2008 Stimulus Checks & Tax Returns

kevhed72

I just spent all day doing my Federal taxes w/ the largest tax software program. Does anyone know...were those Stimulus checks mailed out in May an "advance" on this year's return? The software program prompts me to enter the amount I received (which the program describes as "free-money"), but when I enter the amount, it reduces my Federal return by exactley that amount. I know everything else is correct based on last year's amount of the return becasue there were no major changes in my filing status. I tried Turbotax and the IRS website, but both were basically useless.
Any ideas...I want to get this done... please advise

jdwmap

The stimulus is not "income" but a rebate. When I used Turbotax, it had me verify how much on the IRS website, but it did not change my amounts in any way. It shouldn't change the amount of your Taxable Income or amount of rebate/tax you get/owe.

kevhed72

Thats what I thought was supposed to happen, but when I enter 2100.00 on that particular screen, hit next, it reduces the Federal refund amount by exactley 2100.

It appears there are alot of other folks on the turbotax chat that are having the same problem...possible software clitch, or will the 2100 get added back after you actually submit the return & pay for turbotax. I have a headache...

jdwmap

I think what you may be seeing is the effect of the "second chance" at getting a stimulus check. If you didn't get one last year, they add it to your refund/reduce the amount you owe. It is called a recovery rebate. Check that and maybe compare the amount of tax from last year to this year, it shouldn't be significantly different unless you had big changes in deductions or income.

http://www.irs.gov/newsroom/article/0,,id=186065,00.html

Or, there could indeed be something wrong with the version of the software you are using . . .

treitz3

Crap like this is why I hire an accountant. They know the law and they do the work. Me? I just get the refund and pay the bill which is insignificant to the amount I get back.

I'm sorry that this post wasn't helpful but it is your situation that got me to go to one in the first place. When you have found the right one?

You have found heaven.

LessisNevermore

treitz3 wrote: »

Crap like this is why I hire an accountant. They know the law and they do the work. Me? I just get the refund and pay the bill which is insignificant to the amount I get back.

I'm sorry that this post wasn't helpful but it is your situation that got me to go to one in the first place. When you have found the right one?

You have found heaven.

Most definitely....+1
H&R Block doesn't count, they have no incentive to find you extra deductions, just move the herd on through. NEXT!

ND13

kevhed72 wrote: »

Thats what I thought was supposed to happen, but when I enter 2100.00 on that particular screen, hit next, it reduces the Federal refund amount by exactley 2100.

It appears there are alot of other folks on the turbotax chat that are having the same problem...possible software clitch, or will the 2100 get added back after you actually submit the return & pay for turbotax. I have a headache...

How did you get more than $1200? $1200 was supposed to be max per household, iirc.

It was considered income on my taxes.

tcrossma

ND13 wrote: »

How did you get more than $1200? $1200 was supposed to be max per household, iirc.

It was considered income on my taxes.

$600 per adult, plus $300 per child. We got $1800 for our 4 person family.

polkatese

ND13 wrote: »

How did you get more than $1200? $1200 was supposed to be max per household, iirc.

It was considered income on my taxes.

Noel, I am pretty sure those 2008 tax rebate shouldn't be classfied as income

WilliamM2

It isn't income, and it seems only those who use tax software even mention it. I did my taxes already the old fashioned way, and there was no where to enter it on form 1040A.

tcrossma

WilliamM2 wrote: »

It isn't income, and it seems only those who use tax software even mention it. I did my taxes already the old fashioned way, and there was no where to enter it on form 1040A.

The reason that the tax software mentions it is because there are situations that if a family status changed after the checks were issued the family might be entitled to additional money. So TurboTax, for example, asks for the amount of the check received and apparently does a computation as to what *should* have been received, and 99% of the time does nothing further. I'm assuming that if the situation required it, there would be a need to file an additional form or something. At least that's how I interpreted the whole thing.

polktiger

If you qualified for a check last summer, you got free money.

1) Those checks were accelerated payments of a credit that shows up on your 2008 tax return. IT IS NOT INCOME. So, if you got the check, you don't get the credit on your return. If you claim the credit and you got the check, the IRS will bounce your return. So many people have reported it wrong that the IRS has a backlog processing these incorrect returns. I know your refund or tax due looks better reporting $0 for that check, but you already got the money you don't get to double dip.

