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Businesses will be directly helped by the new economic stimulus legislation passed by Congress. But small businesses in general, and retailers in particular, may get the biggest lift from consumers spending their tax rebates.
Bars, restaurants and other retailers are counting on increased business from consumers who will start getting their tax rebate checks in May. "That's where small businesses will benefit the most," said Barbara Weltman, a lawyer and small business tax specialist in Millwood, NY.
"Small businesses are doing better than the rest of the economy," said Dan Danner, EVP of the National Federation of Independent Business. "They are one sector that continues to create jobs, but they are not doing as good as they could do. If you're going to stimulate the economy, this is the group to help."
Starting in May, the U.S. Treasury will begin sending economic stimulus payments to more than 130 million individuals. The stimulus payments will go out through the late spring and summer, making this an ideal time for retailers to help educate consumers about the pending windfall.
The vast majority of Americans who qualify for an economic stimulus payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year. They will not have to complete applications, file any extra forms or call the Internal Revenue Service to request the payment, which is automatic.
The IRS will determine eligibility, figure the amount and issue the payment. Stimulus payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns.
The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will equal the amount of tax liability on the return, with a maximum amount of $600 for individuals and $1,200 for taxpayers who file a joint return, and a minimum of $300 for individuals and $600 for taxpayers who file a joint return.
Even those who have little or no tax liability may qualify for a minimum payment, if their tax return reflects $3,000 or more in qualifying income. For the purpose of the stimulus payments, qualifying income consists of earned income such as wages and net self employment income, as well as Social Security or certain Railroad Retirement benefits, and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007.
Low income workers who have earned income above $3,000 but do not have a regular filing requirement must file a 2007 tax return to receive the minimum stimulus payment. The IRS emphasized that people with no filing requirement who turn in a tax return to qualify for the economic stimulus payment will not get a tax bill. People in this category will not owe money because of the stimulus payment.
Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.
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