Taxpayer asks:
I haven’t done my taxes in 3 years, I don’t owe the Feds any$, will I get the stimulus funds every1 else got once I do my taxes? (via twitter)
Taxgirl says:
By law, the IRS is not able to make any economic stimulus payments after December 31, 2008.
But all is not lost. Assuming that you qualify, you may be eligible to claim the Recovery Rebate Credit (for those who missed the credit or had a change in status) in 2009 by filing a 2008 income tax return. This also assumes that you properly filed for extension – individual taxpayer returns were due on April 15, 2009. With an extension, that pushes out the date to October 15, 2009 – just 17 days away. So if you qualify, get moving.
Before you get too excited, though, I should point out that your statement that you “don’t owe” does give me pause. There are income and tax liability limits; for a refresher on who qualifies for the RRC, check out this prior post.
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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Taxpayer asks:
I have a query on the recovery rebate for the year 2008.
Let me explain my status as of last year and current year.
Last year :
Tax filed as “Maried filling jointly”
Myself – have SSN
Wife – ITIN
KID1 – ITIN
Since my wife didn’t have an SSN, we didn’t qualify for the stimulus package, which I agree upon.
This year :
Tax filed as “Maried filling jointly”
Myself – have SSN
Wife – SSN
Kid1 – ITIN
Kid2 – ITIN
Since my wife has SSN this year, I was expecting recovery rebate of around $1200 (600 each for myself and my wife). I understand that my kids don’t have SSN, so I won’t get any credit for them.
But the IRS department totally denied any credit saying that all the persons on the tax return should have valid SSN.
Is this correct? Last year many of my colleagues in similar situation got stimulus package for themselves and their spouse and not for kids. So why I have been denied the credit for myself and my wife this year ?
Your advise on the same would be highly appreciated.
Taxgirl says:
Unfortunately, the IRS is right on this one. To be eligible to collect a rebate, you’re only eligible if “[y]ou and any family members listed on your tax return have valid Social Security numbers.”
I’m not sure why others you know might have received a check other than human error. I do know that some folks were filing MFS (married filing separately) to avoid being ineligible altogether – but that’s not something that I recommend in most circumstances. It’s rare that MFS produces a significantly better tax result, especially with dependent children.
I wish I had a better answer for you.
All that said, I’m not sure why your children would not have a SSN if you and your wife do – have you applied?
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:
Hi,
I’m very disorganized and still haven’t filed my 2007 taxes (as of March 2009!). I’m planning to file in April 2009. Of course, I did not receive an Economic Stimulus Payment in 2008.
I’m single, and I definitely have taxable income and will owe taxes. Will I be eligible for the Recovery Rebate Credit when I get to my 2008 taxes? I’ve read all through the IRS RRC pages. They talk about all sorts of eligibility requirements, but say nothing about people who simply are behind in filing.
Taxgirl says:
You can file for the RRC on your 2008 taxes even if you did not file for 2007, assuming that you qualify.
That said, I would definitely file – and pay – your 2007 tax returns as soon as possible in order to insure that there are no delays in processing your rebate. Additionally, I’m not sure whether IRS was expecting you to file in 2007 or not (i.e. if forms W-2 or 1099s were sent their way) but it’s better to file that old return promptly to avoid any potential issues – not to mention that the clock is ticking on penalties and interest!
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!
As of April 1, many taxpayers will see an extra few dollars in their paychecks as a result of the Making Work Pay Credit. The MWPR was part of the American Recovery and Reinvestment Act of 2009, signed into law by President Obama in February 2009. The credit will provide up to $400 per individual worker and $800 per working married couple.
The credit will be administered through cuts in withholding at the employer level. The credit will phase out for individual taxpayers with AGI in excess of $75,000 (up to $95,000) or $150,000 for married couples filing jointly (up to $195,000). If you are a higher income taxpayer, you will see little or no change in your pay.
The amount of the credit that you receive will be reported on your 2009 income tax return, which is filed in 2010, but it is not taxable and you do not have to pay it back if you received the proper amount. If you do not have taxes withheld by an employer during the year because you are self-employed or because your withholding level is too low for the credit to apply, you can claim the credit on your 2009 tax return (filed in 2010). This is a refundable credit, so if you qualify and you do not receive the entire amount, you can have any additional credit refunded to you at tax time (again, in 2010).
The changes will be made automatically through your withholding so you will not need to make an adjustment to your form W-4 come tax time for most taxpayers.
There are, however, potential problems for some taxpayers. It is possible that there could be an “over withholding” for some taxpayers. Chief among them: college students and others who may be claimed as a dependent on someone else’s return. If you are claimed as a dependent on someone else’s return, you do not qualify for the Making Work Pay Credit. This means that those taxpayers will have to return any credit paid out to them (either in the form of a payment to IRS or a reduced refund, if you normally qualify for a refund) unless an adjustment is made on a form W-4.
Additionally, married taxpayers who both work should carefully review withholding. If each spouse’s employer makes the adjustment, an “over withholding” could apply, especially in cases where combined income hits a phase out amount or if withholding from one spouse runs all of the way up the bracket (the same situation applies to taxpayers who work more than one jobs). Remember, your employer is merely reading from a tax table: he or she is not aware of your spouse’s income (or lack of) or your other employment. If you know that your combined incomes are over the phase out limits, or that your income may run up the bracket as a married taxpayer or due to holding more than one job, you should make accommodations now (either in the form of adjustments or setting money aside) so that you don’t get caught by surprise next April.
It’s also important to remember that if you do not work, you are not eligible for the credit. Retirees and the disabled are set to receive a $250 check sometime in late spring/early summer but there will be no checks for taxpayers who do not work and do not qualify as a retiree or disabled person. Keep in mind, too, that the number of children that you have will not affect your credit this year: I’ve been fielding questions from taxpayers who believed that the provisions from the last stimulus bill (in 2008) would apply for this year. They do not. Claiming additional dependents on your 2009 tax return (filed in 2010) will not increase your Making Work Pay credit.
The bottom line is that if any special circumstances apply to you, be aware of how much is being withheld from your check. Do the math if you’re worried. Assuming that you’re not phased out, to receive $400 over (roughly) the next nine months, an individual taxpayer should receive about $11 extra per week. Similarly, assuming that you’re married and not phased out, you and your spouse should receive twice that amount combined ($22/week). If you find that your withholding is more than it should be – and you’re concerned – make an adjustment on your form W-4 or talk to your tax professional.
