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?).

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 Erb is a tax attorney, tax writer and podcaster.

Comments

  1. The Recovery Rebate Credit (not Rebate Recovery as you put it) line on Forms 1040/1040A/1040EZ is only for people who didn’t get all of their Stimulus. Let’s say you are single and you only got a stimulus check for $450.00. You could claim the difference between the $600.00 you should’ve got and the $450.00 you did get, which would be $150.00. Be sure that your stimulus wasn’t offset to cover a debt. My neighbor had his offset to cover his student loan.

  2. Thanks for correcting my error – I transposed the words when I typed it in.

    Also to clarify, since I’ve been asked, if you received too much last year, you will not be asked to give it back. If you received too little, you can, as you pointed out, make up the difference.

  3. I have an eligibility question. I got married in 2008, and my wife was claimed as a dependent and had no income for 2007. I received the full amount afforded me in 2008.

    This year, 2008, she also had no income. Since we are now married and she never received a stimulus check, because she was not eligible, can I get $600 or whatever her amount would be since we are now filing as married jointly?

  4. Mike, great question! I think she may now qualify for the rebate. As I read the instructions, assuming that there’s no other issues, I believe that you can apply for the difference.

  5. My husband and the mother of his child have agreed to share claiming the dependent for tax purposes, his mother claims him one year and then we claim him the next. His mother claimed him on her 2007 return and thus receieved the $300 economic stimulus payment. We are claiming the child on our 2008 return and the tax program I am using assumed we received the payment for him. When I correct the amount it gives us an additional $300 credit. Is this correct can we receieve the money as well as her for the same dependent and she does not have to pay back the amount she recieved either. The information I found suggest that someone who was claimed as a dependent in 2007 and is not claimed as a dependent in 2008 can now recieve the credit. The irs website also states that the person who claimed them as a dependent and thus recieved $300 does not have to pay it back in 2008. So they would both be receiving $300 for the same dependent and this is basically the same situation.

  6. Jesse, I think your situation is very different from Mike’s. In Mike’s situation, the individual (his wife) shifted from dependent to taxpayer – meaning someone who would have not qualified for a 2008 credit based on 2007 status. The purpose of the credit is to rectify that very situation – making folks who would have qualified in 2008 for the 2008 credit eligible when they were ineligible in 2007.

    In your scenario, however, there is no change of status. The dependent is still a dependent, only the person claiming dependent is different. The rules don’t say that the dependent must have been claimed on your own return to be eligible this year but that”[i]ndividuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008″ would be eligible. This specifically excludes the situation that you’re talking about. The dependent would not be eligible as a qualifying dependent for a second year for purposes of the RRC and to claim him or her as such is begging for examination, in my opinion.

  7. Hi, thanks for providing advice!

    I filed a 1040ez for 2007, not realizing that I wouldn’t be able to get a stimulus check.

    I thought then that I was considered a claimable dependent, which I am not, and I will not be filling in that way for 2008.

    How can I get my stimulus check from this filing?

  8. Shawn,
    If you qualify, just make sure to claim the Recovery Rebate Credit this year. On form 1040-EZ, you’ll see the credit at line 9 (there’s an accompanying worksheet).

  9. HI!!

    I WAS WONDERING IF I GOT 900.00 FROM MY REBATE LAST YEAR.. BUT I WAS MARRIED AND JUST HAD ANOTHER CHILD IN 2008.. WILL I BE ELIGABLE FOR THE OTHER 900 THIS YEAR?

    I MEAN I ONLY GOT HALF OF WHAT I SHOULD HAVE GOTTEN..

    ALSO IF I DO GET THE OTHER 900, DO I HAVE TO PAY THAT BACK ON NEXT YEARS TAXES?

  10. one more question.. how accurate is the calulators on hr blocks site? i know it says estimator, but how close is it to being accurate?

  11. Hello. If i was claimed as a dependent on my parents 2007 taxes and they are once again claiming me this year, am i able to recieve the Recovery Rebate, since I wasn’t eligible last year? Or does being claimed as a dependent also disqualify you from being part of the Recovery Rebate Credit like it did the Economic Stimulus ?

    • Deb – Your statements regarding the 2001 rebates are not completely true. The rebate checks issued in 2001 were considered an “advance payment” to taxpayers – unlike the 2008 checks. The amount of those checks (received in summer 2001) were includable on the 2001 returns when tax returns were filed in April 2002. Taxpayers who received more than they should have did have to give it back (unlike this year).

