Tax Tips

• Economic Stimulus Act of 2008
• Summary of 2007 Tax Legislation
• Expiring Tax Law Provisions
• Hybrid Vehicle Tax Credit
• Disaster Tax Relief
• Avoiding Taxes

Taxpayers Deposit Rebates into IRAs, Tax-favored Accounts

Taxpayers who indicated on their 2007 tax returns that their federal refunds should be directly deposited to a tax-favored account will have their economic stimulus payments directly deposited in those accounts too.

Tax-favored accounts include the following:

• Traditional or Roth IRA
• Health Savings Account (HSA)
• Archer Medical Savings Account (MSA)
• Coverdell Education Savings Account (ESA)
• Qualified Tuition Program (QTP) or Section 529 Plan

The IRS has granted special relief to these taxpayers allowing them to withdraw these funds without tax or penalty until the due date of the 2008 tax return, including extensions. The amount withdrawn won't be treated as contributed or distributed from the account. Form 1040 instructions for 2008 will provide details on how to report the tax- and penalty-free withdrawals. Also, taxpayers won't need to withdraw earnings associated with the payment.

The special relief is intended to help prevent excess contributions (and associated penalties) caused by direct deposits of economic stimulus payments into tax-favored accounts. Taxpayers may also choose to leave the funds in their accounts, but must keep annual contribution limits in mind.

Taxpayers who have opted for split refunds will receive a paper check.

IRS Temporarily Allows Verbal Requests for Address Changes

The IRS has made 2 temporary changes to the oral authority rules which will allow it to change a taxpayer's address based on a verbal request.

These are the circumstances:

1. The taxpayer contacts the IRS regarding the Economic Stimulus Act and requests the IRS to make an address change.
2. The taxpayer files a joint return and contacts the IRS about a lost, stolen or destroyed stimulus payment. In this situation, the IRS can initiate research for the missing stimulus check and waive completion of Form 3911, Taxpayer Statement Regarding Refund.

The procedure regarding changing the taxpayer's address doesn't apply to any circumstances other than issuance of the rebate check and is only effective for April 15, 2008, through Nov. 30, 2008. All other address change requests must generally be made in writing by filing Form 8822 - Change of Address.

IRS Releases Schedule of Stimulus Payments

The IRS will begin sending more than 130 million economic stimulus payments starting May 2, 2008. Payments will be sent out in the order of the last 2 digits of the social security number used on the tax return.

Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check.

Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008.

Direct Deposit Payments
If the last 2 digits of your social security number are:	Your economic stimulus payment deposit should be sent to your bank account by:
00–20	April 28
21–75	on or before May 9
76–99	on or before May 16
Paper Check
If the last 2 digits of your social security number are:	Your check should be in the mail by:
00–09	May 9–May 16
10–18	May 23
19–25	May 30
26–38	June 6
39–51	June 13
52–63	June 20
64–75	June 27
76–87	July 4
88–99	July 11