Taxpayer asks:

I was told by “somebody” that the stimulus checks we received will be deducted from our tax refunds for 2008? Is that true?

Taxgirl says:

Nope. The tax rebates are not taxable and will not be credited against your 2008 return – unlike the 2001 rebates which were credited against the 2002 returns. There was some initial confusion about this – even CNN reported it differently, but that has since been cleared up.

I haven’t seen the 2008 returns yet but my understanding is that you will report the amount received on your individual tax return. This is ostensibly to make sure that everyone got their fair share (insert throat clearing here). The IRS says that the 2008 tax instructions will “include a worksheet to help those who did not qualify for a payment or those who received a reduced amount determine if they can obtain a benefit when they file their 2008 tax returns next year.” My cynical take on it is that the IRS wants to make sure that everyone files – again.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

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Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.


  1. I must take somewhat exception to what you wrote. Trying to explain how the stimulus payments work is like trying to explain the Presidential candidates tax cut proposals to the everyday taxpayers.

    In reality the stimulus payment is a credit on the 2008 tax return. Therefore if someone did not receive any/all of the stimulus payment that is allowable on the 2008 tax return they get the difference on the return. For example if a single taxpayer only received $400 stimulus payment, since that was the amount computed from the 2007 tax return, but is entitled to a larger amount on the 2008 he/she will receive in the computation the difference. Therefore to that extent, the stimulus payment received is deducted from their refund on the 2008 tax return. If a person goes to the website and then puts in the search box 2009 1040 draft. You will get the complete 1040 draft forms including the worksheet for the computation of the stimulus payment to determine if more stimulus payment is entitled to the taxpayer.

    But as I wrote Persons had always filed MFJ tax returns in the past. They have 3 children all under the age of 17 their stimulus payment was therefore $2100.00 If they file 2008 tax returns MFS and the mother should claim all 3 children, she would show on her return she received $1050 stimulus. She is entitled to $1500 (600 herself, 300 each child) she would receive the other $450 on the 2008 tax return and the husband does not have to repay the overpayment he received. I believe thousands (perhaps millions) will cheat themselves on their returns since they will not realize that this year, as in 2001 tax returns, they should file MFS and tax advantage of this legal loophole

    Jeff Day EA
    Evansville, IN

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