This is the fourth federal income-tax rebate program intended to help stimulate the nation’s economy. The others were in 1975, 2001 and 2003.

But this is the first one in which recipients have been given the option to have their rebates deposited directly into their bank or credit union accounts.

Small wonder, then, that some MoneyLine readers have questions about this part of the latest federal rebate program.

Q: I heard a little rumor that someone got their money for the government rebate . . . put on their H&R Block ATM card. . . . I did not write out “direct deposit” on the slip. My question is, are [they] going to send me a check, or is there a possibility . . . that it will go on my H&R Block card?

— M.Y., North Kingstown

A: Some people arrange, through their tax-return preparer, to have their refund loaded onto a prepaid card.

It’s a stored value card, resembling a credit card or debit card. In general, people use such cards to make purchases or cash withdrawals. (Fees may apply, depending on the transaction.)

H&R Block, a national tax preparation firm, gives its customers the option to have their refund loaded onto a prepaid card –– the H&R Block Emerald Prepaid MasterCard, said company spokeswoman Nancy Mays.

(Technically, the card is issued by H&R Block Bank, a federally insured bank. The card is linked to your account record at that bank. Terms and conditions of the card, including fees, are available on Block’s Web site: www.hrblock.com.)

If you arranged through a preparer to have your refund loaded onto a prepaid card, will your rebate be loaded onto that card, too? It depends on the circumstances. For example:

•Refund Loan: Some people choose to receive their refund in advance, through a refund anticipation loan (also known as an RAL). In other words, they obtain a short-term loan, essentially using their refund as collateral, from a lender affiliated with the preparer or tax-preparation firm.

If you made such an arrangement, and the loan proceeds were loaded onto your prepaid card, you’ll receive your rebate in the form of a check, by mail, IRS spokeswoman Peggy Riley said.

•Deferred Fees: If you didn’t pay your tax preparation fee up-front, but arranged instead to have it “deferred” –– in other words, deducted from your refund –– and the net proceeds loaded onto your prepaid card, your rebate will be mailed to you, Riley said.

•Regular Process: If you had your refund loaded onto your prepaid card –– with no refund anticipation loan and no deferred fees involved –– your rebate will be loaded onto your prepaid card, Riley said. (This assumes that your card is still active and that the bank account associated with the card has not been closed, she said.)

H&R Block has a Web site with information about the rebates, including rebates for customers using Block’s prepaid card:

digits.hrblock.com

Q: I am trying to determine if I am entitled to get a [rebate] check through direct deposit, or the actual check itself.

— R.A., Greenville.

A: To have your rebate deposited directly into your bank or credit union account, you must fill out the “direct deposit” section of your federal income-tax return. The section is located toward the end of your return, close to where you sign the return.

Assuming that you filed your return already, and filled out that section, you’ll receive your rebate by direct deposit, Riley said. If you didn’t, the Treasury will mail you a rebate check.

But that’s only the general rule. There are some exceptions.

For example, on your federal income-tax return, you have the option to have your refund “carved up” and deposited into a number of different accounts.

If you chose this “split refund” option, your rebate won’t also be carved up. Instead, you’ll receive a rebate check by mail, Riley said.

In general, directly deposited rebates are going out faster than rebate checks. (For example, the U.S. Treasury began directly depositing rebates about two weeks ago; the Treasury began mailing rebate checks late last week.)

For more about the rebate distribution schedule, call the IRS rebate hot line toll-free at (866) 234-2942, or use the IRS Web site:

www.irs.gov

The IRS also recently updated the rebate section of its Web site to include more information about direct deposits.

(If you use the Web site, bear in mind that the IRS typically uses the term “economic stimulus payment” instead of “rebate” –– even though the federal economic stimulus law that made the rebates possible refers to them as “recovery rebates.”)

Q: We normally [receive refunds] from IRS [by] direct deposit. This year, we had to pay [the] government, so, therefore, there was no reason to fill out direct deposit. . . . Do we get our [rebate] in the mail or do they have our direct deposit in our file at the IRS?

— J.D., Woonsocket

A: The IRS is processing rebates based only on the information on the return you filed this year, the one covering 2007.

So if you didn’t fill out the “direct deposit” section of your 2007 return, you’ll receive your rebate in the form of a check, by mail, Riley said.

If you haven’t already filed your return, you should fill out the “direct deposit” section of your return even if your return shows a balance due.

That way, your rebate will be deposited directly into your bank or credit union account. (Keep in mind, however, that if you’re using tax preparation software, or your preparer uses software, the program may not allow for this option.)

Q: My husband . . . passed away a couple of weeks ago. I am wondering if he would be still entitled to the federal rebate check. His Social Security [benefits were] directly deposited into [a] checking account. I am wondering if [the rebate] would be direct deposited. I am wondering if I am entitled to it.

— B.J., Cranston

A: I’m sorry to hear about your loss.

Assuming that you and your husband filed a joint return for 2007, were eligible for a rebate, and completed the “direct deposit” section of the return, a rebate will be deposited directly into your account –– even though your husband has died, Riley said.

(Check with your bank or credit union about its rules for gaining access to the account.)

In your question to MoneyLine, you noted that your husband had arranged to have his Social Security benefits deposited directly into a checking account. This has nothing to do with the direct deposit of rebates, Riley said.

TODAY’S TIP: The IRS has begun mailing notices that let you know, based on your circumstances, whether you’re entitled to a rebate, how much you’ll receive, and when you receive it.

When you get your notice, keep it for your files; it’ll come in handy during next year’s tax-filing season.

(The rebate isn’t taxable, and won’t reduce your refund next year. But you’ll have to say on that return how much of a rebate you received.)

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moneyline@projo.com

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