How to claim the rate reduction credit
By Kay Bell • Bankrate.com

If you didn't get a tax rebate check last summer, or yours was smaller than the widely publicized amounts, you may be able to recover the cash now on your individual return.

Even if you did get a check, some taxpayers may be able to get a bit more back from Uncle Sam thanks to the tax law changes and rebate process.

But the only way to collect now is to file your tax return. You'll have to do a few additional calculations on your 1040EZ, 1040A or 1040 form, but the payoff may be worth the effort.

Who can claim it?
Last year, most single taxpayers got a check of $300, double that for married couples, as part of tax-relief legislation. Though popularly called a "rebate," the checks actually were an advance credit against 2001 taxes.

When the new tax law took effect last summer, it created a 10-percent tax bracket that was retroactive to Jan. 1, 2001. That meant a portion of the money earned during the first half of the year ($6,000 for single filers; $10,000 for heads of households; $12,000 for married couples filing jointly) suddenly became overtaxed for the tax year.

For many taxpayers, tax on these amounts had already been collected through payroll withholding at the existing 15-percent rate. The subsequent Internal Revenue Service checks were government payback for this half-year, 5-percent excess withholding.

Rather than figure each taxpayer's exact amount for payback purposes, the checks were based on a person's 2000 tax filing, hence the "rebate" tag. Lawmakers reasoned that in most cases, a taxpayer's 2001 situation would be the same or very close to their prior-year taxes.

But taxpayers who faced different tax circumstances in 2001 than they did in 2000 may have been shortchanged.

Since the checks were based on 2000 filings, if you paid no income taxes that year, you didn't get a check. But if you got a job in 2001, you overpaid your taxes for the first six months and didn't get any of it back. Now you can claim that amount as a rate reduction credit when you file your 2001 return.

Similarly, persons whose filing status changed should explore the rate reduction credit this year. For example, Jane was a single taxpayer in 2000 and received a $300 rebate check. But on her 2001 tax return, she's eligible to file as head of household, and her changed filing status produces $200 in additional tax relief -- an amount she'll need to claim on her tax return to collect.

Claiming the credit
While the process used by Congress and the IRS to come up with the rate-reduction credit may be a bit convoluted, it's not that difficult to claim it on your 2001 tax return. And it's available to taxpayers regardless of whether they use the simplest 1040EZ, the 1040A or the long 1040.

The first step for taxpayers who got a rebate is to find the notice that came with the check. It will confirm exactly how much you received. You'll need this amount to determine if you're eligible for any additional tax credit. If you didn't get a check, then head straight to your tax return.