Tax Tips

Check out these popular news topics or read on for the latest news:

• Economic Stimulus Act of 2008
• Summary of 2007 Tax Legislation
• Expiring Tax Law Provisions
• Hybrid Vehicle Tax Credit
• Disaster Tax Relief

'Where is my economic stimulus payment?'

There are many questions that taxpayers have concerning their economic stimulus payments. The IRS has released frequently asked questions on www.irs.gov that will help answers those questions. Here are some highlights that could answer your question.

1. If you chose to receive your tax refund through a refund anticipation loan (RAL) or any other financial agreements with a tax professional, the IRS can't send your stimulus payments by direct deposit. You'll get a paper check based on the paper check distribution schedule.



2. Additionally, if you requested that your e-file or tax preparation fees be deducted from the amount of your refund, you'll get a paper check based on the paper check distribution schedule, EVEN IF you chose to have your refund directly deposited. Having your fees deducted from your refund enters you into a financial agreement with the tax preparation provider or e-file software company for a refund anticipated check (RAC).
   
   The reason is that both RACs and RALs are bank products. The money that is deposited into your bank account comes from the financial institution associated with your e-filing software provider or tax preparation provider, not directly from the IRS. The rules stated above will be true for everyone, whether or not you used H&R Block products and services to prepare your return.



3. If you chose to have your tax refund deposited onto a "stored value card" or debit card through the professional tax preparer (such as the H&R Block Emerald Prepaid MasterCard), your stimulus payment will be directly deposited onto that same card.
   
   The exception in this case is if you requested a refund anticipation loan (RAL) through your tax professional, or your card account has been closed, in which case you will receive your economic stimulus payment by paper check. Because the IRS must wait until the money is returned, this process may take several weeks.



4. If you didn't provide direct deposit information for your original tax return, you can't request a direct deposit after a return has been filed to get your economic stimulus payment directly deposited.



5. Conversely, if you designated direct deposit on a tax return, the stimulus payment will go to the account number you designated. If the account number is no longer active, the IRS will send you a paper check. Note that if this is the case, this process may take several weeks.

IRS Schedule of Stimulus Payments

The IRS began sending more than 130 million economic stimulus payments May 2, 2008. Payments are scheduled to be sent out in the order of the last 2 digits of the social security number used on the tax return.

Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check.

Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008.

Direct Deposit Payments
If the last 2 digits of your social security number are:	Your economic stimulus payment deposit should be sent to your bank account by:
00–20	April 28
21–75	on or before May 9
76–99	on or before May 16
Paper Check
If the last 2 digits of your social security number are:	Your check should be in the mail by:
00–09	May 9–May 16
10–18	May 23
19–25	May 30
26–38	June 6
39–51	June 13
52–63	June 20
64–75	June 27
76–87	July 4
88–99	July 11

Taxpayers Deposit Rebates into IRAs, Tax-favored Accounts

Taxpayers who indicated on their 2007 tax returns that their federal refunds should be directly deposited to a tax-favored account will have their economic stimulus payments directly deposited in those accounts too.

Tax-favored accounts include the following:

• Traditional or Roth IRA
• Health Savings Account (HSA)
• Archer Medical Savings Account (MSA)
• Coverdell Education Savings Account (ESA)
• Qualified Tuition Program (QTP) or Section 529 Plan

The IRS has granted special relief to these taxpayers allowing them to withdraw these funds without tax or penalty until the due date of the 2008 tax return, including extensions. The amount withdrawn won't be treated as contributed or distributed from the account. Form 1040 instructions for 2008 will provide details on how to report the tax- and penalty-free withdrawals. Also, taxpayers won't need to withdraw earnings associated with the payment.

The special relief is intended to help prevent excess contributions (and associated penalties) caused by direct deposits of economic stimulus payments into tax-favored accounts. Taxpayers may also choose to leave the funds in their accounts, but must keep annual contribution limits in mind.

Taxpayers who have opted for split refunds will receive a paper check.