Getting ready for your stimulus package
Issue date: 3/22/09 Section: Business
(ARA) - The heat is on: One month remains before tax deadline. The bad news? With so many changes made for the 2008 tax season, some taxpayers are bound to make a mistake on returns. The good news? You can save time and money by learning from the mistakes of others who have already filed.
RECOVERY REBATE CREDIT
The Internal Revenue Service reported that nearly 15 percent of 2008 tax returns filed by the end of January included errors involving last year's federal stimulus payments. The recovery rebate credit is a one-time benefit for taxpayers who didn't receive the full economic stimulus payment last year and whose family circumstances may have changed (making them eligible for some or all of the rebate amount). Making an error on your recovery rebate credit will result in a higher tax payment or smaller refund, and ultimately rejection of your return or a delayed refund.
Here's what you need to know in order to correctly report your recovery rebate credit:
1. Only about 3 percent of taxpayers will receive a recovery rebate credit.
2. Although your 2008 stimulus payment amount will not appear on your return, you need to know the amount in order to figure your recovery rebate credit. You can find your payment amount on Notice 1378 the IRS sent to those who received the payment, by visiting www.IRS.gov or by calling the IRS at (866) 234-2942. Quality tax preparation software will determine your eligibility by simply asking you for your payment amount.
3. Any recovery rebate credit you receive will be added to your refund or subtracted from the amount you owe on your return.
EARNED INCOME TAX CREDIT (EITC)
A quarter of those who qualify for the Earned Income Tax Credit don't claim it. Qualified taxpayers could be entitled to a credit of up to $4,824. The EITC is for taxpayers who were paid wages or self-employed in 2008 but had lower incomes, and is based on the amount of earned income and qualifying children in the household (taxpayers without children may qualify).
RECOVERY REBATE CREDIT
The Internal Revenue Service reported that nearly 15 percent of 2008 tax returns filed by the end of January included errors involving last year's federal stimulus payments. The recovery rebate credit is a one-time benefit for taxpayers who didn't receive the full economic stimulus payment last year and whose family circumstances may have changed (making them eligible for some or all of the rebate amount). Making an error on your recovery rebate credit will result in a higher tax payment or smaller refund, and ultimately rejection of your return or a delayed refund.
Here's what you need to know in order to correctly report your recovery rebate credit:
1. Only about 3 percent of taxpayers will receive a recovery rebate credit.
2. Although your 2008 stimulus payment amount will not appear on your return, you need to know the amount in order to figure your recovery rebate credit. You can find your payment amount on Notice 1378 the IRS sent to those who received the payment, by visiting www.IRS.gov or by calling the IRS at (866) 234-2942. Quality tax preparation software will determine your eligibility by simply asking you for your payment amount.
3. Any recovery rebate credit you receive will be added to your refund or subtracted from the amount you owe on your return.
EARNED INCOME TAX CREDIT (EITC)
A quarter of those who qualify for the Earned Income Tax Credit don't claim it. Qualified taxpayers could be entitled to a credit of up to $4,824. The EITC is for taxpayers who were paid wages or self-employed in 2008 but had lower incomes, and is based on the amount of earned income and qualifying children in the household (taxpayers without children may qualify).
Be the first to comment on this story