(IRS) Don’t Report Stimulus Payment On Tax Return

IRS Says Don't Report Stimulus Payment Directly on Tax Return

Use Payment Amount to Calculate New Tax Credit

MILWAUKEE, February 11, 2009 – The Internal Revenue Service announced that an early sampling of tax returns shows a significant number of errors involving how to account for the stimulus payments that were issued to nearly 119 million Americans last year. The payments affect taxpayers' eligibility for the new Recovery Rebate Credit.

“Filers should NOT report the stimulus payment directly on their tax returns,” said IRS Spokesman Christopher Miller. “Use that figure to compute the new Recovery Rebate Credit or just let the IRS calculate it for you.”

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 the entire unpaid portion.

Like last year's stimulus payment was 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 because they have already received the full amount.  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.

To determine eligibility for the new credit, taxpayers can either supply their stimulus payment amount on the worksheet or in software calculations when preparing their return.  However, taxpayers should not enter the stimulus amount on the return itself.  Taxpayers can also choose to let the IRS figure and calculate the credit based on its records by entering a zero on the line for the Recovery Rebate Credit.

For more information, visit IRS.gov or call the IRS toll-free at 1-800-829-1040.

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IRS Debunks Myths about Reporting Stimulus Payments

The IRS today moved to debunk myths and misunderstandings that may be causing increased filing errors.

1. Myth: The economic stimulus payment you got last year must be paid back or is taxable or lowers your refund.

Fact: The stimulus payment is not taxable federally, does not have to be paid back and does not lower your tax refund.

2. Myth: You must report the stimulus payment you received last year on your 2008 tax return.

Fact: You DO NOT report the stimulus payment directly on your tax return. If you are using tax software, enter the stimulus payment amount when prompted and the software will complete the calculation and enter the correct credit on your return. If you are filing a paper return, enter the stimulus payment amount on the Recovery Rebate Credit worksheet in the instruction booklet then complete the worksheet and enter the result on your return.

3. Myth: When using tax software, the amount of the refund displayed on the screen decreases as soon as you enter your stimulus payment, so that proves that it's either taxable or it reduces your refund.

Fact: Some tax software adds the Recovery Rebate Credit to your refund up front then subtracts your stimulus payment from the credit as soon as you enter the amount of payment you got. With some exceptions, people are only entitled to either the 2008 stimulus payment OR the Recovery Rebate Credit on their 2008 tax return, not both.

4. Myth: If you enter the amount of your stimulus payment directly on your tax return, your refund will be delayed for weeks.

Fact: Entering the amount of your stimulus payment directly on your tax return is an error and may delay your refund, usually by no more than one week.

5. Myth: If you can't find the amount of your stimulus payment or don't remember it, you can't get the Recovery Rebate Credit.

Fact: The IRS provides an online tool (How Much Was My Stimulus Payment?) at www.irs.gov that allows you to access the amount of your stimulus payment by entering your Social Security Number and your 2007 filing status and number of exemptions claimed. If you don't have Web access, call IRS toll-free at 1-866-234-2942 and provide the same information. However, if for some reason you are unable to find out your stimulus payment amount, as a last resort make certain that the return you file claims a zero amount for the Recovery Rebate Credit on the actual return.  Typically, this would best be accomplished by entering the maximum stimulus payment amount on the worksheet or when prompted by the tax software.  In this situation, in which your return claims a zero amount of Recovery Rebate Credit, the IRS will automatically send you the amount of credit to which you are entitled. If you are filing a paper return, entering “RRC” on the Recovery Rebate Credit line will prompt the IRS to figure the credit for you.

6. Myth: If you got a stimulus payment last year, you are not eligible for the Recovery Rebate Credit.

Fact: This is true for many but not all. For example, taxpayers who had a child born in 2008 or who ceased being a dependent may qualify for the credit.  Seniors or retirees who did not file for the stimulus payment last year may also qualify for the credit.

7. Myth: The Recovery Rebate Credit will be sent as a separate check.

Fact: The credit will be added to your 2008 tax refund. It will not be a separate payment