Examples of 2008 Recovery Rebates for Married Couples

Married couple with two children and $30,000 of earnings: rebate equals $1,200 (limited to their income tax liability before child and earned income credits) plus $300 for each child. Taxable income equals earnings of $30,000 minus a standard deduction of $10,700 minus four exemptions of $3,400 each, or $5,700. Their tax is 10 percent of that amount, or $570. Their rebate is thus $570 (the $1,200 maximum reduced to their $570 tax liability) plus $600 ($300 for each child), or $1,170.

Married couple whose only income is $30,000 of Social Security benefits: rebate equals $600 because the couple has more than $3,000 of income from Social Security. They do not qualify for the basic $1,200 benefit because they have no income tax liability.

Married couple with $2,500 of Social Security benefits and $10,000 of investment income the couple qualifies for no rebate. Their income from earnings, Social Security, and veteran’s payments is less than $3,000 and they have no income tax liability.

Married couple with two children and adjusted gross income of $175,000: their rebate of $1,800 ($600 for each spouse plus $300 for each child) is reduced by 5 percent of the amount by which their AGI exceeds $150,000. That excess equals $25,000, 5 percent of which is $1,250. Their rebate is thus $1,800 minus $1,250, or $550.

Married couple with two children and adjusted gross income of $200,000: their rebate of $1,800 ($600 for each spouse plus $300 for each child) is reduced by 5 percent of the amount by which their AGI exceeds $150,000. That excess equals $50,000, 5 percent of which is $2,500. They get no rebate because the $2,500 reduction exceeds their maximum benefit of $1,800.