By now you’ve probably heard of the Economic Stimulus Act, a $152 billion package to provide aid to the U.S. economy, signed into law last month. The new law provides for a credit on your 2008 tax return. Sounds great! But in reality the United States Treasury will be sending advanced payments on that credit. It won’t reduce the amount of tax you pay next year. When you file your 2008 return you won’t actually receive a credit. You’ll have to report that you already received the benefits.

The economic stimulus package has been highly controversial. Many people believe it won’t aid our faltering economy because the “credit” is not enough to offset the losses many of us incurred due to the declining housing marketing and plummeting stock market. Others think we will simply spend the money on items manufactured overseas further diverting the funds from our local economies. And I’ve yet to hear one single person say they won’t cash or spend the check!

It appears as though we can not do anything to prevent this additional debt from plaguing our future. The U.S. Treasury is not even offering the option to refuse this check and hold the credit until we file our tax return. That said, this tax tidbit discusses the basics of the rebate. To begin, it is based on four factors:

your income, your tax, your filing status, and how many qualifying children you have reported on your 2007 tax return. There are other requirements but these are the core requirements. The credit phases out when your adjusted gross income (AGI) exceeds $75,000 if your filing status is single, or $150,000 if you are filing as a couple.

Couples filing a joint return will receive between $600 and $1200. Individuals will receive between $300 and $600. For each qualifying child you may receive an additional $300. Of course if you have any outstanding tax debt (or other non-tax liability that requires any tax refund be applied to that liability), the rebate will be used to offset that debt first before you receive this payment. The first round of payments will be sent in May and are scheduled to continue through the summer.

For most people, filing a 2007 tax return is enough to trigger your payment. In fact, the IRS sent out more than 130 million letters (Notice 1377)last week reminding taxpayers to file a return in order to receive this economic stimulus payment.

However, many people who are eligible for this payment must take an extra step to claim it. Generally, most recipients of Social Security and Veterans Affairs benefits are not required to file tax returns—many haven’t even been required to file tax returns for the past several years. If they have at least $3,000 of income they’ll need to file a tax return this year. The IRS mailed special packages (Package 1040A-3) to 20.5 million recipients of Social Security and Veterans Affairs benefits. This package is different from Notice 1377. It is especially designed for people who may qualify for the economic stimulus payment but who aren’t normally required to file tax returns. The IRS is making it as simple as possible. In some instances taxpayers will simply need to sign a pre-printed form and add postage.

Free File is available to people who don’t normally file but are filing this year to receive the economic stimulus payment. For more information visit the IRS website.

Of course mass distribution of money opens doors to scams and fraudulent activity. Remember the IRS does not collect information over the phone. It also does not send unsolicited e-mails to taxpayers. If you receive an e-mail from someone claiming to be the IRS do not click the links, forward it to and then delete it. Check here for the latest IRS scams.

For more info on the economic stimulus package visit the IRS website or contact a trusted tax professional.

Share your comments, concerns and questions about the Economic Stimulus Act with other Queercents readers below!