DALLAS - The Internal Revenue Service announced that an early sampling of tax returns shows about 15 percent have errors involving the Recovery Rebate Credit. Some tax returns erroneously claim the credit, do not claim the proper amount of Recovery Rebate Credit or mistakenly enter the amount of the stimulus payment they received on the Recovery Rebate Credit line.
To avoid delays in tax refunds, it is critical that taxpayers know the correct amount of the stimulus payment they received last year, if any, to help determine whether they qualify for the Recovery Rebate Credit now.
"Let me stress that last year's stimulus payment is not taxable," said Clay Sanford, Dallas IRS spokesman. "The amount of the stimulus payment will not be entered directly on the tax return."
But, Sanford added, the reason you will need to know the amount of the stimulus payment you received, if any, is so that it can be used in the process of preparing your return.
For people using a paper tax return, the stimulus payment amount will be required when completing a related worksheet. For people using tax software, the stimulus payment amount will be needed as well, but there are no pencils to sharpen. The software will figure whether you have a Recovery Rebate Credit coming to you.
For most taxpayers, the correct entry for the recovery rebate credit will either be blank or zero.
If there is any question at all as to the amount that should be reported for the recovery rebate credit, the taxpayer or preparer should enter a zero on the appropriate line above, and the IRS will determine from records whether a recovery rebate credit is due, and, if so, how much.
Some of the major factors that could qualify you for the recovery rebate credit include:
The Recovery Rebate Credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion. Like last year's stimulus payment, the Recovery Rebate Credit is a maximum of $600 for individuals and $1200 for married couples filing jointly. Another $300 is added for each qualifying child under age 17.
Most taxpayers who received a stimulus payment last year are not eligible for the Recovery Rebate Credit, but there are some exceptions. Those who earned more or less in 2008 than in 2007 and those who had a child born or who ceased being a dependent in 2008 may qualify for some or all of the new credit. Also, seniors and retirees who did not file for a stimulus payment last year may qualify for the credit.
For more information, visit IRS.gov or call the IRS toll-free at 1-800-829-040.