Fast forward 3 months and I get a bill in the mail saying “The IRS calculated the amount of Recovery Rebate Credit incorrectly” and I now owe 603 dollars.

What exactly happened? I followed the IRS and Turbo Tax directions to the T and then get sent a bill for exactly the amount of my stimulus check?

There isn’t a minimum as I originally had a $28 RRC until I deducted some more business expenses, which shrunk it to $0.

Hrm – one of my comments on this site was deleted. I had a link to a calculator I wrote which made it much easier for me to understand how the RRC works.

You can search on google for the calculator (and I see that now there are lots of calculators available – so you can try the calculations on those too).

When I wrote mine (and posted it here) the IRS hadn’t published their calculator, so I was hoping to help all you folks out.

The way I see it is that I was given an advanced credit that I wasn’t eligible for and now I have to pay it back when money are gone…

Per IRS stimulus check shouldn’t affect my tax refund, but it does!!!

The long answer to all of the questions regarding the RRC is to fill out the RRC calculation on page 62 of the 1040 instructions. Or put “RRC” on line 70 of the 1040, and let the IRS figure it out for you.

catherine: yeah, the way I have figured it out says that some people got more than they “should” have in the original stimulus check, because the IRS doesn’t know how much tax you would pay this year, so sent the full amount. But, those people applying for the RRC are limited by the actual amount of taxes (and a couple of the credits), causing you to generously donate that money to the American people.

As a friend of mine said last night, “The American people thank you”.

However, whenever (as far as I know) I have made mistakes in calculating things, either in my favor or in the IRS’s favor, they have caught the mistakes, and corrected them.

If you misreport income or expenses/deductions, they have a harder time finding that out, so can’t catch all of those mistakes.

I expect that all of the recovery rebate stuff will be caught since so many people have been making mistakes. If I had used your tax preparer, I’d expect them to pay what you should have gotten from the IRS, since that is why you are paying them – to do your taxes correctly, so they shouldn’t make “mistakes” like the one they did. But, I’d expect you to receive the correct amount from the IRS in this case anyway.

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As a followup to my own question, I’ve asked around, and there isn’t any way to move deductions from one year to the other once they’ve occurred – if I had realized how the form worked prior to January, I could have easily moved some donations or expenses to the next year, and saved a couple hundred dollars… One accountant did tell me that there is some trick with sort of ending your year early, and moving all expenses after November, etc. particularly in the case if you have one big chunk expense, but that sounds kind of shady, and I don’t want to be involved in that.

As I understand it, almost everyone should receive nothing this year for back-payment of the economic stimulus credit. And whether you got it last year or will get it this year, it doesn’t affect your “regular” taxes.

In my case, we had a child in 2008, so I expected to receive an extra $300 for the RRC. But, as I was adding in business expenses/deduction, I noticed that my “regular” refund stopped going down. Looking into it further, I discovered that the RRC was going down each time I added a deduction.

The reason for this is that my taxes (line 56 of the 1040) is zero (but, never fear, the IRS is getting plenty of money out of me in the way of self-employment taxes). If you follow the instructions for calculating the RRC, you’ll notice it is limited by the child tax credit (line 52) (and note that the line 52 is limited by your overall tax, and further credits are taken on line 66)

So, I ended up with a RRC of $28, instead of $300…

Now, I’m just trying to find a (legal) way to move deductions from 2008 to 2009 in order to save the “missing” $272.

It’s pretty painful to watch deductions not have an impact on the taxes I pay.