As featured in The Wall Street Journal, Money Magazine, and more!
     

Filing Your 2008 Taxes With the Economic Stimulus (Recovery Rebate Credit)

This article was written by in Taxes. 171 comments.


If you didn’t received a payment from the economic stimulus that was devised by the United States government last year and your situation now qualifies you for the credit, you should claim this amount when filing your 2008 taxes.

On the 2008 tax filing forms, there is a line designated to enter this amount, listed as the recovery rebate credit. On the traditional 1040 form, it is line 70. On the 1040A, enter your economic stimulus amount on line 42. The 1040EZ requires the rebate credit on line 9. Here is what the line looks like on the 1040; click on the thumbnail for a larger snapshot.

Recovery Rebate Credit

The instructions for all three forms include a worksheet to help you calculate how much of a credit you should receive towards your 2008 tax due. By following the instructions on the worksheet, you can calculate the credit you should receive based on your 2008 tax situation, list the credit you received last year if any, and subtract the latter from the former to get the amount of the remaining credit owed to you.

If the result is a positive number, you can claim an additional credit. If the result is a negative number, you don’t have to pay back what you received in 2008. You get to keep the excess credit you received. In most cases, if you received a payment in 2008 for the economic stimulus, you will enter zero on this line.

To simplify everything, just enter “RRC” on this line on the tax form. This will instruct the IRS to calculate the recovery rebate for you. Also, if you file electronically, your software will ask you the appropriate questions to calculate the recovery rebate.

Just so it’s clear, the 2008 economic stimulus is a new credit that’s appearing on the 2008 income tax forms that are due in April 2009. Either you received your credit as an advance in 2008 (the “economic stimulus payment”) or you claim it when filing your taxes (the “recovery rebate credit”); thus, the net effect is the same.

Updated September 13, 2011 and originally published January 2, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,435
Rank: Platinum
About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 171 comments… read them below or add one }

avatar Chas

I do not understand mi2jax and everyone else who omplains that the stimulus payment that they recived in 2008 is a loan. You were GIVEN the money, tax free. If you fill out the tax software/worksheet correctly, your Recovery Rebate Credit on your 2008 form will be $ 0.00. Where on the 2008 return are you paying the $600.00 back?

I do not blame mi2jax or anyone else. The IRS went above and beyond in taking a very simple concept and confusing the bejeebers out of it – as usual.

Reply to this comment

avatar mi2jax

Chas…..Okay let me understand what your saying ….Before I put the $600 on the line that asked,did you rec’ a stimulus ck and for how much….I was getting close to $1200 back………IRS rejected my e-file because I didn’t put it in the space provided….I filled it in ($600) and hit caculate and now I am rec’ing $297…..like I said it’s all verbage = garbage…….

Reply to this comment

avatar Dan

I started filling out my taxes with Turbo Tax and it asks about the Stimulus Payment. I filed married, jointly, so we recieved $1800. Without out putting that amount in I get a refund of $700. If I put in the stimulus, I have to PAY $1100. I don’t understand how that makes sense unless I have to pay back the full $1800.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

Dan: As has been explained many times above, you’re not paying back the $1,800. When you start your tax return on Turbo Tax, they assume you did *not* receive a stimulus payment, so they’ve built it into your refund. Once you correctly enter that you’ve received $1,800, you no longer qualify for the recovery rebate credit. The $1,800 is still money you wouldn’t have received without the existence of the stimulus payment (aka recovery rebate credit).

Reply to this comment

avatar Dan

I did not finish going thru every step of my taxes in Turbo Tax so maybe it will fix itself later on in the process. I have very simple taxes, so I have already put in my income and deductions. Even after I answer the question at the beginning, it stll says I owe $1100. So I don’t understand where you think the stimulus will be offset. According to Turbo Tax I owe the gov for the first time in 20 years because of the $1800. Will it somehow change back to a refund of $700?

Reply to this comment

avatar Richard Longwell

In 2008 when I did my 2007 taxes my son was in college, and my wife and me claimed him on our taxes as a dependent since we helped provide him more than half his support and paid a substantial amount towards college tuition DURING 2007 WHICH IS WHAT WAS THE REQUIRED YEAR FOR INFO REQUIRED BY THE IRS. My wife and me therefore received a check for $1200 under the stimulus in May, 2008.

However, in 2008 my son supported himself in grad school, paid for his own room and board elsewhere, therefore this month when we did our 2008 tax return we did NOT claim him as a dependent. He himself never received $300 for himself under the stimulus last year. Isn’t he eligible to claim an additional $300 when he now does his 2008 tax return?