      It is true that they were not taxable for 2001 – and are not for 2008.

      In fact, the Treasury Department received so much agita about this that they did not want to refer to the checks officially as a “rebate.”

  12. Shawn: If you claim yourself on your 2008 return, you’ll be eligible for the $600 rebate, if your tax is at least $600 (on line 56, Form 1040). To receive the Recovery Rebate Credit, fill out the Recovery Rebate Credit Worksheet and enter the amount from line 29 of the worksheet to line 70, Form 1040.

  13. Taxpayers who received $300 for the rebate based on receiving more than $3,000 in Social Security benefits will receive the additional $300 (line 70, Form 1040) if their tax on line 56 is $600 or more when they file their 2008 return.

  14. Kelly: Absolutely untrue. Nobody had to pay back any part of the rebate received in 2001. The only reason the amount of the rebate had to be included on the worksheet for the 2001 tax return was for the software to determine if more rebate should be given to the taxpayer. If so, the extra amount was included on line 47, Form 1040, under Rate Reduction Credit.

    Trust me on this. This is my 34th year preparing taxes, I prepared over 800 tax returns for 2001, and I am 100% certain that nobody had to pay back any part of the 2001 rebate (if they ended up receiving too much in the summer of 2001, based on their income and exemptions on the 2001 tax return).

    Look at a 2001 Form 1040 and you will find no line in which to pay back any part of that rebate.

  15. I’d rather not do a back and forth on this because I don’t think it’s helpful for readers esp as it’s not timely. It’s semantics. The 2001 “rebate” checks were really an advance on the refund taxpayers were going to get in April 2002 due to tax cuts made mid-year for the lowest tax brackets. Refunds in April 2002 were smaller than they would have been without the checks using the revised tax brackets. This realistically means that you “paid it back” at tax time which is why I have “give it back” in quotes in the original post.

    I did make a mistake in comment 17 re overpayments. You’re correct that overpayments were not required to be repaid.

    If you go back and look at those old instructions, the IRS only uses the word “rebate” once in about 80 pages and only then as a parenthetical. This year, rebate is front and center because it’s a different animal.

    The 2001 cuts were a disaster – because of the nature of the credit, the IRS reported that there were more than 4 million refund-related errors that year directly attributable to the credit.

  16. Folks: The 2001 rebates were not loans to taxpayers. You did NOT have to pay back the 2001 rebates on your 2001 tax returns. You just didn’t receive the 2001 rebate AGAIN when your filed your 2001 tax returns. If you were eligible to receive a higher rebate, based on your 2001 filing status, then you included that additional rebate on the Rate Reduction Credit line in the Credits section of Form 1040. An example would be: if you were Single in 2000 and Head of Household in 2001, you would be entitled to an additional rebate on the 2001 tax return.

    I hope this clarifies this misunderstanding!

  17. Deb and I disagree on the characterization of the 2001 rebate but I am posting her comment here in order to let the discussion die.
    Moving on to 2008, it’s a pure rebate – it’s not taxable (as stated) and you don’t have to give it back (as stated).

  18. Hi,
    My wife and I are married, filing jointly. The IRS sent notice 1377 , (Feb. 2008, cat. # 51255B). This notice stated that we would be receiving $1200. 00, for a stimulus check. We received notice #CP1378 at the end of May 2008, that informed us that we would only be entitled to $728.00. Their reason “based on our filing status, the amount of the stimulus payment is $1200.00 OR your 2007 net income tax liability, which ever is less”.
    For 2008 we are still married and still filing jointly, using form 1040EZ. I don’t understand the worksheet for line 9.
    My question is…on line 9, can I claim credit for the difference between $1200.00 and the $728.00 check we received, difference being, ($472.00), the money that we feel got shorted from the stimulus?
    If so, can you please tell me how to use the worksheet on pages 17 & 18, so I can understand it.
    Thank you so much,
    Jim

  19. Our daughter is 20 and we claimed her as a dependant in 2007 because she was attending college. She did not attend college in 2008 so she cannot be claimed as a dependant on our 2008 taxes, is she now elegible for the recovery when she files her taxes for 2008?

