Is your rebate check really in the mail?

Now that President Bush likely will sign the economic stimulus bill as early as next week, you're probably wondering what's next.

Is our tax rebate check really in the mail?

Local experts Diane Swonk, chief economist and senior managing partner at Mesirow Financial in Chicago, and Mark La Spisa, co-founder of Vermillion Financial Advisors Inc. in South Barrington, along with The Associated Press provide some answers.

Q. When will these checks arrive in our mailboxes?

A. The government said it would cut the checks about 60 days after passage of the bill, Swonk said. This is going to happen perhaps in May, which is a reasonable time and in the second quarter, she said. It doesn't help now, but it will help lighten up the economy later. This stimulus will reassure us there's a light at the end of the tunnel, Swonk said.

Q. Who gets a rebate?

A. Anyone who pays taxes or earns at least $3,000, including through Social Security or veterans' disability benefits. Singles with income of more than $75,000 and couples with more than $150,000 get partial rebates.

Q. Who does not get a rebate?

A. People who earn less than $3,000, illegal immigrants, anyone who does not file a tax return, singles with incomes exceeding $87,000 and couples with incomes exceeding $174,000. The caps rise by $6,000 per child.

Q. What do you have to do to get the rebate?

A. Eligible people must file a 2007 tax return with a Social Security number for each person listed.

Q. How is the amount of our check determined?

A. Single taxpayers get a rebate of at least $300, with couples receiving at least $600. The rebate will be equal to the taxes they paid, up to $600 for singles and $1,200 for couples, plus an additional $300 per child. That amount will be reduced by $50 for every $1,000 above the income limits of $75,000 for singles and $150,000 for couples, according to The Associated Press.

People who earn too little to pay taxes but had income of at least $3,000, including seniors whose only income is from Social Security and veterans who live on disability payments, will get $300 if single or $600 if a couple.

Q. How are the rebates calculated?

A. Rebates are calculated on the basis of taxpayers' 2007 adjusted gross income, which includes salaries and wages, interest, dividends, capital gains, taxable pensions, royalties and farm or rental income, according to The Associated Press. It does not count contributions to individual retirement accounts, 401(k) retirement plans, tax-free health savings accounts or student loan interest payments. Rebates for low-income people who don't pay taxes, including seniors and disabled veterans, will be a flat $300 if single and $600 for couples.

Q. Will we have to pay state and federal income taxes on this?

Some government officials have said no, but La Spisa said this has not been determined yet. La Spisa noted the last time the government sent out this type of check, it used the refund as a reduction of employee federal withholdings.

Q. How should we be spending this money to help the economy?

A. Just spend it quickly, Swonk said. That's what stimulus is. Don't pay down debt. But, Swonk said, these are different times and many people have credit card debt or are in foreclosure and they will be paying down their debt. And there will still be some benefits from that, she said. There even could be a benefit of spending it all at Wal-Mart, even though most of what the business sells is made in China. But at least they'll be keeping the Wal-Mart workers employed, Swonk said.

La Spisa said the last time the government sent out checks such as these one-third of consumers chose to use proceeds to pay existing debts, one-third used proceeds for savings or investments, and one-third used proceeds to buy goods and services. The government is hoping consumers buy goods and services, such as big screen TVs.