FOR YOUR CLIENTS: SOCIAL SECURITY DISABILITY AND VETERANS BENEFITS MAY QUALIFY FOR FEDERAL ECONOMIC STIMULUS PAYMENT

Individuals Must File a Federal Tax Return to Receive the Payment

Congress recently passed an economic stimulus package that includes payments between $300 and $600 for individuals and $600 to $1200 for joint filers. Many low-income people who are not required to file income tax returns may find that it makes sense to file this year in order to receive the stimulus payment.

To receive a stimulus payment, individuals must:

• have a minimum income of $3,000 for 2007 AND
• file a tax return.

Social Security Disability benefits and certain Veterans’ benefits may count as income for the purposes of receiving this one-time payment. For example, if a person earned $500 last year and received $2,500 in Social Security Disability benefits, they would qualify for the payment.

These benefits should be reported on Line 20a of Form 1040 or Line 14a of the Form 1040A. These lines should also be used to include any veterans or Railroad Retirement benefits. Veterans’ benefits that qualify include disability compensation, pension or survivors’ benefits. The total of all of these benefits should be included on Line 20a of Form 1040 or Line 14a of the Form 1040A.

Important exceptions:

• Supplemental Security Income (SSI) does not count as qualified income for the stimulus package payment.
• Anyone who is claimed as a dependent on someone else's return is ineligible for the payment, regardless of whether they meet the other requirements.

What if your clients already filed tax returns?

If your clients already filed returns, but they did not include Social Security Disability benefits, they can file amended tax returns. They should use Form 1040X to add their Social Security Disability benefits. This will not affect their tax liability, but it will qualify them for the stimulus payment.

Free Tax Help Available

Individuals who need to file a return this year to receive a stimulus payment may be able to take advantage of thousands of free tax preparation sites nationwide for low-income and elderly taxpayers.

The Volunteer Income Tax Assistance (VITA) program provides help to low- and moderate-income taxpayers. Call 1-800-906-9887 to locate the nearest VITA site.

The Tax Counseling for the Elderly (TCE) Program provides free tax help to people age 60 and older. As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. To find an AARP Tax Aide site call 1-888-227-7669 or visit the AARP Web site.

For More Information

• AARP
• IRS: Economic Stimulus Payments Information Center

If you have any questions about this issue brief, please contact Tammy Seltzer.

DISCLAIMER: The information provided in this document is not intended to serve as legal advice. If you are concerned about a tax problem, please seek professional assistance from a tax lawyer or accountant.