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Will You Qualify for Extra Rebate Money?
Here's what you need to know about claiming this credit on your 2008 tax return.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
February 4, 2009
Since my Second Chance at a Rebate column was posted in mid January, I’ve received hundreds of questions from readers asking whether they’ll qualify for extra rebate money when they file their 2008 tax returns. And they're not alone in their confusion. On January 30, the IRS said that an early sampling of tax returns showed that about 15% have errors related to the rebate. Some erroneously claimed the credit, didn't claim the right amount, or entered the wrong number when asked how much of a rebate they received last year.
Here are answers to some frequently asked questions, to help you avoid errors on your own tax return.
If I received the full rebate last year, will I get it again this year?
No. You'll get a second chance at this rebate only if you didn't get the full rebate last year. You could qualify this time around if your 2007 income was too high or too low to receive the full amount but your 2008 income fell within the limits, if you had a child in 2008, or if you were claimed as a dependent on someone else's return in 2007 but won’t be claimed as anyone’s dependent on a 2008 tax return.
The IRS’s Recovery Rebate Credit Information Center and FAQs About the Recovery Rebate Credit can help you figure out whether you're likely to get additional money. The IRS also plans to have a Recovery Rebate Calculator available in late February.
If I received a rebate check last year but my 2008 income exceeded the limits to qualify, will I have to give the money back?
No. Even though you get a second chance to qualify if your income has dropped, you don’t have to give back any money if your income has risen or your circumstances have changed in any other way.
Where do I fill out the rebate information on my tax return?
You don't actually report the amount of your rebate on Form 1040. That money is not taxable and shouldn’t be included as income when you file your taxes.
But you will use that number in the Recovery Rebate Worksheet in the Form 1040 Instruction Book to calculate whether you should receive more money. Then you record that number -- the extra money you should receive, which is called the rebate recovery credit -- on line 70 of your 1040 (this will be done automatically if you're using tax software). For most people, this number will be zero.
Be sure to use the amount of the rebate you received in those calculations, not your 2007 refund. The IRS reports that a lot of people have been mistakenly entering their refund amount.
The worksheet asks me for the exact amount of the rebate I received last year. Where can I find that information?
You should have received Notice 1378 last year, which the IRS mailed to people who received the rebate. You can also use the How Much Was My 2008 Stimulus Payment? tool at the IRS Web site or call the IRS at 866-234-2942. Select option one for the amount of your economic stimulus payment, then you'll need to provide your filing status, Social Security number and number of exemptions to verify your identity.
Keep in mind that the number you need to report is the stimulus payment you were supposed to get, before any offsets were subtracted for back taxes, unpaid student loans or child-support obligations. If, for example, you qualified for a $1,200 rebate but the IRS took $800 of the money for back taxes you owed, and your rebate check was only for $400, you should actually report the full $1,200 rather than the $400.
Will I get this second chance at a rebate in a separate check, or will it be included with my refund?
If you're eligible for additional rebate money, it will be included with your refund.
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