Rebates may begin in May 

On February 7, 2008 both the Senate and House of Representatives passed H.R. 5140, the Economic Stimulus Act of 2008 (the Act), which the President is expected to sign. The Act contains provisions pertaining to tax rebates and depreciation.

The Rebates

Based on 2007 returns, a rebate of up to $600 would go to single filers with AGI of $75,000 or less ($1,200 for married filing joint with AGI of $150,000 or less). In addition, parents would receive $300 rebates per child. Tax filers who do not owe income taxes but have at least $3,000 in qualifying income would get a $300 rebate. The rebates are phased out by 5% of income in excess of the threshold amounts.

The IRS is expected to start sending out checks in early May with all rebates completed by mid-summer, according to Treasury Secretary Henry Paulson.

Increased §179 plus first year bonus depreciation

For tax years beginning in 2008, the Act increases the $128,000 §179 expensing limit to $250,000 and boosts the overall investment limit from $510,000 to $800,000.

In addition, the Act generally permits a bonus first-year depreciation deduction of 50% of the adjusted basis of qualified property acquired and placed in service after December 31, 2007, and before January 1, 2009.

California

Considering the California budget crisis, it is unlikely Californians will see any type of tax relief from Sacramento. However, because California does not tax federal refunds or allow a deduction for federal taxes, the rebates should have no effect on California tax returns.

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