Fiscal Tax Blog

The Tax Rebate Check That Keeps On Giving!

January 13, 2009

For tax years beginning in 2008, taxpayers can claim a refundable credit figured in the same manner as the economic stimulus payments sent out last year. The major difference between this year’s Recovery Rebate Credit and last year’s tax rebate checks is that the amounts are based on tax year 2008 instead of tax year 2007.

The amount of the credit is reduced by any tax rebate check received in 2008. So, for example, if you got your $600 tax rebate check and also gave birth to a child last year, your 2008 rebate credit would in all likelihood be calculated as $900. Since you already received $600 of the rebate credit in the form of last year’s tax rebate check, you’d be entitled to a $300 refundable tax credit on this year’s return.

If the credit is less than the payment received, the difference does not have to be repaid. For example, if you claimed a 17 year old daughter as a dependent on your 2007 taxes, you would have received an extra $300 on last year’s tax rebate check. When the tax rebate is calculated again on your 2008 taxes, your now 18 year old daughter no longer qualifies you for that extra $300 tax credit. But it doesn’t matter because the IRS isn’t going to make you pay back the difference. You would only really need to worry about paying back last year’s tax rebate check, if you fraudulently claimed all or part of it.

All the ins-and-outs of this tax credit can get rather complicated and confusing. So, feel free to ask your questions by leaving a comment below. In the end, if you’re not certain whether you qualify for this tax credit, be sure to consult with a knowledgeable and professional tax preparer.

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5 Comments

Bre

January 15, 2009, 9:50pm

I am a single mother with a 7 year old son. I was under the assumption that I would get $600 for me and $300 for my son from last years rebate check, yet I only received $600 though. I worked, but only grossed around $10,000. What would this tax break have to offer me?

Fiscal Tax

January 16, 2009, 1:49pm

Bre, based on what you say, it looks like the IRS sent you the right amount. If you only grossed around $10K, it's unlikely you wound up owing any taxes. People who didn't owe any taxes only qualified to get the minimum base rebate of $300 instead of $600. So, it does look like you got your $300 tax rebate for your son. Without knowing your tax situation last year completely, it's difficult to say for sure. So, if you use a tax preparer this year, be sure to ask if you qualify for this credit.

Tom

March 20, 2009, 9:59am

On my 2007 tax return, I exceeded the stimulus check limits so I did not receive a check in 2008. I was laid-off at the end of 2007, and only had income from unemployment in 2008. Is there a way for me to receive a credit for the 2008 stimulus when I file my 2008 taxes? Thank you,

Fiscal Tax

March 20, 2009, 12:37pm

Tom, the Recovery Rebate Credit is based on your 2008 income tax return. If your 2008 return qualifies for a Stimulus Rebate, that amount will be included in the return's calculation of the refund or balance due. When you complete your 2008 tax return, you will need to complete the Recovery Rebate Credit Worksheet. On that worksheet you will report a 2008 Stimulus Rebate amount received of zero. The worksheet will determine the amount of additional rebate (if any) to be included in your 2008 return. The Stimulus Rebate calculation is based on several criteria, one of which is earned income. Unfortunately, unemployment compensation is not considered earned income. For more information, follow this link to the IRS website: http://www.irs.gov/newsroom/article/0,,id=202117,00.html

Patty

April 13, 2009, 10:31pm

My husband and I file jointly. We didn't receive our tax rebate for last year. What should we do? We are filling out our tax forms now and will send them in tomorrow, April 14. Thanks for your help.

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