Taxpayer asks:
I recently did my taxes through Turbo tax and during the process Turbo tax informed me that I qualify for a rebate of $300.00 (stimulus payment) beings I did not work 2007 and missed out on the 2008 rebate. Here is what turbo tax said “your situation has changed, and you qualify for a rebate of $300.00 when you file your 2008 return” The IRS has approved my taxes and i am just waiting for the check in the mail. My question is will I get the $300.00 or should i at lest get the $300.00 with my tax return? If not how or when will I get the refund? Is there anything i need to do to make sure i get the refund? Thank you!!
Taxgirl says:
If you qualify to receive the rebate this year (because you didn’t qualify last year or your situation has changed), you don’t need to take any further steps beyond filing your return. The credit will be applied towards any refund you might be due. On its site, the IRS states very clearly that “taxpayers will receive a single refund that includes any recovery rebate credit to which they are entitled. The IRS will not be issuing separate recovery rebate credit payments.”
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:
We were granted the full rebate but granted a partial rebate as that the difference was applied to IRS taxes owed, would we recive that difference this year?
Second question, my son did not work in 2007, worked in 2008, he is a dependent/student on my return, can he file for the rebate. I understand certain persons can claim the rebate if they did not receive one last year, but I can not find his situation noted? Thanks in advance
Taxgirl says:
Nope. You won’t receive the difference. If you received the full amount – but that amount was offset for back taxes, child support, etc. – you are not entitled to an additional credit.
As to your question about your son, he will not qualify for the credit. Since you are claiming him as a dependent on your return, he remains ineligible for the rebate.
The rebate rules from before still apply. For a refresher, check out this prior post about the size of your rebate check or this post about folks who are ineligible to receive a rebate check.
To be clear: the rules have not changed. If your situation has changed, that’s a different story. Generally, the credit will apply to folks who were income ineligible on their 2007 return but qualify with 2008 income, had a baby in 2008, or those that did not file.
It’s really important to note that most taxpayers have already received the proper rebate amount. The IRS estimates that only 3% of taxpayers are eligible for additional money. Just 3%.
As an aside, I’ve heard that many tax pros are advising their clients to skip the Recovery Rebate Credit line altogether in order to avoid confusion. The return instructions state that IRS will calculate any credit due if you want: enter “RRC” next to line 70 on your 1040 or line 9 on your 1040-EZ. I don’t know how widely this is being publicized and would love to hear what my colleagues are telling their clients…
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!
Oh, it’s going to be a long January…
President Elect Barack Obama has proposed tax cuts for individuals and small businesses as part of his massive economic stimulus package. The price tag on the cuts? About $300 billion. With a b.
Don’t get too excited just yet. These are just proposed cuts. There’s a lot to hammer out first – not the least of which is that Congress is just now being seated (Minnesota and Illinois notwithstanding) for the new year. And there’s that little detail of Obama not yet being the sitting President…
So take these proposals for what they are: a quick wish list. We’ll see what shakes out in the next few weeks.
But for now, here’s what’s being considered:
Tax cuts for working folks. The tax cuts that are being considered would equal $500 a year for working individuals and $1,000 for working couples. The cuts would be in the form of a payroll tax credit. That’s good news for workers because it’s an immediate benefit – no wait for IRS checks. Employers will make the adjustment during the year by reducing federal tax withholding; workers not subject to withholding will likely be able to apply for a refund at the end of the tax year. And yes, there will likely be phaseouts and caps – meaning at an as yet unmentioned income level, the credits would be reduced or not apply. Whispers are that the income level cap will be around $200,000 but don’t hold me to it.
Business tax breaks. Okay, tax break is a strong word. What’s actually being considered is extending the net operating loss (NOL) carryback to five years (from the current two year limit). That means that businesses that have a bad year or two now can use those losses to offset tax burdens from other years.
Obama would also extend the increase in Section 179 deductions (more or less, immediate tax deductions as opposed to writing them off over a period of time) for small businesses through at least 2010. The limit has been $125,000 but was doubled for one year as part of the Economic Stimulus Act of 2008. The proposal would extend the $250,000 limit for 2009 and 2010.
Finally, to stem off rising unemployment, businesses that create jobs here in the US or avoid future layoffs would receive a tax credit.
So, it’s a lot. Is it too much? Is it enough? Will it stimulate the economy? Or just throw money away. I suspect these questions will be debated for weeks now. But what are you waiting for? Chime in now. Vote in our poll (psst, feed readers, you can’t see it unless you click onto the site) and then tell us what you really think!
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!
