Hi Neil,

As we discussed, the Economic Stimulus payments are not considered
countable income for purposes of determining eligibility for MassHealth
(regardless of aid category), Commonwealth Care, Health Safety Net, CMSP
and Healthy Start.

Alison

Alison Kirchgasser
Director of Federal and State Relations
Massachusetts Office of Medicaid
Executive Office of Health and Human Services
617-573-1741

Read this even if your only income is a measly SSDI check…

How the Tax Rebate Applies to People with Disabilities

Guest Column
By Paul Gada

This column is the first in a series of columns discussing timely tax issues.

With the April 15th tax filing deadline close at hand, people can use all the help they can get to survive another challenging tax season.

Although most dread dealing with another tax season, there is something good to look forward to this year.   As I’m sure you know, the federal government, via the IRS, is issuing one-time economic stimulus payments to more than 130 million households starting in May.

The amount of the stimulus payment is $300 for qualifying single individuals receiving just Social Security or veterans-disability benefits and $600 for married couples. However, the payment amount could be more for a couple where one individual is also working (up to a $1,200 rebate) or where a single person with a disability had earned other income (up to a $600 rebate). Also, anyone getting a rebate may be eligible to get an extra $300 for each of their children under 17.

To get an estimate of what your stimulus payment may be, use the IRS calculator offered on their site.

The stimulus payments are not taxable and will not affect your 2007 or 2008 tax returns in any way. The IRS also assures the public that the stimulus payments will not count toward or negatively impact any income-based government benefits, such as Social Security benefits, food stamps and other similar programs.

To be eligible to receive a stimulus payment, you must meet three simple requirements:

•    Have a valid Social Security number (SSN);
•    Have at least $3,000 in qualifying income; and
•    File a 2007 federal tax return.

The first requirement is fairly straightforward. Only those with a valid SSN are eligible for the one-time stimulus payment. Those with an Individual Taxpayer Identification Number (ITIN) instead of an SSN are not eligible. If married filing jointly, both must have valid SSNs, otherwise neither can receive the payment. 

The second requirement is a bit harder to meet. Fortunately, the definition of qualifying income is broad and includes earned income from a job, net self-employment income, Social Security benefits such as Social Security Disability Income (SSDI) and veterans-disability payments.

However, Supplemental Security Income (SSI) does not count as qualifying income. Dividends, interest and capital gains income also do not count towards qualifying income.

For most taxpayers, the last requirement is no more a burden than usual. If you normally file a federal tax return from year to year, you will not have to do anything else other than file your 2007 individual income tax return to receive a stimulus payment this year. Payments are calculated and sent automatically by the IRS. No extra forms or applications are necessary.

For many people, however, there is a catch to the third requirement. Specifically, individuals that only receive minimal SSDI benefits or otherwise have low incomes, and who may not generally owe taxes, will need to file a 2007 federal tax return in order to receive the one-time stimulus payment.

If you normally don’t have to file a federal tax return and need to for the stimulus payment, the IRS form for you is the 2007 Form 1040A.  The IRS provides a sample pre-filled Form 1040A on its site to illustrate what’s required of those that normally don’t need to file a return. We’ve also posted an informational Tax Resource Center, which links to this and other documents related to the rebate.

If it doesn’t look like you qualify for this year’s government bounty, take heart. If your circumstances change and you become eligible after you file your 2007 federal tax return, you can still file an amended return using IRS Form 1040X to get the stimulus payment. If you are not eligible this year but become eligible next year, the economic stimulus payment can be claimed next year on your 2008 tax return according to the IRS.

Hopefully, this explains the details so that you may receive the economic stimulus payment you qualify for.

Have Questions?

I plan to contribute a guest column each of the next few weeks for the AAPD blog on tax issues impacting individuals with disabilities. I welcome your questions as possible topics to cover in these future columns. You can post comments here, so others can see what has been asked.

Happy tax season!

~Paul Gada is a tax attorney and the Personal Financial Planning Director for Allsup, a national provider of Social Security, health care and financial services for those with disabilities.