Reply to this comment

avatar alegoricha

I already filed my 2008 tax form (1040EZ) . I didnt know the economic stimulus was the same as Recovery Rebate Credit. I still followed the guidelines and it ended up as zero dollars. I do not have dependents, I didnt recieve the stimilus last year, my earn income credit was about 7,000 in 2008. Why didnt I get anything?

Reply to this comment

avatar dwc

The computer generated tax return is giving you the false impression that the stimulus was a prepayment of your 2008 tax return. Take out pencil and follow the instructions in the book and you will find out that the stimulus did not effect your tax return for 2008.

Reply to this comment

avatar Melissa

I get how Flexo explained it (over and over), and it makes sense. I had the same problem as everyone else here–if I put in “$0″ in TurboTax, it shows a refund of a mere $200. If I put in the $1200 we received, we suddenly owe $1000. Totally sucks, but the way Flexo’s explaining it, I get it.

Here is my confusion:
From the MSNBC article that was posted earlier (I had also read it before then), it clearly states:
“We are seeing this and similar problems with many returns,” said Eric Erickson, a spokesman for the IRS. If a software package is telling you that you owe more tax or is shrinking your refund because of the stimulus payment, “what we are telling people to do is just leave the line blank or enter a zero.”

Sounds clear enough to me. So I entered “0″ in TurboTax and the IRS rejected it, basically saying I’m trying to claim the credit twice. I’m absolutely not. But if I put it in, I owe money. If I leave it out, I don’t. And Eric Erickson clearly states that if putting that stimulus check in there changes the amount it says you’re getting or owe, LEAVE IT OUT. But TurboTax won’t let you.

Guess that means I wasted $30 e-filing for nothing and I’ll just have to do it all by hand and use the “RRC” method that was mentioned at the beginning. Lame.

Reply to this comment

avatar Dale Jr.

Just to make sure the information was right that is being said about an advance on the refund I took my 2008 income from this years ta return and input it into the 2007 forms to see what the difference on my refund would be making the same amount this year as last year. This year (2008 earnings) my refund is $5,867 whereas last year earning the same amount would have netted me a refund of $4,975. So this year I am actually getting a refund of $892 more. Now my economic stimulus payment was $1,133. So if you add the additional refund together with the economic stimulus payment I am getting almost $2,000 extra back this year. So this tells me the tax rates must have been lowered and tax credits raised to make it where I pay less taxes even though the economic stimulus lowers your end of the year refund, you are still getting more money. You can get prior year forms and instructions from the IRS website if anyone else wants to try this. It is less than half an hour. I was just wondering what other people came up with. Are you getting more or less back than last year?

Reply to this comment

avatar baby mama

I appreciate all of your explanations Flexo and I do undertand them. However, the bottom line is that now I owe the government $1000.00 and if they had kept their stimulus payment I would be getting a $200.00 refund. Of course we spent that money when we received it and now we don’t have the $1000.00 to pay back the government. I wish they would have kept the money. We were fine before we got it and now that we enjoyed the stimulus we have to figure out a way to pay it back. It was definitely not clear that the $1200.00 was an advance on the 2008 tax refund.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

Baby mama: I don’t think you’re quite understanding the explanations. If there had been no stimulus last year (and no recovery credit this year), and assuming your taxes were completed and calculated correctly, you would still owe $1,000. The stimulus payment, while it was an advance of the recovery rebate credit, was money from the government that is not being repaid.

Reply to this comment

avatar Dale Jr.

Plug your figures into last years return to find out if you are getting more or less money that will give you the answer. Use your 2008 W2s and tax info on the 2007 forms at IRS.gov

Reply to this comment

avatar Danielle

Everything I ever read about the 2008 stimulus checks after it was passed last year made it very clear that the stimulus check was not extra money from the government, but an ADVANCE on your 2008 tax return to encourage spending in 2008.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

Danielle: Close, but not correct. As I’ve written above, the stimulus check is an advance on a *new tax credit* (the “recovery rebate credit”). So it is “extra money” because this tax credit didn’t exist until the economic stimulus was created in 2008.

Reply to this comment

avatar Danielle

Richard: yes. that 300 credit will be applied to him. I was in the same situation as your son last year- my parents claimed me in 2007 but not 2008, so i didn’t get a stimulus check, but i did get the credit when I filed my tax return for 2008. as long as he doesn’t mark himself as a dependent on his taxes, he should get the credit.

