Stimulus checks tripping up taxpayers

[liberal N proud]

The IRS says refunds will be delayed for income-tax filers who erroneously enter the amount of last year’s tax rebate in a space on forms intended for the few eligible for an additional credit.


By MSN Money staff and wire reports
The Internal Revenue Service warns that many taxpayers are mistakenly trying to double-dip on last year’s federal tax rebate when they file their tax returns this year -- and the IRS is catching the errors.

A sampling of returns shows 15% of early filers made mistakes in the section dealing with the rebate, the IRS said Jan. 31. The errors were found using IRS software that checks for mathematical errors in returns.

The IRS corrects the errors, delaying tax refunds by about a week.

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The IRS sent taxpayers nearly 119 million rebate checks as part of last year’s economic-stimulus package. Individuals received up to $600 and married couples $1,200, plus $300 per eligible child.

The vast majority of taxpayers are ineligible for any more credits under the package. However, this year’s tax returns include a section for the few taxpayers who are eligible for an additional credit.

Many taxpayers have incorrectly entered the amount of their rebate check on the line that calls for the amount of the credit they are claiming, the IRS said. For most taxpayers, the correct entry for the recovery rebate credit will either be blank or zero.

Who is eligible to file?
Some people who were ineligible to file on their 2007 return could be able to file on the basis of their 2008 return. For example:

Your financial situation changed dramatically from 2007 to 2008. If you lost a job and your income fell below the thresholds of eligibility (phase-out begins at $75,000 for single filers and $150,000 for joint), you could file based on your 2008 income.

You did not file a 2007 tax return.

Your family gained an additional qualifying child in 2008.

You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as dependent by someone else in 2008.

If there is any question as to the amount that should be reported for the recovery rebate credit, the IRS says the taxpayer or preparer should enter a zero on the appropriate line, allowing the IRS to determine whether a recovery rebate credit is due, and, if so, how much.

The IRS also included a worksheet in its tax packages, but taxpayers must know the amount of last year’s rebate to complete the worksheet.

If taxpayers forgot the amount they received, they can get the information here, or place a toll-free phone call to 1-866-234-2942. More information on who might qualify is available here.

Tax preparation software such as TurboTax does the calculations automatically.

http://articles.moneycentral.msn.com/Taxes/Advice/stimulus-checks-tripping-taxpayers.aspx

[BlooInBloo]

1. Thanks for the reminder.