FEBRUARY 14, 2008: Retirees, who have at least $3,000 in earned income for 2007 may be eligible for the federal tax rebate, signed into law by President Bush today. For the purpose of the tax rebate, “earned income” includes earnings from employment, including Social Security. In other words, if a retiree has earned at least $3,000 in 2007, from a job or Social Security, then they may be eligible for the rebate scheduled to be paid in May. Also, in order to qualify for a rebate, a 2007 tax return must be filed with the IRS.

Unfortunately, the details of exactly who is eligible and just how the rebates will be calculated are now being worked out. The facts, that are known, have come directly from the official Congressional Record. Since the rebates are now law, and it is up to the IRS to make the official determinations and implement the rebates this spring.
While the IRS is now working to clarify the rules and regulations surrounding the rebate, it does not appear that pension payments or other such retirement income will be considered “earned income” to qualify for the rebate. The earlier version of the Economic stimulus package, passed by the House in January, omitted Social Security payments as earned income. The inclusion of Social Security payments came at the insistence of the Senate’s Democrat leadership.The known provisions of the Tax Rebate, which come directly from the official Congressional Record, are as follows:

  • Must file a 2007 federal tax return and have earned income of at least $3,000 in order to qualify.
  • Filers, whose only “earned income” is from Social Security, will receive a $300 rebate.
  • Single filers with income up to $75,000 and couples up to $150,000 will be eligible for a $600 person rebate ($1,200 per couple).
  • An additional $300 rebate for each child.
  • Individuals with earned income between $75,000-$87,000 and couples with earned income between $150,000-$174,000 will receive a prorated rebate.  So-called high earners (incomes above $87,000 or $174,000) will receive no rebate.
  • IRS plans to begin mailing rebate checks in May.