For 2008 Tax Returns Only: Refund Monitor and 2008 Stimulus Payment
This issue relates only to preparing 2008 tax returns.
Why did the refund monitor change when I entered 2008 stimulus payment?
Don't worry, your stimulus payment is NOT being taxed
If you see the amount on the Refund Monitor go down after entering the amount of the stimulus payment you received in 2008 on your 2008 tax return, you're probably wondering why this happened and whether you're being taxed on your payment.
We understand that this can be confusing.
But we can assure that your stimulus payment, or tax rebate, is NOT being taxed and does not need to be repaid.
We hope the explanation below helps.
Why we ask you about your 2008 stimulus payment
The government gave out the rebates starting in early 2008, to help stimulate the economy. The amount of the rebates that taxpayers received was based on their 2007 tax returns.
However, the stimulus payment was actually an "advanced credit" on their 2008 income taxes. (A credit lowers your taxes dollar for dollar.)
When taxpayers filed their 2008 tax returns, the government tried to learn if some people missed out.
A small percentage of people, those who did not get a 2008 stimulus payment or got less than the full amount, could qualify for a payment based on their 2008 tax returns. This payment is called "recovery rebate credit."
That's why the IRS requires you to enter the stimulus payment amount you received in 2008 when you're preparing your 2008 tax return -- to determine if you qualify for a recovery rebate.
NOTE: If you enter an amount less than you actually received, TurboTax will automatically assume that you qualify for a recovery rebate credit. And the amount shown on the Refund Monitor will increase (or the taxes owed will decrease).
Once you enter the correct amount showing that you already got a rebate, then the Refund Monitor would show a decreased refund or more taxes owed.
Be sure to verify that your 2008 rebate matches IRS records
When customers complete the Personal Info section on TurboTax, they are asked:
Did the IRS issue you a rebate last year?
IMPORTANT: If you got a rebate in 2008, call the IRS toll free, at 800-829-1040.
If the rebate amount entered is less than the amount the IRS states, the IRS could reject your tax return.
