Tuesday Tax Tip: Recovery Rebate Credit (Economic Stimulus 2nd Chance)

• Tweet

• Tweet

This is part of my new series of tax tips I’ll be featuring on Prime Time Money until April 15th. Sign up for free updates to ensure you get every tip.

Recovery Rebate Credit

For some, last year’s Economic Stimulus Check has become this tax season’s Recovery Rebate Credit. Let me explain… In typical confusing fashion the IRS has given a second name to the economic stimulus check IF you didn’t receive it in 2008, or IF you didn’t receive enough in 2008. It’s now called the Recover Rebate Credit. Here’s the details from the IRS:

“This credit is figured like last year’s economic stimulus payment, except that your 2008 tax information is used to figure this credit. Your 2007 tax information was used to figure your economic stimulus payment. The maximum credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child.

You may be able to take this credit only if:

• You did not get an economic stimulus payment, or
• Your economic stimulus payment was less than $600 ($1,200 if married filing jointly for 2007), plus $300 for each qualifying child you had for 2008.”

So, if you missed out on the economic stimulus check in 2008, and your tax situation has since changed, you may be eligible for this rebate.

Economic Stimulus Check Transformed

Remember, the economic stimulus check was essentially an advance on your 2008 tax return that was based on your 2007 earnings and filing status (they couldn’t look into the future). See How the Economic Stimulus Check Affects Your 2008 Tax Return.

So, if things have changed for you since December 31, 2007 from a tax perspective you may be eligible for a recovery credit. Here are some possible scenarios:

You Had a Baby in 2008 – For every child you had in 2008, you’ll likely receive a recovery rebate credit of $300. See Have a baby in 2008? Get $300 from Uncle Sam.

You Didn’t Receive a Stimulus Check and then Made Less Income in 2008 – If you were excluded from receiving the economic stimulus check back in 2008 because you made too much money, but you’re income dropped below the exclusion point for 2008, you could received the Recovery Rebate Check.

For more scenarios, see the baby link above.

Filing with the Recovery Rebate Credit

So when you go to file your 2008 taxes this year, be sure and look for the line to include your Recovery Rebate Credit. Most tax software programs will ask you the rebate related questions so you’ll put the right number there. Be careful though as the IRS has reported many errors on this line with people misunderstanding what goes there.

Lastly, I’ll just add to not confuse this rebate with the second economic stimulus, which will likely come in the form of a rebate, but is currently being debated in the U.S. Senate.

Tweet

Did You Like This Article? Get free email updates! Sign up now and receive exclusive content and a FREE COPY of my eBook '31 Days to Improve Your Financial Life'. Enter your name and email address below: