Have You Cashed Your Rebate Check Yet?

by Leroy Baker, Tax-News.com, New York

27 September 2001

While Congress and the Administration ponder a new tax incentive package, the IRS plods along dealing with the consequences of the last one, mailing rebate checks to 90 million taxpayers. According to the original schedule, it should complete the mail-out by next Saturday, having started on July 23rd.

Those who are to receive rebate checks should have received a copy of IRS Notice 1275 specifying the week during which the rebate check should reach them via the US Postal Service. But if you haven't received either the 1275 or your check yet, and wonder what's happened to it, the first thing to do is to look at the last two digits of your Social Security number (the first one listed on your tax return if there is more than one number). Taxpayers with SSNs ending in 00-09 were scheduled to receive their checks in the week of July 23, those with SSNs ending in 10-19 in the week of July 30, and so on until those with SSNs ending in 90-99 should get their checks this week or next.

However the IRS is late in completing the mail-out, partly due to understandable disruptions in the last two weeks, and says you shouldn't query a missing check until October 23, because it won't be able to help you until then - the number to call is 1-800-829-1040.

Although the checks, for up to $600 per taxpayer under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, are colloquially known as 'rebates', yet more properly they are advance payments against the current year's tax computation, in which the 15% tax bracket has been reduced to 10%, and this bracket is deemed to apply to the whole tax year.

The amount of the check you should receive is the lowest of three figures:

• 5% of the "taxable income" on your year 2000 individual income tax return; or
• The 2000 "income tax liability" after subtracting most credits (but not the earned income tax
  credit), or
• A limit based on your tax filing status: $300 for Single or Married Filing Separately, $500 for Head of Household returns, and $600 for those Married Filing Jointly or Qualifying Widow(er).

The name(s) on the rebate check will be the same as the name(s) as on the 2000 individual income tax return filed by the taxpayer, so if you recently got divorced you'll need the co-operation of your ex-spouse to cash the check.

The rebate itself is not counted as income in compiling your 2001 federal income tax return, but note that in some states it's possible that there may be some state income tax due on the rebate. You need to check about your check with the local tax authority!

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