YOU ASKED, WE ANSWERED: Answers to Your Questions About Tax Rebates

Jan. 25, 2008— -- "World News" viewers submitted questions about tax rebates on our Web site. ABCNEWS.com personal finance columnist David McPherson provided his answers below.

Question: "I am looking for some clarification on the stimulus package. Will the government be looking at our 2006 or 2007 tax return to make the determination if we qualify for the rebate?"

Gordon from Kentucky

McPherson: The final details will depend upon on the final bill signed by President Bush, but as of now, the rebates are to be based on the 2007 federal tax return. That could be one more reason to get your return done early this year. But remember, Alternative Minimum Tax relief passed by Congress in December was already expected to delay the processing of some 2007 tax returns this year. If the rebates become law, then the IRS will have even more work to do during an already busy time of year.

Question: "How will the president's tax rebate work for families with a stay at home mom? Does the 'working couple' apply to them, or will the family be punished for having a mom be a mom and stay home with the children? Thank you"

Shari from California

McPherson: According to examples provided by the Treasury Department, the rebates depend on a married couple's joint adjusted gross income, not on whether both parents are working. For instance, a married couple with two children and an adjusted gross income of $80,000 and income tax paid in excess of $1,200 would receive a total rebate of $1,800: $1,200 for the couple and $600 for the two children.

Question: "Tonight Charles Gibson announced the plan for economic relief with 170 million 'tax payers' receiving fed. money. In all of the relief plans tossed about, one segment of the population has been ignore. Senior citizens, retirees who can no longer work, on limited incomes. Is nothing being done for seniors?"

Melanie from Indiana

McPherson: Melanie, retirees would qualify for the rebates to the extent they pay taxes on pensions, investment income, Social Security and other sources of income. They would not qualify under the current proposal if their adjusted gross income is so low that they pay no federal income tax at all and their earned income in 2007 was less than $3,000.

Earned income includes money earned on the job or in a business. According to the IRS, it also includes union strike benefits, long-term disability benefits received prior to retirement age and any nontaxable combat pay received by military personnel.