First of all, if you haven’t filed your 2000 tax return yet (i.e., you are on extension), none of the following applies to you. Since the amount of your rebate is based on your 2000 taxable income, you cannot get your rebate until you file your 2000 tax return. Maybe that will light a fire under some of us to get our 2000 tax returns filed. . . .
The IRS will begin sending out rebate checks in July as part of the immediate payout of the new 10% rate for 2001. You will learn in a letter sent by mid-July exactly how much you will receive, and when your check will be sent. The IRS will start mailing checks the week of July 23 and promises that "most" of the mailings will be completed by the end of September. Generally, the last two digits of a taxpayer’s Social Security number will determine when a check is mailed. If you filed a joint return, the first Social Security number on the return will determine the mailing date for your rebate check.
The following is the expected schedule for rebate checks:
| Last two digits of Social Security number: | Receipt the week of: | |
|---|---|---|
| 00 – 09 | July 23 | |
| 10 – 19 | July 30 | |
| 20 – 29 | August 6 | |
| 30 – 39 | August 13 | |
| 40 – 49 | August 20 | |
| 50 – 59 | August 27 | |
| 60 – 69 | September 3 | |
| 70 – 79 | September 10 | |
| 80 – 89 | September 17 | |
| 90 – 99 | September 24 |
The rebate checks will be based on your 2000 income tax information. The rebate amount will be 5% of the taxable income shown on your 2000 income tax return, up to the following maximum amounts: single — $300; head of household — $500; married filing jointly — $600.
If your rebate is less than the maximum amount, you may be able to claim a credit on your 2001 return, up to the difference between the allowable amount (based on your 2001 income) and the payment already received (based on your 2000 income). If you did not have an income tax liability for 2000, you will still be able to claim the tax credit on your 2001 return, provided you are otherwise eligible.
The new withholding tables for 2001 will go into effect on July 1. The tables reflect the change in income tax rates on individuals beginning on July 1, 2001. Under the initial phase starting July 1, the 28%, 31%, 36% and 39.6% rates drop to 27%, 30%, 35% and 38.6%, respectively. If you are in the 28% or higher brackets, you may not want to have your withholding reduced pursuant to the new tables.1 If this is the case, you should file a new Form W-4 with your employer.
1Depending on your deductions and other sources of income, the reduced withholding may result in under-withholding of your income tax liability which could subject you to penalties. To avoid this situation, check with your tax advisor.