Filed taxes a bit ago and thought they seemed high...however, a decent size stimulus check will be coming for the wife and I.
I now realize why they seemed high. I forgot to apply a rather large tax credit that we qualify for. Obviously, I'll file an amended return. However, I note that, if I had filed and included this credit to begin with, our stimulus payment would have been about half the size. So, will we have problems relating to an amended return (applying a large credit) and an overly-large stimulus payment? From the IRS site, it looks like the stimulus payment shouldn't change at all. But will I have problems when I file 2008's taxes next year?
"Caliban" Filed taxes a bit ago and thought they seemed high...however, a decent
Well, congratulations on coming up with a question that's not easily answered. I suppose it's too much to hope that you're talking about the Child Tax Credit. If you are, relax. It's disregarded in the computation of the stimulus payment and the 2008 credit.
The statute draws no distinction between original and amended returns when determining the amount of the advance payment. It just says that the payment is calculated based on 2007 numbers.
Regarding a reckoning on the 2008 return, it says that the 2008 credit is reduced by the stimulus payment "made or allowed," but not below zero. In general concept this means that if your stimulus payment based on your 2007 numbers was greater than the credit allowable for 2008 you don't have to pay it back.
I don't see anything in the statute that authorizes a recovery of a stimulus payment because of an amended return. That said, the ethical thing to do would be to get the amended return filed ASAP and see what develops. I'd also keep the excess where I could find it until the dust settles a year from now.
I think this question is going to come up a lot. So to be clear for the archives, how about some clarifying information? When you say "credit" above, do you mean a number on lines 47-55 (line 52, the child Tax Credit excepted) changed?
Are you using the IRS stimulus payment calculator linked at
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7937,00.html#Calculator ? If so, what stimulus payments does it give for (1) and (2)? What formula, software, or web site are you using that gives you the same numbers for the original and amended returns' stimulus payments?
So far, I do not think the exact information for how this will be treated is available. Verbage in the original stimulus act bill and media reports say that, on 2008's tax return, one will not have to pay back excess one received in
2007, no ifs ands or buts (so it seems... ). But that leaves too much room for other people getting away with stimulus payment fraud.
My bet is that you will pay the excess stimulus payment you receive back, one way or another. E.g. it's possible the IRS will catch the error on the original return (depending on the specific credit) and send you the correct amount anyway; or they'll get the amended return in time and make the change; or, using a line on your 2008 tax return, you will return the excess.
The goal is to try to be honest, so amend as quickly as possible, and document any exchanges you have with the IRS, preferably with something from them in writing.
A similar question arose recently where I am. A man filed a stimulus payment 1040A. He put his only income, Supplemental Security Income (SSI), into the Social Security benefits line. But SSI is not income that counts towards the stimulus payment. I have no idea whether the IRS is coordinating with Social Security to track such income and see who is and is not entitled to a stimulus payment. He is in a particularly bad situation because he will not have to file a return for tax year 2008 (in theory, based on his only income being SSI) and because he is disabled. He has little idea how all this works anyway.
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