How the Economic Stimulus Act Affects Your Taxes

The buzz in early 2008 in America has been about the Economic Stimulus Act of 2008, which among other things has resulted in the government mailing out checks to individuals and families across the country. The Economic Stimulus Act of 2008 was officially passed by the House of Representatives and the Senate on February 7, 2008 and later signed off by President Bush. So what does it mean?

Economic Stimulus Tax Rebates

A number of things have changed under the 2008 Economic Stimulus act. One of the most “visible” has been the checks that will be mailed out to a large number of Americans. Who gets checks?

Singles making less than $75,000 per year receive a tax rebate of $600.

Couples making less than$150,000 per year receive a $1,200 rebate.

Anyone who did not owe income tax in 2007 but had at least $3,000 in income will receive a $300 rebate.

A rebate of $300 per eligible child will also be issued.

The government expects to begin mailing out the rebate checks in May. To be eligible, all you have to do is file your 2007 income taxes. Once you’ve done this you’ll receive a letter to inform you of your eligibility for the extra rebate (you might receive a letter even if you haven’t yet filed your tax return). Regardless of how you file-whether electronically or via the traditional “paper” method-you’ll receive a letter to let you know how big your rebate is, and when you can expect the check, after you file.

Other Economic Stimulus Changes

The tax rebates aren’t the only changes the Economic Stimulus Act of 2008 will bring. As well as the rebates, the act includes provisions intended to help with the home lending crunch and help prevent a possible recession in the U.S. economy. The changes here include an increase in the size of home loans eligible for Federal Housing Authority Insurance, and an increase on the cap for Fannie Mae and Freddie Mac housing loans to $730,000.

Finally, there are some changes for small businesses, investments, and other areas, including the following:

Starting in 2008 depreciation expensing limits of small businesses will be $250,000.

The overall investment limit of Section 179 eligibility has been increased to $800,000.

Qualifying property acquired in 2008 will have a first year depreciation of 50% of the adjusted basis.

Qualifying vehicles will have their luxury automobile cap on first year depreciation increased to $8,000. In addition bonus depreciation will apply for AMT and regular tax.

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