Have you started your taxes yet? When you do, don't be surprised when you find a line asking about your
2008 Rebate Check.Uh oh!
That's right: The IRS will ask you if you received a Stimulus Rebate Check last year.
Many people are stumbling upon that line and asking if it means you now have to pay taxes on the $600 or $1200 check you received last summer. Does this mean it's taxable? After all, that money is long gone.
The IRS says no, last years checks are not taxable. You do not have to pay income taxes on them, or give them back to the Government.
If your tax preparer says that is incorrect...stop right there. He or she is wrong. Do not pay that tax preparer, and find another.
So why do you have to enter whether your received a check? The agency says the line is there so that people who did not receive the full amount last year can claim it now.
Bottom line: You dont have to pay taxes on your check...even though it sure looks that way! Can't remember how much you received? Click the link above and the IRS will look it up for you.
Is this unnecessarily confusing? Could the IRS have done a better job explaining this? Yes, and yes.
The
Ohio Society of CPA's has more information on its website (click above).
As always, don't waste your money. I'm John Matarese.
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WEB EXTRA: Full Explanation from the IRS
IRS tax tips: Myths about reporting stimulus payments Written by Dianne Besunder, IRS
Wednesday, February 04, 2009
The IRS has moved to debunk myths and misunderstandings that may be causing increased filing errors.
1. Myth: The economic stimulus payment you got last year must be paid back or is taxable or lowers your refund.
Fact: The stimulus payment is not taxable federally, does not have to be paid back and does not lower your tax refund.
2. Myth: You must report the stimulus payment you received last year on your 2008 tax return.
Fact: You do not report the stimulus payment directly on your tax return. If you are using tax software, enter the stimulus payment amount when prompted and the software will complete the calculation and enter the correct credit on your return. If you are filing a paper return, enter the stimulus payment amount on the Recovery Rebate Credit worksheet in the instruction booklet then complete the worksheet and enter the result on your return.
3. Myth: When using tax software, the amount of the refund displayed on the screen decreases as soon as you enter your stimulus payment, so that proves that it’s either taxable or it reduces your refund.
Fact: Some tax software adds the Recovery Rebate Credit to your refund up front then subtracts your stimulus payment from the credit as soon as you enter the amount of payment you got. With some exceptions, people are only entitled to either the 2008 stimulus payment or the Recovery Rebate Credit on their 2008 tax return, not both.
4. Myth: If you enter the amount of your stimulus payment directly on your tax return, your refund will be delayed for weeks.
Fact: Entering the amount of your stimulus payment directly on your tax return is an error and may delay your refund, usually by no more than one week.
5. Myth: If you can’t find the amount of your stimulus payment or don’t remember it, you can’t get the Recovery Rebate Credit.
Fact: The IRS provides an online tool (How Much Was My Stimulus Payment?) at
www.irs.gov that allows you to access the amount of your stimulus payment by entering your Social Security Number and your 2007 filing status and number of exemptions claimed. If you don’t have Web access, call IRS toll-free at 1-866-234-2942 and provide the same information. However, if for some reason you are unable to find out your stimulus payment amount, make certain that the return you file claims a zero amount for the recovery rebate credit on the actual return. Typically, this would best be accomplished by entering the maximum stimulus payment amount on the worksheet or when prompted by the tax software. In this situation, in which your return claims a zero amount of recovery rebate credit, the IRS will automatically send you any additional credit that you might be entitled to.
6. Myth: If you got a stimulus payment last year, you are not eligible for the Recovery Rebate Credit.
Fact: This is true for many but not all. For example, taxpayers who had a child born in 2008 or who ceased being a dependent may qualify for the credit. Seniors or retirees who did not file for the stimulus payment last year may also qualify for the credit.
7. Myth: The Recovery Rebate Credit will be sent as a separate check.
Fact: The credit will be added to your 2008 tax refund. It will not be a separate payment. ShareThis