  20. yeah i used turbo tax this year to do my taxes i never filed in 08 for the stimulas check i never got it but turbo tax said i was able to get the recovery rebate of 428 but my question is why is this not included in my federal return i am getting back my orginal federal with no recovery rebate added to it according to my 1040A from line 45 i took a snapshot of what im talking about http://www.freewebs.com/emotions1/2-1-2009%206-26-44%20AM.jpg sorry im just not understanding this i mean if they said i can get it shouldnt it be listed in the return with my federal

  21. I never received my rebate last uear that I can tell.
    How can I be sure?

  22. I had a dependent relative in 2007 returns and got stimulus check for the relative. In 2008 the relative is no longer my dependent. However, I had a new born in 2008. Technically i am supposed to get additional credit for the new born. How do we claim the amount as the tax software is not recognizing it as a new dependent ??

  23. I have to fill out a Amended Return from 1040X, because I already filed my tax return for 2008 and I want to claim the Recovery Rebate credit (I gained a dependent in 2008). My question is on that form what line would I put that under??

  24. I have a question. When filing my 2008 taxes, it asks how much I received in the stimulus rebate… I got married in ’08 and my husband and I both received a check. Do I put the amount we got together, or what? We are filing married jointly. Thanks.

    • Cyndi,

      If you believe that you’ve both already received your full rebate checks, then there’s no need to complete that part of the form. If you’re using software and it won’t let you skip the question, then just add your rebates together.

  25. In 2007, I filed as non-dependent and single, and I did receive a stimulus rebate. I will be filing as non-dependent and single again in 2008, so am I still eligible for this year’s stimulus rebate? I am also under the age of 25, if that matters? The whole “before offset” thing is throwing me off. Should my stimulus that I received from 2007 cancel my stimulus in 2008?

    • Jason – there is no second rebate available. This is just a chance to get a stimulus check if you missed the first one. If you’ve already received your full rebate, you’re done. 😉

  26. Okay, here’s one that the FAQs don’t address. Taxpayer had qualified income in 2007 but filed late, didn’t file at all, died, or filed incorrectly and never received an Economic Stimulus Payment to which they were entitled in 2008. Let’s say there’s no qualifying income to report on the 2008 return (i.e., they died at the end of 2007). How do they get their Recovery Rebate Credit if there’s no income on the 2008 tax return?

  27. Dave –
    My gut is that they would not be entitled. The 2008 checks were based on an estimate of 2008 eligibility based on 2007 returns. Those who filed a 2007 return would have received a check (if eligible) irrespective of whether the taxpayer died in 2008. However, if there is no qualifying income in 2008, deceased or not, taxpayer would not be eligible for a check. If they missed their chance in 2008 to get a check by not filing, etc., for 2007, I think they’re out of luck. But again, that’s my gut. Other thoughts?

  28. I filed using TurboTax, and since I was claimed as a dependent by my parents in 2007 I did not get a stimulus check. However, I am no longer considered a dependent in 2008. TurboTax said I would get $300 as a Recovery Rebate Credit for this year.

    I efiled and it was accepted, but I did not get the Recovery Rebate Credit added to my refund. I thought this was pretty cut and dry, is there something I did wrong?

    • I’ve heard about a lot of these type errors and it’s hard to say what’s going on without seeing the return.

      My advice is to wait and see how much refund/rebate you actually get, as IRS seems to be calculating any RRC for taxpayers (even though the instructions ask you to write on the form if you want IRS to do this). If it’s not the right amount, then I would call IRS and see what you can do to to fix it.

      The IRS says that early indications are 15% of returns have RRC errors. That’s a lot. Estimates are that only 3% of taxpayers are entitled to the RRC since most taxpayers have already received the full stimulus amount due them.

  29. I forgot to add Recovery rebate credit, and yes I am eligible for $300 dollars
    I have filed already electronically havent proved yet but should I refile again through internet or do I have to amend or IRS will automatically correct this and add $300 dollars to refund?

  30. I applied as 1040NR last year as I was considered non-resident. Now, I am considered resident for tax purposes. Am I elgibile to claim that rebate?

    • If you qualify this year (income, etc.), it doesn’t matter if you didn’t qualify last year. So assuming no other issues, then yes.

  31. I have a question. I was dependant on my parents return for the year 2007 and they received 933.70 stimulus payment 466.85 for each spouse. This year I have income over 15000.00 and my parents are claiming me as a dependant, can I claim a rebate on my return? or I have to claim my exemption on my own return?

    Thanks,

    Aish

  32. It would be interesting to calculate how much time has gone into calculating the recovery rebate credit and how that compares to an hourly rate based on how much money was given back.

    I wrote a utility this morning to help folks figure out what their credit is, if any.

