On February 12, 2009, the Internal Revenue Service clarified its January 30, 2009 guidance regarding recovery rebate credits. Taxpayers who did not receive an economic stimulus check in 2008, and some that did, may be eligible for the recovery rebate credit on their 2008 tax returns.
In the January guidance, the IRS stated that before finalizing tax returns taxpayers and tax preparers should focus on the eligibility requirements for recovery rebate credits and the proper calculation of these credits. The IRS issued this guidance in response to errors on early filers, which included both errors regarding the proper calculation of the credit and errors regarding ineligible taxpayers claiming the credit.
Factors that might qualify a taxpayer for the credit are:
- A dramatic change in a taxpayer’s financial situation from 2007 to 2008;
- Taxpayer did not file a tax return in 2007;
- Addition of a child; and
- In 2007, taxpayer was claimed as a dependent on another taxpayer’s return, and in 2008, taxpayer may no longer be claimed as a dependent by another taxpayer.
While taxpayers can use the appropriate tax worksheet to determine eligibility for and amount of the credit, in its February update to the January guidance, the IRS stated that taxpayers and tax preparers may input “RRC” on Line 70 of Form 1040, Line 42 of Form 1040A, or Line 9 of Form 1040EZ, whichever is applicable, and the IRS will then determine eligibility and the proper credit amount.
To see the full IRS Release, click here.
– ksmolawyer
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It turns out that if you didn’t take advantage of the recovery rebate credit, IRS will automatically adjust your return and refund you any overpaid taxes.