What is the Recovery Rebate Credit

The IRS says: “The recovery rebate credit is a one-time benefit for people who didn’t receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.” (IRS @ http://www.irs.gov/newsroom/article/0,id=186065,00.html ) So what is that all about?

Well, understanding this animal requires a little historical review. If you can remember back to the summer of 2008, the federal government started sending out checks to taxpayers called economic stimulus payments. If for some reason you didn’t get the payment in 2008, you were eligible to get it as a refundable recovery rebate credit on your 2008 tax return filed in the spring of 2009. If you got the credit on your 2008 tax return, it would show up on line 70 of form 1040, line 42 on form 1040-A and line 9 on form 1040EZ.

Now, if a taxpayer was eligible but didn’t get the original economic stimulus payment in 2008, and still didn’t get it as a credit on their 2008 tax return filed in 2009, they may be entitled to claim the recovery rebate credit on the 2009 tax return. Also, if the taxpayers eligibility status has changed since 2008 and they are now eligible, they may now claim the credit on their 2009 return. For instance, your status has changed if:

•  Your filing status (single married) changed between 2007 and 2008. A table on the the IRS web page: http://www.irs.gov/newsroom/article/0,id=202404,00.html provides a table of possible filing status changes which could have effected economic stimulus payment eligibility.

•  You didn’t get the full economic stimulus payment, $600 if single, $1,200 if married filing a joint return, because your gross income was too low or too high.

•  You gained a dependent during 2008, could be a new born child, adopted child, or even a qualifying parent or grandparent.

•  You were claimed as dependent on someone else’s return in 2007,  but filed and claimed yourself in 2008, or did not file a return in 2008.  

•  You didn’t have a valid social security in 2007 but got one in 2008.

So, if you didn’t get the credit before, you may be able to claim it on your 2009 tax return. Or if you got the credit, but not the full amount and there has been some change in your tax status, you may be eligible to get an additional credit amount on your 2009 tax return. If you still aren’t sure, check with your tax prepare or visit the IRS web site listed above for additional information.