2) Why its free money. You only get the credit if your income is low enough, and it is a credit on your 2008 return that was paid to you early based on your 2007 TR. If your 2007 income was too high to qualify for the check, and your income is lower in 2008, you get the credit on your 2008 TR (remember its a 2008 income tax credit). If your income was low enough on your 2007 TR to get the check and it is too high when computed on the 2008 TR, you do not have to pay it back (remember, the check was an advance payment of a 2008 tax credit). If of course you did not get a check and your income is too high on the 2008 TR to qualify for the credit, smile you are considered rich and a part of the elite 5% club that pays 80+% of all income taxes in the country. As part of the "elite rich," you will be getting an invoice for your share of the $800 billion pork bill shortly, but hey, you are rich, you can afford it!

Gaara

OP, I would contact TurboTax. You are paying for them, why not get your moneys worth? One thing to check, are you sure on the stimulus payment amount? You can check it here on the IRS site.

As for the Income debate, it is NOT income.

WilliamM2 wrote: »

It isn't income, and it seems only those who use tax software even mention it. I did my taxes already the old fashioned way, and there was no where to enter it on form 1040A.

Just a FYI, Line 42 in the credits section. I did my 1040A to last week, and got an additional $300 as my income now is over the threshold for the $600.

kevhed72

Folks, what eveyone has said makes sense, except I do not agree middle class citizens should have to hire a professional (although this year it would have been a good idea) to do their taxes, but that is whats wrong with our tax code and a whole other subject.
We made less than 100K last year; the only major changes from 07 to 08 are the following:
1. One of use made slightly more in 08 than 07, but still under 100K.

Everything else was status quo...no more kids, nobody died, no sale or dividend income, distributuions, etc. All the amounts for my refund from 07 to 08 make sense, except the 2100 is "taken" from the 08 refund when I enter the amount in the Turbotax screen which states you need to let the IRS know, but that it is also considered "free money". IMO at this point, Turbotax has blown-it with their 2008 returns because of this stimulus situation. I cannot find anywhere where it states the stimulus was considered an "advance" on our 2008 returns.
Has anyone else out there had this Turbotax situation?

Gaara

Follow up:

From this IRS Q&A

"Q. Is my stimulus payment taxable?

A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment."

I agree, middle class citizens shouldn't have to hire a professional, but I don't think they should have to use programs like turbotax either when there are free alternatives out there, like TaxAct or doing it yourself like myself + William.

MikeC78

I don't even want to think about taxes, this year is making me sick. I think I owe about 30K this year.:(

polktiger

kevhed72 wrote: »

All the amounts for my refund from 07 to 08 make sense, except the 2100 is "taken" from the 08 refund when I enter the amount in the Turbotax screen which states you need to let the IRS know, but that it is also considered "free money". IMO at this point, Turbotax has blown-it with their 2008 returns because of this stimulus situation. I cannot find anywhere where it states the stimulus was considered an "advance" on our 2008 returns.
Has anyone else out there had this Turbotax situation?

Couple of things, while I think Turbo Tax is poor software, it gets the job done for most people. I am a CPA (working on some returns as we speak), and the software I use blows away Turbo tax, but it costs a small fortune each year, and unless you are preparing a really complicated return, you don't need its capabilities. Turbo Tax did not drop the ball with this credit fiasco, Congress did, and guess what you get to do it again next year with the $13 a week mickey mouse stimulus that was just passed.

Your refund is smaller since you got the $2100 check. If you had not gotten the check you would be getting the credit on your 2008 return. If 2008's TR is basically the same as 2007's TR, the amount on page 2 line 70 should be $0. If you did not get a check, or if you had a substantial change to your tax situation your credit will show up there.

kevhed72 wrote: »

I cannot find anywhere where it states the stimulus was considered an "advance" on our 2008 returns.
Has anyone else out there had this Turbotax situation?

