TAX TIP No. 14
More than 119 million economic stimulus checks were delivered last year. If you didn't get any of the $96 billion that was issued or didn't get as much as you had hoped, you might get another shot at the money this filing season.
Even some folks who did get a rebate check in 2008 could get more money this filing season, depending upon their tax circumstances.
In this tax tip:
- Rebate questions
- Rebate yes, taxes no
- Your 2008 rebate credit
- Who qualifies now?
- Extra payout, added problems
This unusual second chance at tax money is known as the Recovery Rebate Credit. It shows up on all three 1040 forms: line 70 of the long version, line 42 of the 1040A and line 9 of Form 1040EZ.
It's on the forms because of the way the stimulus payments, or rebates, were distributed.
The checks issued last year were based on individuals' 2007 tax data, but the money technically was an advance credit against 2008 taxes. Congress and the president decided to hand out the cash early in the hopes that individuals would spend it and help lift the economy out of the doldrums.
That plan didn't work as well as the politicians hoped. And the crossing of various tax-year boundaries in connection with the rebates created a lot of confusion.
Rebate questions, then and nowTaxpayer bewilderment began in February 2008, when the economic stimulus payment program was announced. The questions then tended to be about the amounts available and how a person would qualify.
Basic rebate amounts used to determine payments
- A $300 minimum rebate, including for individuals who received at least $3,000 in nontaxable veterans and Social Security benefits.
- Up to $600 per person, $1,200 if married filing jointly, for taxpayers with at least $3,000 in earned income, that is, wages or salary.
- Another $300 for each child age 17 or younger claimed on a 2007 return.
- The exact rebate amount for taxpayers with earned income depends upon the filer's actual tax liability.
- The rebates begin phasing out for taxpayers who in 2007 made more than $75,000 as single filers or $150,000 as married joint filers.
Those same amounts still apply to taxpayers seeking the Recovery Rebate Credit this year.
Once rebate recipients began cashing their checks last year, other questions arose.
"I started hearing about it last year. People were asking is this going to affect their taxes in 2009," says Bruce McFarland, a tax preparer with L&R Tax Preparation in Grandview, Mo. "The closer tax time got, more questions came. Do I get more money? Do I have to pay it back?"
Rebate yes, taxes noLet's answer that last question first. The good news is you do not have to pay back the rebate money.
Neither do you owe taxes on any stimulus payment you received last year. The IRS says that the stimulus payment is not reportable as income on your 2008 income tax return.