OK, some rebate checks

For workers, the new Making Work Pay tax credit provision in the just-passed stimulus package will mean a few extra dollars in their paychecks.

The latest word is that about $13 a week should start showing up in pay envelopes in June.

But what if you don't get a paycheck? That would be the case for retirees and veterans.

During last year's stimulus rebates process, these folks got a $300 payout based on the amount of retirement money they received as long as they filed a tax return to let the IRS know of the benefits.

That rebate system is going to happen again with the Making Work Pay credit. This time, recipients of Social Security, Supplemental Security Income (SSI) or railroad retirement benefits, veterans receiving disability or pension benefits, and federal and state pensioners who are not eligible for Social Security would be eligible for a one-time minimum $250 payment.

And once again, this payment will probably be in the form of a separate check.

The logistics for distributing the $250 rebates have not yet been announced. But tax watchers expect the IRS will follow a distribution plan similar to the 2008 stimulus payments.

What about the self-employed? These folks, including me, make estimated payments throughout the year to cover our taxes on SE income.

We can take this new credit into account in computing those payments and adjust accordingly. Since it's a $400 credit, that would be $100 less in each quarterly payment if you pay in four equal installments. Your first 2009 estimated payment is due the same day as your regular 2008 tax return: April 15. 

There also will be the option to claim the credit on your 2009 tax return.

Again, specifics on the mechanics are sketchy; do you tell your boss you don't want the new, reduced withholding from your paychecks? I'm sure that's gonna happen in a lot of cases … NOT!

Bur if for some reason you don't get the credit via your regular pay, I suspect this "lump sum" option will be along the lines of this year's Recovery Rebate Credit on 2008 returns. And I suspect that means when 2009 returns are filed in 2010, there will the same sort of filing confusion taxpayers are experiencing now.