Products Affected:
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- ProSeries/1040
- ProSeries Basic/1040
- ProSeries/1120, 1120S, 1065, 1041
- ProSeries/Fixed Asset Manager
The U.S. House of Representatives voted in strong bipartisan support for the Senate Amendment to H.R. 5140, the Economic Stimulus Act of 2008. The President has since signed the bill into law.
Businesses
ProSeries/1120, 1120S, 1065 and 1041
In the ProSeries/1120, 1120S, 1065 and 1041 updates that became available online on March 4, 2008, depreciation calculations on the Asset Entry Worksheets have been updated for the Economic Stimulus Act changes to allow the increased automobile limits and bonus depreciation.
ProSeries/Fixed Asset Manager
A ProSeries/Fixed Asset Manager update that became available online on March 12, 2008, includes changes for complying with the Economic Stimulus Act of 2008.
Economic Stimulus Act Provides Tax Benefits to Businesses
In addition to providing stimulus payments to individuals, the Economic Stimulus Act of 2008 provides incentives to businesses. These incentives include a special 50-percent depreciation allowance for 2008 purchases and an increase in the small business expensing limitation for tax years beginning in 2008. For more information, view IR-2008-22 on the IRS Web site.
Individuals
ProSeries/1040 and ProSeries Basic/1040
Estimated amount of rebate. In a Federal 1040 update that became available online on February 28, 2008, near the bottom of the Federal Carryover Worksheet there is a new Estimated Rebate Due to Economic Stimulus Act of 2008 section that calculates the estimated amount of a taxpayer's rebate (or what the IRS calls an “economic stimulus payment”) from the information on the taxpayer's 2007 tax return.
Note: If you use the 2008 ProSeries/1040 or ProSeries Basic/1040 program to transfer data from a client's 2007 ProSeries/1040 or ProSeries Basic/1040 client file, the estimated rebate amount will be included in the data that is transferred into the client's 2008 tax return.
Estimated 2008 Economic Stimulus Tax Rebate Payment Worksheet. The Federal 1040 update that became available online on February 28, 2008, also includes a new, fully-calculated Estimated 2008 Economic Stimulus Tax Rebate Payment Worksheet that you can print for your clients. This worksheet provides a general description of the rebate, information about when the payments will be sent out, the client's estimated rebate, and a reason the client is not eligible for the rebate (if appropriate) based on the information in their 2007 return. In the Open Forms dialog box, this worksheet ("Rebate Estimate") will be located under Form 1040 and immediately after the Information Worksheet. The program creates the Estimated 2008 Economic Stimulus Tax Rebate Payment Worksheet automatically. As with other worksheets, this worksheet may be set to print using the regular print options. By default, this worksheet is set to print only with the client copy and the preparer copy of the return.
Filing Form 1040A to receive a rebate. The IRS has provided a sample of Form 1040A for people who normally don't need to file a tax return but now need to file a tax return to get their rebate. On this Form 1040A, the IRS wants only certain lines to have entries. The “Stimulus Payment” Form 1040A is available in the Federal 1040 update that became available online on March 12, 2008. In this update, if your client is not otherwise required to file a federal income tax return, check the box on the Federal Information Worksheet, Part IX, Main Form Selection to use an abbreviated Form 1040A to file for the stimulus payment. It is only necessary to enter qualifying income your client received such as wages, social security or railroad retirement benefits, veterans' disability compensation, pension or survivor's benefits received from the Department of Veterans' Affairs, or nontaxable combat pay. The program will print the “Stimulus Payment” Form 1040A if the taxpayer qualifies for the rebate.
Veterans' benefits. In the Federal 1040 update that became available online on March 12, 2008, if you enter veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans' Affairs in 2007 on line H of the Social Security Benefits worksheet, the program will only print veterans' benefits on the “Stimulus Payment” Form 1040A. If your client is required to file a regular federal income tax return, and veteran’s benefits received would increase the stimulus payment, your client will need to file a special edition of Form 1040X when that form is available.
How the stimulus tax rebate payment will be sent. The Estimated 2008 Economic Stimulus Tax Rebate Payment Worksheet will provide information about whether the stimulus tax rebate payment will be sent as a check by mail OR as a direct deposit to a bank account.
If there is direct deposit information provided on the tax return, generally the stimulus tax rebate payment will be directly deposited to the account information provided. If direct deposit information is not provided, a check will be sent to the address on the tax return. There are some specific exceptions to these general rules:
- If Form 8888, Direct Deposit of Refund to More than One Account was completed, the stimulus tax rebate payment will be sent via a check.
- If a client chose a Refund Anticipation Loan, a Refund Anticipation Loan Direct Deposit, a Refund Transfer, or a Refund Transfer Direct Deposit, the stimulus tax rebate payment will be sent via a check.
- The Federal 1040 update that became available online on March 7, 2008, permits electronic filers of zero balance and balance due returns to select direct deposit of their stimulus tax rebate payment. Prior to this update, only returns containing a refund could opt for direct deposit.
Electronic Filing Form 1040 to receive a rebate. The Federal 1040 update that became available on March 7, 2008, allows users to complete a Form 1040 and use an IRS approved workaround of adding $1 of interest income with the payer name of ESP. This return can be marked for Direct Deposit of the stimulus rebate payment via Part VIII on the Federal Information Worksheet.
Electronic Filing Form 1040A to receive a rebate. Electronic filing of the “Stimulus Payment” Form 1040A is now available in the Federal 1040 update that became available online on March 21, 2008. Download and install this update, if you have not already done so.
Economic Stimulus Act Provides Tax Benefits to Individuals
Starting in May, the Treasury will begin sending economic stimulus payments to more than 130 million individuals. The stimulus payments will go out through the late spring and summer.
The vast majority of Americans who qualify for the payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year. The IRS will use information on the tax return to determine eligibility and calculate the amount of the stimulus payments. For more information on the stimulus payments, including the amounts and eligibility requirements, please visit the IRS Web site:
- IR-2008-18, IRS Will Send Stimulus Payments Automatically Starting in May; Eligible Taxpayers Must File a 2007 Tax Return to Receive Rebate
- FS-2008-15, Facts about the 2008 Stimulus Payments
Information for Recipients of Social Security Benefits
The IRS and Treasury will be working closely with the Social Security Administration along with beneficiary organizations to ensure that all eligible individuals know what to do to receive a stimulus payment. For more information, please view FS-2008-16 and IR-2008-21 on the IRS Web site.
Information for Recipients of Veterans' Benefits
The IRS and Treasury will be working closely with the Department of Veterans Affairs along with beneficiary organizations to ensure that all eligible individuals know what to do to receive a stimulus payment. For more information, please view FS-2008-16 and IR-2008-21 on the IRS Web site.
Certain veterans' benefits count towards qualifying income for economic stimulus payments (rebate payments) from the federal government. Normally veterans' disability compensation, pension, or survivors' benefits received from the Department of Veterans' Affairs are not reported on the federal income tax return. The IRS will be counting these benefits received in 2007 when figuring rebate payments.
Consumer Alert on Rebate Scams
Taxpayers should be aware that there are identity theft scams involving the proposed advance payment checks, known informally as rebates to many Americans. The IRS knows of at least one telephone scam making the rounds which uses the proposed rebates as bait. For more information, please view.IR-2008-11, IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting, on the IRS Web site.
For more information, please visit the Economic Stimulus Payments Information Center on the IRS Web site.