IRS has introduced this new credit, which is available for 2008 returns. You can claim maximum credit of $600 ($1200 for people filing jointly) for this year. If you have already received the economic stimulus payment for the last year in full, you are not entitled to claim this credit for the current year. If there is a change in the circumstances like a new child in your family, you could get some more money on your current year return.
So if you have received less than $600 ($1200 for filing jointly) for the last year, you can claim the balance this year. If there is a new child in the family, you can claim an additional $300 for the current year.
Please ignore the use of the word "credit". It has nothing to do with the usual meaning of credit. The word credit is used for making adjustment for people who can make adjustment of the balance from the previous year. You need not give anything back to IRS if you claim this rebate.
You can claim recovery rebate credit on all of the 1040 forms. What you should know while claiming this credit is the amount you received last year so that you can decide your eligibility this year. If you have missed out last year because your income was very high or very low, you can claim your credit this year.
How to find out the money you received last year:
IRS must have sent you a notice 1378. This notice was sent to all individuals who have received the economic stimulus payment last year. If the notice is not readily available, then visit IRS.gov and click on how much was my stimulus payment? You can get within seconds the exact amount. Otherwise you can call straight away IRS on 1-866 -234-2942. You can select appropriate option to find out the amount specific to you. You need to keep your social security number and the filing status ready with you. Once you have the figure of the last year, then you can calculate the balance and enter that amount on recovery rebate credit worksheet. If you are using some tax preparation software, that software itself will provide you appropriate location to enter this figure. In most other cases the amount will be calculated appropriately and will be reported accordingly.
If you are not sure about the figure of the last year, you can enter a 0 at the appropriate line and the IRS will calculate the recovery rebate credit for you.
Things which may qualify you for the eligibility of this credit
A drastic change in your financial situation from 2007 to 2008 You could not file a tax return for the year 2007 There was an addition in your family of renewal child in 2008 Please note that IRS will not issue a separate check for the recovery rebate credit. The amount will be included in your normal refund. You can also make a direct deposit request to IRS for your refund and your money will be transferred directly.Every year a new set of tax rules and changes are introduced by IRS. Sometimes there are tons of changes. You need to keep track of important changes which affect your tax liability and refunds.
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