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Tax Tip - August 25th, 2008

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Stimulus update: Some changes have been made

The weekly wave of economic stimulus payments subsided in July, and so did much of the news coverage. But there have been changes to the program that may benefit you or someone you know.

Here's an update.

  • Direct deposit relief. If you choose to have your regular federal income tax refund deposited directly into a single account at a financial institution, that's also how you received, or will receive, your stimulus payment. Financial accounts eligible to accept direct deposits can include traditional or Roth IRAs, health savings accounts, Archer medical savings accounts, Coverdell education savings accounts, and qualified 529 plans.

    Problem: The addition of your stimulus payment to these accounts means you may inadvertently exceed contribution limits.

    The good news: You can remove all or some of the stimulus payment from your account with no tax or penalty, as long as you make the withdrawal by the due date of your 2008 income tax return (including extensions).
  • Military relief. The law authorizing the stimulus payments required that both you and your spouse have valid social security numbers on a jointly filed return.

    Problem: Some married military couples didn't qualify.

    The good news: The requirement was revised for members of the armed services. If you're active military and your spouse does not have a social security number, you can still qualify for the stimulus money.

Stimulus payments will continue through December 2008, as extended returns are filed. If you have questions about eligibility for yourself or a family member, please call.
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