Federal Economic Stimulus Payments
General Information from the Internal Revenue Service
- Economic Stimulus Payments Information Center from the Internal Revenue Service
- Answers to Frequently Asked Questions from the Internal Revenue Service
Applying for the Federal Economic Stimulus Payment
Although it will be necessary to file a federal income tax return to receive your federal economic stimulus payment, you do not have to file a Montana individual income tax return if you would otherwise not be required to do so.
Taxability of the Federal Economic Stimulus Payments
The economic stimulus payment (federal tax rebate) is not taxable for federal or state income tax purposes. Please note however that if you itemize your deductions for state income tax purposes for tax year 2008, your "federal income taxes paid" deduction may be reduced because of this rebate.
Here are a couple of scenarios to help you determine if the federal tax rebate will impact your Montana income tax situation. Please keep in mind that the maximum allowable deduction for “federal income taxes paid” for Montana individual income tax purposes is $5,000 for single, head of household, or married filing separately, and $10,000 for married filing jointly.
- If your itemized deduction for “federal income taxes paid” is below the threshold for your filing status, your deduction for “federal income taxes paid” on your state tax return will be reduced by the amount of the rebate.
- If your itemized deduction for “federal income taxes paid” exceeds the threshold for your filing status, your deduction for “federal taxes paid” on your state tax return most likely will not be impacted because your deduction has already surpassed the maximum allowable amount. The exception would be if the federal tax rebate decreases the amount of your itemized deduction so that it now falls below the threshold for your filing status.
