your tax return by the April 15th deadline, you will receive your rebate check automatically starting May 2. For those who elected to receive their rebate check via electronic deposit, checks will begin being sent by the IRS on May 2nd. For those who will receive their check via mail, the checks will be sent starting May 16. If you filed your taxes late or filed for an extension, you may not receive your rebate check for several weeks after you file, and there have been some reports that it may take several months to receive your rebate.

My only income is military disability pay. Will I receive a rebate?

Yes. People receiving benefits from the Department of Veterans Affairs for disability, pension, or survivors’ benefits are eligible to receive the economic stimulus rebate. If you have already filed a return, you will automatically receive the rebate.

For eligible veterans who do not normally file a tax return, the IRS has prepared a 10-page informational package that includes instructions, a sample Form 1040A and a blank Form 1040A — everything needed to file a tax form today.

• Package 1040A-3, 8-page informational package for people who normally do not file a tax return.

Tax filers should note that Line 14a of the Form 1040A and Line 20a of Form 1040 are designated for Social Security. However, these lines should also be used to include any veterans’ benefits.

For more information, go to the IRS economic stimulus FAQ section for those receiving military benefits.

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. File the form after April 14, 2008, and allow 8-12 weeks of processing time before making any inquiries about the payment. See a sample with instructions.

All of my income in 2007 came from a tax free zone. Will I still receive the rebate?

Yes. As long as you file your taxes and otherwise qualify, you will automatically receive your rebate check.

I was in a tax free zone and filed for an extension on my taxes. Will I still receive the rebate?

Yes. The rebates are based on taxpayers’ 2007 tax returns. Those who file extensions or file late would likely receive their checks later than regular filers, but they will still receive them. The checks will be sent out automatically; taxpayers don’t need to apply. If you are unsure whether you are eligible to file an extension without penalties, consult the Military Tax Extension IRS FAQ page or go to a qualified tax professional for more details.

For more FAQ’s, check out the Economic Stimulus FAQ section on Cash Money Life.

Today is tax day, and millions of last minute tax filers (myself included!) will be streaming by the post office today to send their taxes to the IRS. But what happens if you missed the deadline? The good news is that you can file an extension. That bad news is that if you owe the IRS money, it was due on April 15th, even if you file an extension. If you are late with your payment, you may be assessed a penalty.

Military Tax Deadline Extensions

The great news is that many military members qualify for tax deadline extensions. This deadline is available for most military members who served in a tax free zone in the previous or current tax year. There are a lot of details, so the best thing I can do is point you to the Military Tax Extension IRS FAQ page or to a qualified tax professional for more details.

More Military Tax Information

• Many military members are qualified to file their taxes several months later without penalties.
• Heroes Earned Retirement Opportunities Act (Heroes Act) gives military members the opportunity to contribute to a traditional IRA, even if all of their income was earned in a tax free zone and was Tax-Free Military Pay.
• Free tax preparation for military members
• Taxable Military Income
• Non-Taxable Military Income
• Tax-Free Zones and Military Pay

There are a lot of unique tax laws affecting military members, so if in doubt, contact a tax professional!

Tax season is drawing to an end, and you’ve only got about 2 weeks to complete your taxes before the end of the year. Fortunately, there are several places that provide free tax preparation for military members. If you are looking to do your own taxes, it helps to know which pay and benefits are taxable, and which are not.

Military pay is confusing. There are a lot of different rules regarding military pay and which benefits, bonuses, and special pays are taxable and which are not. This series of articles will focus on clearing up some of the confusion.

Taxable military benefits

As a military service member, you earn money from several different allowances and benefits, and there rules regarding which of these must be reported to the IRS as income and those you can exclude.

The following items must be included in your reported gross income unless they were earned while you were serving in a combat zone. The good news, is that military taxpayers who receive tax-free combat pay can continue to include it as earned income when determining the Earned Income Credit and Additional Child Tax Credit, and for purposes of making an IRA contribution.

Basic pay

• Active Duty Pay, Reserve Training, and Guard Drill Pay
• Attendance at a designated service school
• Back wages

Special pay

• Aviation Career Incentive
• Diving Duty
• Foreign Duty
• Medical, Dental, Pharmacy, Optometry, and Veterinarian pay
• Nuclear-Qualified Officers
• Special-Duty Assignment pay

Bonuses

• Enlistment / Reenlistment
• Officer
• Career Status
• Overseas Extension

Other payments

• High Deployment Per Diem
• Accrued leave
• Personal money allowances paid to high-ranking officers
• Student loan repayment from programs such as the Department of Defense Educational Loan Repayment Program (certain exemptions may occur if you serve in a combat zone during the repayment period).

Please keep in mind this list is not an all-inclusive list and it is subject to change. Always check with an accountant or your base finance office for further details.

See these related articles regarding military pay and taxes:

• Taxable Military Income
• Non-Taxable Military Income
• Tax-Free Zones and Military Pay