Reply to this comment

avatar baby mama

Ok Flexo, perhaps I do not understand. If I am not repaying the stimulus check we were given and there is a recovery rebate credit for 2008 why do I owe $1000.00 when I add my $1200.00 stimulus check to turbotax and without it I am getting a $200.00 refund? If you received the stimulus check do you not qualify for the recovery rebate credit? Or, is the credit based on your stimulus payment paired with your income?
I have also read some comments that TurboTax has an error in the program. According to your explanations I would say it does not. Do you know if there is an error in the program?
I have also read if you received an overpayment of the stimulus you do not have to pay it back. The turbotax calculations sure make it appear as though I am paying it back.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

The key is in the answer to one of your questions: If you received an economic stimulus, unless you situation has changed, you do not qualify for the recovery rebate credit. That’s because the economic stimulus payment in 2008 was simply an advance on the recovery rebate credit. The confusion arises when TurboTax assumes you did not receive the economic stimulus payment until you enter your information for the recovery rebate credit. Once you do that, your “running total” decreases by the amount you enter on that line. But that’s correct.

If you’re concerned that TurboTax has an error in the program (it doesn’t, but as I pointed out elsewhere, there are some tax law changes due to the new American Recovery and Reinvestment Act that have not been activated in the software yet), you can do your taxes by hand and compare.

Reply to this comment

avatar baby mama

Thanks for the quick response Flexo. I will do them by hand just to ensure that Turbotax is not missing something with the changes that are not in effect in their system yet.
I wish I could say I wasn’t disappointed because I still am. We are having a baby in April and the possibility of owing $1000.000 is a difficult thing for us at this time. We will be looking forward to our extra tax deduction for 2009!

Reply to this comment

avatar Brian

The stimulus was offered last year as an advance to this recovery rebate, like Flexo said. IF you did not claim the stimulus last year, you are entitled to it this year as a recovery rebate credit. On your taxes, it is defaulted to say that you received NO stimulus last year and therefore you now qualify for it. Thats why it shows more of a return. It is acting like you are claiming a stimulus that was already given to you last year. You arent losing anything because of this, you simply didnt pay enough in throughout the year.

Reply to this comment

avatar rluchente4

I haven’t seen my situation posted anywhere. I’m a single father with 4 kids. I claim 2 of my children as dependents on my return and my ex-wife claims the other 2 on hers. Its been that way for the last 5 years except for this year. I’m claiming all 4 kids this year on my return. I received $1200 for my economic stimulus payment last year (600 for myself and 600 for 2 of my kids based on how I filed for 2007) . When I enter $1200 as my stimulus payment on the RRC worksheet, it says I’m eligible for $600 RRC for my 2 additional kids I’m now claiming for this year. Is this right? Would that be considered double-dipping?

Reply to this comment

avatar edwardsdalejr

The economic stimulus payment was based upon $300 per person or $600 for the working individual and then $300 for each other dependent. This would mean you would be able to get $600 for you and $300 for each of the children for a total of $1800. Since you only received $1200 you are entitled to the additional $600. This does not work like the Earned Income Credit that cuts you off after two children.

Reply to this comment

avatar rluchente4

Thanks for your reply edwardsdalejr. I understand but I’m confused because my ex-wife already received $600 in her stimulus check for our 2 youngest children she normally claims and which I’m now claiming this year. In other words, I received $600 for our 2 oldest children last year. She received $600 for our 2 youngest children. I’m now eligible to receive another $600 for our 2 youngest children even though my ex-wife already received that in her stimulus check last year. In total, we will have received $1800 in stimulus payment and recovery rebate credit for our 4 children. Originally I thought my ex-wife would have to pay back that $600 stimulus back if I claimed a recovery rebate credit of $600, but from what I’ve read, you don’t have to pay back any excess credit.

I would imagine this situation would come up with divorced parents who alternate tax years when claiming their children. For example, if the father of 1 child claimed that child in 2007, he would have received $300 in his stimulus check for his child. Since they alternate tax years for claiming their child, the mother would claim their child for 2008 which would make her eligible for a $300 recovery rebate credit this year. In total, they would each receive $300 for the same child. If that is kosher with the IRS, then I’m all for it.

Reply to this comment

avatar stepmom

I have the same issue–alternating tax years between our son. We received the stimulus check last year ($300). Does that mean his mother can also receive the RRC ($300)??

Reply to this comment

avatar rluchente4

I believe that is the case. You received the $300 stimulus check last year since you and your husband claimed him for 2007. His mother will claim him for 2008 so when she inputs her stimulus payment in the RRC section when doing her taxes (assuming $600 if she files single), it should calculate a $300 RRC. I guess the only way to know for sure is to ask a professional tax preparer.

avatar jay

Hello all/flexo,

I am already late in my filing just because of stumilus confusion, would appreciate if some one can help quickly

last year due to some error, I didn’t got IRS $1800 stumilus check, and I they had instructed me to mention RRC in this years return.

