Millions could lose tax rebate

PERSONAL FINANCE

June 24, 2008|By EILEEN AMBROSE

You'd think by now that everyone has heard about the tax rebates being handed out to stimulate the economy.

But the Internal Revenue Service reports that about 5.2 million retirees and disabled veterans potentially eligible for the rebate have not filed a tax return to claim it. Of those, more than 97,000 are in Maryland - a number that, incredibly, is almost one-third of the state's retirees and disabled veterans who are likely eligible.

They might include an 80-year-old caller last week who told me she just learned about the rebate when her neighbors were talking about receiving their checks.

This is disturbing, because so many retirees and disabled veterans could use an extra few hundred dollars.

Rebates range from $300 to $600 for individuals and $600 to $1,200 for married joint filers. Parents can receive an extra $300 for every child under the age of 17 as of the end of last year.

If you know a relative or neighbor who is retired or a disabled veteran, do them a big favor: Ask if they have filed a return to get the tax rebate. If they haven't, direct them to some of the resources below so they can get help claiming their rebate. They need to file a tax return before Oct. 15 if they want to receive their rebate this year.

The IRS identified about 20 million Social Security and Veterans Affairs beneficiaries as likely candidates for a rebate. About three-quarters of them have either filed a return or turned out to be ineligible.

Of the 309,695 Maryland retirees and disabled veterans identified as prospects for the tax rebate, 97,138 have not acted to claim it.

Most of them - or 21,198 - live in Baltimore. The number is nearly 16,000 in Baltimore County, about 12,000 in Prince George's County, about 10,000 in Montgomery County and close to 7,800 in Anne Arundel County.

Even if these Marylanders qualified for only the smallest rebate of $300, that adds up to more than $29 million left on the table.

The IRS is launching a campaign to reach out to retirees and disabled vets. It plans to send out letters later this summer that will explain who is entitled to the rebate and how to claim it. A similar letter was sent out in mid-March.

Why have so many failed to claim their money?

Maryland, at 31 percent, ranks 11th in the country for the percentage of retirees and disabled veterans who have not filed for the rebate. Neighboring Washington ranks No. 1, with 39 percent not claiming the rebate.

One reason may be that many haven't had to file a return because their income is low, says IRS spokesman Jim Dupree in Baltimore.

"Some people haven't filed in years and, in some cases, decades," he says. "It's not part of the norm for them to file a tax return."

Joanna Smith-Ramani, director of the Baltimore CASH Campaign, says the rules on eligibility are way too confusing. "There is no one sentence" to explain it, she says.

To be eligible, you must have at least $3,000 in qualifying income. That includes wages from a job, nontaxable combat pay and certain benefits from Social Security, Veterans Affairs and Railroad Retirement, the IRS says.

Benefits considered as qualifying income include Social Security retirement, disability and survivor benefits; Veterans Affairs disability compensation, disability pension and survivor payments; and Railroad Retirement's Social Security equivalent portion of Tier 1 benefits, the IRS says.

The types of income that don't qualify: investment income, Supplemental Security Income and unemployment benefits.

Also, you can't get a rebate if you are declared as a dependent on someone else's return.

Rebates begin to be phased out once adjusted gross income exceeds $75,000 for individuals and $150,000 for joint filers.

Filing a return to get a rebate shouldn't cost anything more than the price of a stamp. Call First Call for Help at 800-492-0618 to find free tax preparation help in Maryland.

Or, go online at www.irs.gov and search for Contact My Local IRS Office to find IRS locations where you can get free help. Baltimore residents can go to the IRS office at 31 Hopkins Plaza.

AARP has a handy online form for filing a 1040 tax return at www.aarp.org/stimulus. After answering 10 easy questions, your information is automatically posted on the appropriate lines of the 1040. You can print out the form, sign it and mail it to the IRS.

If you write in your bank account and routing numbers, your rebate will be directly deposited in the bank and you'll get your money faster than with a paper check.

The AARP site is useful if you are trying to help an elderly relative or a neighbor who doesn't have a computer file a return.

Be wary of fraud, says AARP spokesman Jim Dau, whose organization has been helping the IRS with its outreach. For instance, the IRS will never telephone you and try to extract a Social Security number or other personal information from you, he says.

Don't worry. The rebate money won't be subject to tax next year. And if you usually don't have to file a return, doing so this one time doesn't mean you will have to continue filing year after year. "This is a one-shot deal," says Dupree of the IRS.

So don't wait, Maryland. There's at least $29 million out there waiting for you.

To suggest a topic, contact Eileen Ambrose at 410-332-6984 or by e-mail at eileen.ambrose@baltsun.com.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.