Stimulus checks may be just a loan for a few

WASHINGTON — About 52 million Social Security recipients started receiving $250 economic recovery checks Thursday, including many who will have to repay the money at tax time next year — either through a smaller refund or a larger tax bill.


The payments were meant to provide a boost to people who don’t qualify for President Barack Obama’s "Making Work Pay” tax credit, which pays individuals up to $400 and couples up to $800.

Taxpayers are ineligible to keep both the full tax credit and the stimulus payment. However, stimulus payments will go to many people who also are earning the credit through jobs that provide taxable income. Those people will have the $250 payment deducted from their tax credit next spring, when they file their returns for the 2009 tax year.


Who will be paid?
Stimulus payments are scheduled to go to people who receive Social Security, Supplemental Security Income, railroad retirement benefits or veteran’s benefits. In all, a little more than $13 billion will be distributed.

"There’s going to be millions of individuals who receive Social Security benefits and will be receiving the Making Work Pay credit,” said Christina Martin Firvida, director of economic security for the AARP.

About 17 percent of U.S. residents age 65 and older are in the labor force, according to the Bureau of Labor Statistics.

The Internal Revenue Service issued tax withholding tables in February designed to distribute the new tax credit by increasing workers’ pay a few dollars a week. However, the tables could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that the IRS will recoup at tax time next year.

At-risk taxpayers include married couples in which both spouses work, workers with more than one job, as well as Social Security recipients with jobs that provide taxable income. Retirees who have federal income taxes withheld from pension benefits also are getting an income boost as a result of the new withholding tables.

However, pension benefits are not earned income, so they don’t qualify for the tax credit.


by the associated press