Tax-prep services delay rebates

As of the end of May, the Treasury Department had sent out about 57 million stimulus payments — by paper check and direct deposit — totaling about $50 billion. And so far, the Internal Revenue Service has answered 99.99 million phone calls about missing checks, direct deposits that didn’t show up on time and smaller-than-expected rebates.

OK, I’m joking about the 99.99 million.

The IRS hasn’t released a tally on the calls, though it is getting a ton of them. I’ve gotten dozens.

The IRS has set up a special rebate hotline at (866) 234-2942.

By mid-July, more than 130 million Americans will get a tax rebate of $300 to $1,200 — possibly more or less, depending on their finances and family size.

So far, many people have received their money with no problem. Others are likely to get a check in the mail in the next few weeks.

Even so, Teresa and Steve Smith are waiting longer than expected. The Northville, Mich., couple with three children younger than 17 thought that a $2,100 stimulus payment would be directly deposited to their bank account by May 9.

“Now, it will be mailed no later than June 20,” Teresa Smith said.

Why the delay?

The Smiths bought software from TurboTax and had fees deducted from their refund. They got an e-mail dated May 16 from TurboTax, alerting them to the glitch.

Thousands of people who used TurboTax and other tax-preparation services expected that they would receive their money via direct deposit. But they’re now waiting longer for a paper check because they agreed to have fees for tax preparation or added services deducted from their refunds.

TurboTax sold 16.5 million tax-preparation units, including software and online programs, for the 2007 tax year.

I’ve heard of other delays, too. Taxpayers who took out refund-anticipation loans for their 2007 tax refunds are going to have to wait longer to get paper checks.

The IRS says less than 1 percent of taxpayers didn’t get their $300 per qualifying child that should have been part of their stimulus rebate checks. Some people didn’t check the proper boxes; some tax-preparation software caused problems. The IRS said it’s fixing the problems, and people don’t need to call or take any additional steps. Expect those checks in July.

The Treasury Department said most of the direct deposits are nearly complete.

Yet, it noted that it is at capacity, working on mailing regular income tax refund checks. Once the regular tax refund mailings are completed this month, the department said, it will print and mail stimulus checks at full capacity, and weekly volumes of stimulus checks will increase.

Make sure you don’t fall for any quick-fix promises.

Dianne Shovely, fraud training and awareness director for Comerica Bank in Detroit, said federal agencies have alerted banks that scam artists are sending e-mails and making phone calls offering people ways to get stimulus checks directly deposited, instead of waiting for a check.

Of course, you’d have to hand over your bank account number to the scam artist. Don’t do it.

Know that some people aren’t getting a windfall. Many taxpayers qualify for the maximum basic payment of $600 for singles or $1,200 for married couples. But the payment could be reduced.

If you’re single and your net income tax liability is less than $600, you’d get less than the full $600 stimulus payment. Or it could be less than the maximum if you’re single and your adjusted gross income is more than $75,000, or if you’re married and filing a joint return, and your adjusted gross income is more than $150,000.

Lower-income seniors and others who normally do not need to file a tax return — but filed a 2007 return for the stimulus payment — are eligible to receive a payment of $300 — or $600 on a joint return — if they had at least $3,000 of qualifying income.

XSusan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.