Another Stimulus Credit question

[jrollo]

Have a client that has additional Stimulus Money coming, however I made a mistake and placed a zero on line 70. Can this return be amended so that she will RRC credit?

Thank you,

Jeff

[neilbrink]

Have a client that has additional Stimulus Money coming, however I made a mistake and placed a zero on line 70. Can this return be amended so that she will RRC credit?

Thank you,

Jeff

The IRS is catching those returns of those who have Stimulus Money coming and are including that automatically in their refund. You may want to wait until your client has received his/her refund before you take any action. If your client did not automatically receive the stimulus, then yes, amend.

[jrollo]

Amboy

Thank you for the imformation will wait to amend.

Thank you,

Jeff

[Jack from Ohio]

At my daytime job here at the firm, we are seeing the IRS changing the amounts and sending a letter explaining.

[Joel]

I just ran into an odd situation. I have a client MFJ who in 2007 did not have any taxable income but did have SS benefits so they received a stimulus check in July of 600 dollars. I checked the IRS website and yes they did get the check and they say they received it.

Now to 2008 tax return. Taxable income results in 548 dollars total tax. Nothing was withheld and no estimated payments. Working thru the recovery rebate credit worksheet they are entitled to a rebate of 600 dollars which they have received and nothing goes to line 70 on the 1040.

Therefor they owe 548 dollars which is a repayment of most of the 600 dollars they received in July. Something seems wrong.

Has anyone else come across this?

[samingeorgia]

I'm not seeing how the $ 548 tax for 2008 income is a repayment of the stimulus money. Isn't the $ 548 tax on various income that they didn't have in 2007 but did have in 2008?

So for 2008: $ 548 income tax - $ 600 stimulus + $ 600 stimulus already received = $ 548 due.

Am I missing something?

[RitaB]

I just ran into an odd situation. I have a client MFJ who in 2007 did not have any taxable income but did have SS benefits so they received a stimulus check in July of 600 dollars. I checked the IRS website and yes they did get the check and they say they received it.

Now to 2008 tax return. Taxable income results in 548 dollars total tax. Nothing was withheld and no estimated payments. Working thru the recovery rebate credit worksheet they are entitled to a rebate of 600 dollars which they have received and nothing goes to line 70 on the 1040.

Therefor they owe 548 dollars which is a repayment of most of the 600 dollars they received in July. Something seems wrong.

Has anyone else come across this?

Joel, it sounds like they just owe $548 tax for 2008, and it is not related to the SP or RRC at all.

If you click the box for the line 70 worksheet to calculate RRC, do they qualify for $548 RRC (without regard to the Stimulus Payment)? Then you enter the $600 SP and you're back to $548? If so, don't sweat it. They just have more income in 2008. At least that's how I understand it.

I believe a couple with only SS benefits vs. another couple with a tax liablity of $600, could both get $600 SP last year, unless I have lost my mind, which is entirely possible. Don't know if thinking about it that way helps or not.

[Joel]

Just a further update.

According to the instructions for line 70

However, you do not qualify for this credit if all of the following apply.

• You received an economic stimulus payment of $300 ($600 if married filing jointly for 2007) before any offset (see Refund Offset on page 63),

• Your 2008 tax on Form 1040, line 46, is $300 or less ($600 or less if married filing jointly for 2008),

• Your 2008 filing status is the same as your 2007 filing status,

• You do not have any qualifying children.

[Joel]

samingeorgia

Since the payments made last summer were an advance of a refund on the 2008 taxes, I would not have expected the taxpayer to have to repay the advance refund.

I would have expected the worksheet to allow for the 600 dollars in the calculation of this years taxes.

[kcjenkins]

But Joel, that would mean that they were getting not a $600 stimulus, but a $1200 dollar one. They were only entitled to one, and they got it already.

[Joel]

KC

That is true, but if their tax liability this year was over 1200 dollars then they would get 600 dollars stimulus (to total the 1200 allowed a couple) and owe the remainder.

Those of us who got 1200 last year kept the 1200. This couple got to keep 52 dollars of stimulus!!!!! They should have received a total stimulus of 548!!!

This is just logic NOT IRS thinking, as I know working thru the worksheet the 52 dollars is correct.

[Joel]

KC,

Even a further thought had they not received the advance stimulus of 600 dollars last year, they would now receive a refund of 52 dollars and the tax liability of 548 dollars would be paid.

[RitaB]

Joel, I woke up thinking about this (cause I have no life), and I don't understand why your clients' potential RRC (before you enter SP on line 28 of the WS) is not $600. Did you enter SS benefits (and I assume they are not less than 2007)?

Then, clients have other income, so that line 56 on 2008 Form 1040 is $548?

They don't get more than $600 (either year) unless line 56 of Form 1040 is greater than $600. They don't get $600 for the SS benefits, plus any tax liability. It's $600 plus the liability over $600.

(But no more than $1200 of course.)

OK, I have to eat breakfast before I have LBSCBD (low blood sugar cranky butt disorder). Did I mention I have no life?

[RitaB]

KC,

Even a further thought had they not received the advance stimulus of 600 dollars last year, they would now receive a refund of 52 dollars and the tax liability of 548 dollars would be paid.

Correct. That's $52 plus $548 = $600 benefit to the client. Having a tax bill paid is equivalent to receiving the money.

Gotta go, that chicken biscuit is calling my name.

[Joel]

RCooper,

But they did get the 600 dollars last summer so now they have to pay back 548 of it!!!!

[Bart]

RCooper,

But they did get the 600 dollars last summer so now they have to pay back 548 of it!!!!

The 548 has nothing to do with the 600.

[kcjenkins]

No, Joel, you are looking at this all wrong. They got their $600, and they did not make enough to qualify for the $1200, either year. So they are not losing something they are entitled to. They are just paying their taxes. You said "but if their tax liability this year was over 1200 dollars then they would get 600 dollars stimulus (to total the 1200 allowed a couple) and owe the remainder." How would it be better that they still had to pay more than they have to pay now?

And you said "had they not received the advance stimulus of 600 dollars last year, they would now receive a refund of 52 dollars and the tax liability of 548 dollars would be paid", and that is true. And it is just what in effect did happen. They got the money, and now they can use it to pay this year's taxes, and keep the difference. So it's not like they did not get a benefit, they in effect got this year free, plus $52.

[RitaB]

RCooper,

But they did get the 600 dollars last summer so now they have to pay back 548 of it!!!!

Nobody pays back amounts received based on 2007 return.

I'm sorry, either I am REALLY misunderstanding this scenario, or you are.

Is 2008 Form 1040 line 56 = $548? If so, the people qualify for $600 RRC less $600 SP, so the 1040 line 70 is zero.

If 2008 Form 1040 line 56 = $650, they qualify for $650 RRC less $600 SP = another $50. Shows up on line 70, and they get a $50 credit on the 2008 return.

Edit: Ok, my phone rang in the middle of this, and KC already explained it.