By Carl Surran
Avoid The Urge To Splurge On Your Stimulus Payment
Summer 2008
Are you one of the millions of Americans expecting a “stimulus payment” this year? As part of the economic stimulus package passed by Congress, the Internal Revenue Service (IRS) will issue individual payments of up to $600 – $1,200 for married couples – plus $300 for each qualifying child younger than 17.
Although you may be tempted to splurge on something special with your rebate, Military OneSource offers prudent ideas such as these:
- Start or add to an emergency fund covering three to six months of living expenses.
- Pay off unpaid bills or cover an upcoming expense such as a car repair.
- Pay down credit card debt, starting with your highest interest-rate card.
- Add to your retirement savings via a Thrift Savings Plan, Individual Retirement Account or your spouse’s 401(k).
Combat pay generally is not taxable, but servicemembers are allowed to list this pay on their 2007 or 2008 income tax returns if it helps their eligibility for the stimulus payment. Servicemembers would report their non-taxable combat pay on Line 40b of Form 1040A and show at least $3,000 in qualifying income. Military taxpayers serving in a combat zone must file their returns by Oct. 15.
The IRS website (www.irs.gov) offers detailed educational guides on filing, helpful tips and tools, and information discussing special deductions that may not be intuitive for military members. Publication 3 provides military-specific information for active-duty members and reservists.
* * * * *
