Will the payments from the Economic Stimulus Payment be subtracted from your total 2008 income tax return or will it be considered part of your gross annual income?

No. However, if you normally get a refund then you'll be in for a little surprise. The government is going adjust the tax rates next year to accomidate this "gift". There is nothing out there official yet...but it will be under lots of red tape. I'll try and find where I seen in on the IRS website and get back to you.