Clicking the link at the top of the IRS's webpage would take you here http://www.irs.gov/newsroom/article/0,,id=203191,00.html?portlet=7

kevhed72

Thanks Polktiger...so the government's idea of "stimulus" last year was to give us back our money earlier (May of 08 versus Feb/Mar 09), but in the end, for me at least, there was no net 'gain' after all is said and done. I can only believe there are alot of others out there in the same situation
While I believe you, I am still on death-hold with the 'help line" because IMO the software company (and of course the IRS) did a terrible job of explaining this.

Gaara

kevhed72 wrote: »

Thanks Polktiger...so the government's idea of "stimulus" last year was to give us back our money earlier (May of 08 versus Feb/Mar 09), but in the end, for me at least, there was no net 'gain' after all is said and done. I can only believe there are alot of others out there in the same situation
While I believe you, I am still on death-hold with the 'help line" because IMO the software company (and of course the IRS) did a terrible job of explaining this.

Again direct from the source, the IRS: "It's not taxable, and it won't reduce your 2007 or 2008 refund or increase the amount you owe when you file your 2008 return. "

The 2007 rebate should have 0 effect on your 2008 refund according to the IRS, so yes you had a tax free gain of 2100.

What I think is happening is TurboTax is assuming you DIDN'T take the rebate in 2007 and giving it to you, then when they realize you did they take it back making it look like the 2100 is decreasing your 2008 refund. All that is hypothetically happening is TurboTax is double dipping then taking it back.

Again, your 2007 rebate should have 0 effect on your 2008 refund.

kevhed72

I went to the link above, at the IRS website, here's what I found:
"However, most taxpayers who received the economic stimulus payment last year will not qualify for the recovery rebate credit on their 2008 federal income tax return."
and if you scroll down further:
"For most taxpayers, the correct entry for the recovery rebate credit will either be blank or zero."

What is scary is that I think most people were assuming those Stimulus payments back in May were "free money" and would not reduce their refund amount for 2008 (or maybe its just me?). Surprise. Now the economic situation is that much worse since May 08; I can only believe alot of folks were counting on their "full" expected refund amount. While I expect the economy will definitely turn around at some point, this situation will not improve confidence in the near-term. I'll get off my soapbox now...

ntculenuff

hired an accountant 8 years ago use him every year since. i did the turbo tax thing a few times and it just didn't seem that i was getting what i should back. the year i hired an accountant i did the turbo tax just to see the difference and he just about doubled my return.
they know the laws and everything you can and can't write off...

kevhed72

Gaara, I sent my last post before reading this one. From what your saying, the software is incorrectly asking me to enter that stimulus amount, because that entry is what reducing my 2008 refund by exactly 2100.00. It is one of the first screens in Turbotax, right after you enter all your personal information.

Gaara

What I am saying is the 2007 stimulus and the 2008 recovery rebate credit should do nothing but help you.

One thing you can try, does your software spit out a completed 1040 at the end? Compare a 1040 the way you have it now and try doing the same information but don't put in the 2100 stimulus amount.

I think what you will see is that in your current return line 70 for the Recovery Rebate Credit will be blank, and if you don't put in that you got the stimulus it will have the 2100, bumping up your return. If this is the case then my hunch is right, and TurboTax assumes you didn't get the stimulus in 2007, and when they realize you do they take it back, looking like the stimulus in 07 is lowering your 08 refund.

kevhed72

I just got off the phone with a Turbotax Customer Service person. She was able to view the online version I was using, so I showed her firsthand how clicking YES (Did you receive a Stimulus payment?) and entering the amount of 2100.00 reduced my amount of Federal return by 2100.
She also stated the program assumes you did NOT receive the Stimulus, so when you enter the amount you received, it deducts that amount. She also confirmed that the Stimulus checks people received could be considered an "advance" on their 2008 return.

Gaara

So the program assumes you did NOT receive the stimulus, and when you let them know you did receive it your refund is reduced to prevent double dipping of both the 2007 stimulus and 2008 credit.

Weird way of doing things, but at least we figured out that it wasn't reducing your refund persay, they were just adding 2100 that they shouldn't have and then removing it later.

Very frustrating, but I am glad you got things sorted out.

ND13

The gubment owes me $600 more dollars then. We have 2 kids. I'll check with turbotax to see if their software has a glitch. I'm pretty sure i saw the AGI go up and refund total go down after I entered it.