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Most Americans will soon receive rebate checks from the IRS worth anywhere between $300 to $1,200 or more, and many businesses have already launched marketing campaigns hoping to lure those potential customers.
Yet, many folks will not be eligible for a check at all and could end up in a bind if theyve already hit the mall and put extra charges on their credit cards, counting on the rebate cash.
More from MarketWatch:
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The global tax firm of Grant Thornton says if you belong to any of the following six categories of taxpayers, you should think twice before charging a purchase with plans to pay it off with that “free” government money. You may not be eligible for a rebate — or at least not for a full or timely one — if:
1. You owe the tax man money. The IRS has acknowledged that it will deduct from all rebate checks any federal tax debt. The agency will also withhold on behalf of all 50 states, and even Puerto Rico and American Samoa, any money owed in state or territory taxes. If you owe back taxes to the IRS or any state government, you could see your rebate reduced or gone altogether.
2. You make too much money. The rebate payments will begin to phase out for individuals with gross incomes above $75,000, and for married couples filing jointly with incomes over $150,000. If your adjusted gross income is above those levels, calculate your rebate carefully before going on a spending spree. Payments to high-income taxpayers will be reduced by 5% of all income above the phase-out thresholds.
3. You dont make enough money. If you have less than $3,000 in qualifying income, dont expect a rebate. Only those with $3,000 or more of income will be eligible. However, you will be able to count income typically exempt from taxation, like Social Security or veterans benefits, to reach that minimum.
4. You dont file a tax return. If you dont file a tax return, you