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Ask the taxgirl: Are Economic Recovery Payments Taxable?

March 10, 2010 · 5 comments

Taxpayer asks:

Hi Tax Girl.

I on social security and am using Turbotax to file my taxes. I have not as yet found out where to put the $500 received by my wife and myself from the federal government in June of 2009. Is this taxed?

Taxgirl says:

It sounds like you’re talking about the Economic Recovery Payment(ERP). You and your wife apparently each received a one time $250 payment from SSA as part of the stimulus package.

That $250 is not taxable and need not be reported unless (and this is a big unless) you are also working and wish to claim the Making Work Pay Credit. In that case, you’d have to reduce the Making Work Pay Credit by any ERP amounts received – you’d do that on a Schedule M.

But if you’re not attempting to claim the Making Work Pay Credit, then you don’t need to claim the payment on your return.

In either event, it’s not taxable.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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{ 3 comments… read them below or add one }

1 Mary Kay Foss March 10, 2010 at 11:50 pm

My tax software wants to give the Making Work Pay credit to everyone getting social security – the $250 has to be entered so someone doesn’t get the credit twice. I’m not sure how Turbotax would handle this.

2 Kathy Jernigan February 12, 2011 at 8:52 pm

My daughter is doing her taxes, and the question came up, did she and her husband receive Making work Pay credits on their 2009 return? Yes, they got $400 each. When she entered the $800, her refund for 2010 dropped by $500. What’s up with that? Do they have to pay this stinkin credit back? She did not work in 2010, after having had a baby Jan 15 2010. I haven’t done my taxes yet, and wonder if we’ll have to pay that money back, too. I thought a “credit” was a gift.

3 Kelly February 12, 2011 at 9:31 pm

Kathy, you’re not paying the credit back. The credit was figured into withholding during the year. See this prior post: http://www.taxgirl.com/making-sense-of-the-making-work-pay-credit/

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