Do you recall the “economic stimulus” payment that you received last year after you filed your tax return? Many single taxpayers received $600, and married taxpayers received $1,200. If you had children, your payment was even greater. But some taxpayers received a reduced payment or no payment whatsoever. Why? Primarily because their income was too high (or too low), or they had been claimed as a dependent on another taxpayer’s return.

If you were denied some or all of a stimulus payment last year, you have a second chance when preparing your 2008 tax return by claiming the “recovery rebate credit.” And more importantly, even if you did receive your full stimulus payment last year, you might receive an additional rebate credit if your circumstances have changed. The most common situations that might make you eligible for the recovery rebate credit include:

—   Your 2008 income changed (either up or down).

—   You had or adopted a child in 2008.

—   You were claimed as a dependent by another taxpayer in 2007, but are filing on your own for 2008.

If your tax situation changed in 2008 and you are afraid that you might have to give back some of the stimulus payment, don’t worry. The recovery rebate credit is a one way street. You will not have to return any “excess” stimulus payment that you previously received. Nor is that stimulus payment subject to tax on your 2008 return. If you think that you may be eligible for the credit, you’ll want to review the recovery rebate worksheet included with your 1040EZ, 1040A, or 1040 tax package. If your return is prepared by a tax professional, they will check your eligibility for you.



David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.