The Morning Report
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I was asked at a campout the other day what are the most common errors we see on tax returns and what happens if you accidentally make one. The IRS actually keeps tabs of a variety of errors like failure to sign by BOTH spouses if a joint return or transposed SSNs, but, by far this year the number one error involves the Recovery Rebate Credit. What is the Recovery Rebate Credit, or RRC for short, you ask? Well, in short, this is a credit provided to eligible taxpayers who either did not get a stimulus payment in 2008 or could get more based on the RRC here in 2009.
Quick background: The Economic Stimulus Act of 2008 was enacted on Feb. 13, 2008 and by law, the stimulus payments issued last year were based on 2007 tax year data since we had to administer immediately and had no 2008 data to go on. Turn the page to 2009 as we are filing for 2008 and the Recovery Rebate Credit comes into play. Most will not qualify for more under the RRC becasue the received the full amount of stimulus, but for a small percentage of taxpayers more may be on the way. A quick, clear example is those who had a baby in 2008. Qualifying children, per the law, were/are worth $300.
The error of either claiming RRC when not eligible or keying in the wrong number is/are causing one-week delays to those who make it/them. When doing your return this year, TRUST THE SOFTWARE, it is computing correctly. If you are preparing a paper return and are unsure of how to proceed, enter “RRC” on the line and the IRS will figure it for you. The stimulus payment is NOT taxable but that information is needed (accurately) in order to complete the return, and in some cases, to see if you will be eligible for more under the RRC. Complete details on this are here.