Four Tips to Help Taxpayers Avoid Errors On the Recovery Rebate Credit
IRS Special Edition Tax Tip 2009-2
Below are the four things every taxpayer should know about this one-time credit, which is related to last year’s Economic Stimulus Payment:
1. You do not have to pay back your Stimulus Payment and the payment is not taxable.
2. Only a small number of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the recovery rebate credit.
3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:
1. Your financial situation changed dramatically from 2007 to 2008.
2. You did not file a 2007 tax return.
3. Your family gained an additional qualifying child in 2008.
4. You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.
4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.