When I use turbotax, if I enter zero (because I didn’t received the check) I arrive at $500 as my rebates? so is that already taking care of $1800 stumilus or IRS would add $1800 to $500 as a total rebate automatically? or should I enter -$1800 or simply do it manually

Thanks for advice and help

cheers,
jay

Reply to this comment

avatar Richard St. Lezin

As i read the Recovery Rebate Credit Worksheet for Line 70 (page 62) question no. 4 disqualifies all persons from taking the credit, no matter anything else, if either the taxpayer or his/her spouse was not a member of the U.S, Armed Forces at some time during 2008.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

As nico pointed out earlier: “If you answered yes to question #2 about having a valid social security number, you skip lines 3 and 4. Otherwise, the Armed Forces service comes into play.”

So most people, having a valid social security number, will never get to question 4 about the U.S. Armed Forces.

Reply to this comment

avatar Uh-oh

I have a great question that may prove that you should do your taxes on time. I filed my 2007 taxes late (January 2009). They owed me so there is no penalty; however, I did not receive a stimulus check. My income spiked in 2008 and it appears I do not qualify for the rebate credit. Is it possible my tardiness on 2007 will eliminate my chance for the stimulus?

Reply to this comment

avatar Brian Romberg

We did not receive any stimulus payments in 2008. Turbo Tax refused to accept our tax forms until we changed our filing to reflect that we received $1200.

In the program it takes you to the federal website, you enter your info and it tells you whether you get the rebate or not.

Now what do we do? Was our rebate check lost in the mail? How do we look into this further?

Reply to this comment

avatar Joan

Where in Turbo Tax is the section where you supply the Recovery Rebate Credit? This is the Turbo Tax Deluxe. My initial copy on my tax return gave me a $600 rebate credit, but after a review on a second return copy, it doesn’t prompt me for this information? This is confusing.

Reply to this comment

avatar Omar

Well I was in for a surprise when I thought I was getting a little something back ($80 something), but now the IRS has turned around and said that I owe $500. And, it turns out, it’s because of an incorrect amount on line 70 (regarding the recovery rebate credit). I think I entered all of the info correctly on Turbo Tax, but sure enough, when I changed that number on line 70 to $0, it adds up to what the IRS says I owe them.

Reply to this comment

avatar Heather

I have a question I filed my taxes and somehow because of the Bush stimulus I now owe 600.00 dollars it seems to me they sure are asking for their money back. I would have received 900.00 dollars back if it wasn’t for that stimulus. So, now what do I do? Any suggestion would be great.

Thank you!

Reply to this comment

avatar Denatae

Okay my question is that my friend had did my taxes and I didn’t want her to send it through cause I didnt think she knew what she was doing and they came back rejected cause she didn’t use my pin or AGI from 2008 and she put me as filing single instead of marriage and she did it through taxact. If i was to do them and resubmit my taxes filing jointly and made changes will the IRS audit me and what if I would go throught turbo instead of resubmitting through taxact will that change things or get me into any trouble

Reply to this comment

avatar Dale Edwards Jr.

You would need to file a 1040X to amend your return and reflet your changes on that

Reply to this comment

avatar Denatae

Okay thank you!!

Reply to this comment

avatar Laney

I am so confused about my fiances tax returns for this year. We went to a good tax service and they said he would only get 7 dollars back, and this is before he paid them. He got a 1200 tax deduction statement from our college, and yet he would only get 7 dollars back? I know he doesn’t own anything to the government because he doesn’t have a house or business. He works and goes to school full time, and makes less than 25,000 dollars a year. Please help, how could this have happened when he got over a thousand back last year?

Reply to this comment

avatar Dale F. Edwards, J.

Look at his return did he receive the making work pay credit? Does he have any children or does he make enough (maybe too much) to qualify for the Earned Income Credit? Is his withholding set to enough if you claim 0 on your W-4 you will have too much money withheld and receive a larger refund if he claimed more than 0 this would withhold less taxout of his pay and make him have a smaller refund. Try going online to the IRS website and find a company that will file your return for free (even if you have already filed) input all his information (W-2s, etc.) and see what the end result is – you do not file this it is just for demonstration purposes so you can see if anything was missed. Also as far as the $1200 school tax deduction – you have a choice to either itemize or take the standard deduction and unless you have a sizeable income and give usually over $5,000 year or have that amount in allowable expenses it makes no sense to spend time itemizing when the standard deduction is more. The accountant either missed something or he is having less withheld from his pay, that’s the usual two scenarios, if they missed something I would go back and ask for a refund or ask that they fix your return – you will have proof of this once you prepare your return online – but remember do not file this return due to the fact he already filed in order to correct you would need to file a 1040X.

Reply to this comment

avatar Kay

Originally filed 2008 with $600 tax recovery credit. Now, in 2011, the IRS is rejecting the credit and requiring repayment with interest and penalties. I checked the on-line IRS site prior to filing to ensure I had not been issued the credit already. Since the IRS lost my tax 2008 paperwork (but cashed my check for tax owed), was the credit linked to timely filing? Help, please.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: