What is the Recovery Rebate Credit?

The Recovery Rebate Credit has been designed for taxpayers that did not receive the full amount of the Economic Stimulus payment in 2008. It is a one time special benefit to help taxpayers that have had a change in their financial circumstances since the Economic Stimulus payments were issued.

The Stimulus rebates were based on 2007 federal tax returns. The Recovery Rebate Credit is based on information from a taxpayers 2008 federal tax return. The original Stimulus payments were a maximum of $600 for single filers and $1,200 for those married and filing jointly.

Personal changes that may have occurred:

Some taxpayers did not receive the full amount of the original credit because their income was either too high or too low for them to qualify. A change in this income level may qualify them for the Credit in 2009.

For those receiving Social Security or Veteran's benefit's a provision has been made. If the taxpayer did not receive benefit payments of $3,000 in 2007 but did receive this amount or more in 2008 they may qualify to receive additional credit.

The birth or adoption of a child in 2008 can provide an additional $300 to taxpayers that qualify. Individuals that were claimed as a dependent on another taxpayers return in 2007 but were not considered a dependent in 2008 may be eligible for the Recovery Rebate Credit.

In addition, anyone that did not have a valid social security number in 2007 but obtained one in 2008 may be eligible.

How do I know if I qualify or claim the rebate?

The IRS can do this for you but there are tools available for you to work with yourself. The taxpayer will need to know the amount of the stimulus payment that they received in 2008. The IRS has web page dedicated to obtaining this information and helps you to figure your credit. Please see the information link at the end of this article. This information is also available in Spanish.

If you use commercial tax software it should automatically calculate the credit for you. It is beneficial for you to know in advance if you qualify and how much you qualify for to be sure you receive the maximum amount available to you. If you do qualify for this Rebate Credit it should appear on your tax refund check and not as a separate check from the IRS.

References:

http://www.ktka.com/news/2009/feb/27/what_recovery_rebate_credit/

http://www.irs.gov/newsroom/article/0,,id=202117,00.html

Link to IRS information and calculators:

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