Taxpayer asks:
Punched in all the numbers in TurboTax for my 2008 taxes. The first thing It asked was how much my 2008 Economic Stimulus rebate check was ($2100). Surprise, surprise, it reduced my 2008 refund by $2100. According to the IRS web site the rebate should not effect by 2008 refund plus or minus. Is this right?
Taxgirl says:
Your rebate check from last year should not result in a reduction in your tax refund. (It could, however, result in a bigger “refund” check or a reduction in federal tax owed if you have not yet received your full rebate check from last year, though only about 3% of taxpayers are affected).
I haven’t seen a version of TurboTax for this year, so I can’t comment on the specifics. However, the good folks at Intuit are in the know about the rebate, and have made accommodation in the software. If there’s a problem not related to your actual rebate check from last year or your eligibility, it may be a skipped line entry or some other confusion. I’d recommend contacting Intuit and having them take a peek. Their contact page indicates that you can call, email or chat online to get answers.
Good luck!
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.
Have a question? Ask the taxgirl! – Now on Facebook!
Taxpayer asks:
my friends told me that the IRS is deducting the stimulus check money from your 08 return! I thought it was free money! And now we have to give it back?
Taxgirl says:
Deep breaths. You don’t have to give it back.
Here’s the confusion… The last set of stimulus checks in 2001 were advances against credits on the 2002 returns. That meant that you did have to “give it back” when you filed in 2002. When the new stimulus package for 2008 was announced, many folks assumed that it would work the same way as the last. CNN even reported it that way initially. But these rebate checks are different.
I’ve taken a peek at the 2008 form 1040 and instructions and it confirmed my earlier report. The “Recovery Rebate Credit” is clearly marked as a credit available for those who did not receive a rebate check in 2008. You do not claim the credit if you have already received your check in the proper amount – and as a result, your 2008 taxes are not affected.
Let me say that one more time, with feeling: if you received your full rebate check in 2008, your 2008 taxes will not be affected.
Don’t be scared by the word “credit” – it’s really just a technical way of making adjustments for folks who might not have received a check in 2008 or if income from 2007 resulted in a smaller check than a taxpayer was really entitled. In other words, the credit can only help, not hurt you, at this point. If you’ve received your check, cashed it and spent it (as the government hopes you have), you’re fine. You don’t have to give anything back with respect to your rebate. I can’t vouch for the rest of your return – that’s on you! 
By the way, this is my second most popular question so far in 2009 (#1 is when are we getting a second stimulus check?).
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.
Have a question? Ask the taxgirl! – Now on Facebook!