    Hope it helps someone: RRC Calculator

  33. I was submitted 1040NR form for 2007 because I stayed in USA less than 6 months in 2007 now I am submitting 1040 for 2008 am I eligible for recovery rebate credit

  34. I wanna know why just cause i did an amended return 2008 a 1040x and never got a stimulus check now,did the 2008 return and they say i dont qualify now just because i did a 1040x last year i dont think that is fair!

    • You’re not barred from receiving a check because you filed an amended return. However, depending on your circumstances, filing an amended return may slow your rebate if your original return has not yet been processed or if you should have filed a different form (such as a form 843). I would contact the IRS for more information.

  35. I just did my mothers taxes with Turbotax.. She told me that her tax stimulus last year was $300.00. but when I efiled them , they were rejected. The reason was the amount of her stimulus check. I verified her amount at the IRS website. She was sent a $600.00 check. SO I changed the amount in Turbotax.. Her federal tax amount that she owed changed from $317.oo to $617.00. So then I changed the amount of the stimulus check to $00…it changed the amount owed to $17.00. Doesn’ that sound like they are taking back the ENTIRE amount that they sent out? Am I doing something wrong?

  36. Just wanted to know, Last year i filed single and recieved a rebate of 300. This year, I am claiming a dependent (whom I pay more than half of his living expenses and also lived with me in ’07 and does not work) does this mean i qualify for the recovery rebate since my circumstances have changed ?? I know that if you obtained a qualifying child than yes, but what if he is just a qualifying relative?

  37. In response to Shana, the dependent has to meet the definition of Qualifying Child for the Child Tax Credit, i.e., under age 17 on the last day of 2008, in order for you to get an additional $300 Recovery Rebate Credit. If your dependent is 17 or over, they would not qualify for the RRC.

  38. I am married. my husband has income, i don’t have income.
    we couldn’t get stimulus payment last year because I don’t have social security number.
    my status hasn’t changed in 2008.
    are we qualify to get recovery rebate this year?
    can my husband file as single to get srecovery rebate?
    in that case i don’t file, is it ok to IRS?

  39. You will not qualify for the credit if you do not have a valid Social Security number. Accordingly, if married filing jointly, both taxpayers must have a valid Social Security number in order to receive the credit.

    Your husband could try filing MFS so that he receives the credit (he cannot file as single if he is legally married) but be careful. In almost every case, filing MFS results in a higher tax burden because of restrictions on credits and deductions. I wouldn’t jump through the additional hoops to get the RRC if the result is a higher tax that you would have paid MFJ.

  40. If we already filed our 2008 taxes but did not claim the RRC for a child born in 2008…what can we do now to get the RRC?

  41. Hi Kelly!

    Basically, my situation is similar to Cindy’s one:

    I have a Social Security Number, but my wife and my son have only Individual Taxpayer Identification Number (ITIN)… I used TurboTax and was somehow mistaken by it, so I requested $900 of RRC ($600+$300 for the son), and got the money! Now I undestand we are not eligable for this money. What should I do in the situation like this?

    Should I try to return the money and how can I do that?

    Thank you!

    • Jeez, the last time that I answered one of these, I advised the taxpayer to do the right thing. She later sent me a blistering email saying that she could have cheated and she found out later that it would have worked and instead she followed my advice to be honest, she’s out $300 and she blames me. Lovely, huh?

      So I will say this. If you believe that you didn’t get the correct amount of money – either too much or too little – I would contact the IRS to confirm the proper amount. It tends to be the case that an overpayment will be discovered eventually. If and when it’s discovered, not only will you have to pay it back, you’ll likely be hit with interest and penalty.

      Bottom line, I always believe that if you don’t think that you received the proper amount, confirm with IRS.

  42. Yes, I have just “broke through” teh IRS automatic answering system and spoke with a representative. She told me we do not eligable for RRC ‘coz my wife has no real SSN but ITIN only . So now I have to send a check with amount received, and a cover letter describing the situation directly to US Treasure.

  43. Hello,
    We filed a 1040 last year but myself and my child did not have a valid ss no hence we were not issued stimulus checks. We filed 1040 again this year but we do have the ss nos fo both of us. Can we file 1040x and claim recovery rebate on the 2008 return if so, what would be the procedure on what line of 1040x do we claim rr? Or, is there any other form to file?

    • I’m not sure why you would file an amended return for 2007 if the sole purpose is to claim the RRC. If that’s the only reason, then you can just file a return for 2008 with your updated info.

  44. If Iam paying money back to aish will the govt take my income tax refund and gst check until they are paid in full
    Thanks Tax Girl

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