Tax Tip

If you didn’t get last year’s tax rebate, you might now qualify. Sandra Block writes:

“The IRS estimates that less than 3% of taxpayers will be eligible to claim the credit — now known as the recovery rebate credit — on their 2008 tax returns. But given the sharp rise in unemployment in the fourth quarter, the number of eligible taxpayers could be higher, Roth says.

Taxpayers whose income declined last year aren’t the only individuals who may be eligible for a recovery rebate credit. You may also qualify if:

•You had a child last year, or adopted one younger than 17. If you claim the child as a dependent on your 2008 tax return, you could qualify for an additional $300.

•You’re a retiree or veteran who failed to claim your rebate last year. Retirees who received at least $3,000 in Social Security, veterans benefits or Railroad Retirement benefits in 2007 were eligible for a $300 tax rebate, or $600 for married couples. To get their payments, though, seniors had to file a 2007 tax return, even if they didn’t owe federal taxes.

The IRS sent letters to eligible seniors last fall, reminding them that they needed to file a tax return to get a rebate.

Still, many seniors haven’t filed for their rebates. Those seniors can still get their money by filing a tax return this year, Roth says.

•You’re a recent college graduate. The economic stimulus act prohibited anyone who was claimed as a dependent on someone else’s 2007 tax return from claiming a rebate.

Parents couldn’t claim their college-age children, either, because the $300-per-child rebate was limited to children who were younger than 17 on Dec. 31, 2007.

Young adults who weren’t claimed as a dependent on a parent’s 2008 return and had at least $3,000 in earned income last year are eligible for a $600 recovery rebate credit, says Bob Scharin, senior tax analyst for Thomson Reuters.

And what if your circumstances improved in 2008, making you ineligible for the rebate, or eligible for a reduced amount? Don’t worry, Scharin says. The IRS won’t make you pay it back.

The economic stimulus payment isn’t taxable and shouldn’t be reported as income on your 2008 return.”

As always, consult with your tax advisor.

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