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Highlights of the Economic Stimulus Act of 2008

By: Suzanne T. Tuson, CPA, MST and Margaret P. Amsden, CPA, MST

In an effort to boost the U.S. economy, Congress passed, and President Bush signed, the Economic Stimulus Package Act of 2008.

Recovery Rebates for Individuals

The bill provides a tax rebate under one of two methods for qualifying individuals subject to phase out for taxpayers with adjusted gross income that exceeds $75,000 ($150,000 joint return filers). These rebates are similar to those received in 2001 and are an advance refund check against 2008 taxes. The rebates will be the greater of:

2007 income tax paid, not to exceed $600 ($1,200 for married couples filing a joint return), or
$300 ($600 married couples filing a joint return) if the taxpayer has earned income of at least $3,000 or a net income tax liability greater than zero and gross income that exceeds the standard deduction plus exemption amount. The rebate amountwill be increased by $300 for each qualifying child under the age of 17

The government is expected to utilize individuals' current direct deposit information in its possession to expedite delivery of these amounts. So taxpayers who have had their overpayment direct deposited in the past should see the rebate directly deposited rather than receiving a check. Additionally, the timing of the rebates is anticipated to be as soon as possible, but will be delayed for those who extend their 2007 tax return.

Business Assets: Expensing and Bonus Depreciation Provisions

The bill will temporarily increase the expensing limit of certain depreciable business assets under Internal Revenue Code Section 179 for taxable years beginning after December 31, 2007. Taxpayers will be able to expense up to $250,000 of their investment in qualifying property limited by an overall investment amount of $800,000.

The bill also provides for a one-time 50 percent bonus depreciation deduction for qualifying new property placed in service in 2008. In order for property to qualify for the additional first-year depreciation deduction it must meet all of the following requirements. First, the property must be:

Property to which MACRS applies with an applicable recovery period of 20 years or less
Water utility property (as defined in section 168(e)(5))
Computer software other than computer software covered by section 197
Qualified leasehold improvement property (as defined in section 168(k)(3))

Second, the original use of the property must commence with the taxpayer after December 31, 2007. Third, the taxpayer must purchase the property within the applicable time period. Fourth, the property must be placed in service after December 31, 2007 and before January 1, 2009.

If you have any questions on how this will apply to you, please contact Sue Tuson or Margaret Amsden at 248.208.8860.

Feb 08

248.208.8860 | 2000 Town Center, Suite 1800 | Southfield, MI 48075