Tax Tips

Second Chance for a Tax Rebate

If you missed out on last year's tax rebate or did not receive the full amount because your income was too high, you may get another chance.

By Mary Beth Franklin, Senior Editor, Kiplinger's Personal Finance

February 16, 2009

If you missed out on last year's tax rebate or did not receive the full amount because your income was too high, you may get a second chance. "The Recovery Rebate Credit should not be overlooked," says Mark Steber, vice president of tax resources for Jackson Hewitt. "You may be due more money when you file your 2008 taxes," Steber adds.

The first round of rebate checks, which were mailed directly to eligible taxpayers, was based on 2007 tax return information. Rebates are reduced for single taxpayers with more than $75,000 in adjusted gross income. For joint filers, the phase-out begins at $150,000.

If your income has changed since 2007 -- perhaps due to a job loss or a reduction in investment earnings -- you may qualify for a credit of up to $600 if you are single and up to $1,200 if you are married. Or, if you had a baby or adopted a child in 2008, or if you are a divorced parent who claims a child as a dependent every other year, you may qualify for a tax rebate of up to $300 for an additional child under age 17.

With more than 11 million Americans unemployed, it's a good bet than many will qualify for additional rebate money, says Mike Martin, president of Mike Martin & Associates in Independence, Missouri.

Any amount you receive based on 2008 tax information would be offset by what you have already received based on your 2007 tax returns. So, for instance, if you are single and received $200 out of the potential $600 rebate, you may be eligible for an additional $400.

The only way to receive a new or additional rebate is to claim the Recovery Rebate Credit on your 2008 tax return on line 70. The IRS provides a two-page worksheet in the 1040 directions as well as a calculator at IRS.gov to help you determine if you are eligible to claim a rebate. If you're not up to doing the math, you can instruct the IRS to calculate the credit for you by entering "RRC" next to line 70.

If you qualify for a rebate, don’t expect to receive a check in the mail. It will be added to any refund you are due or will reduce any tax bill that you owe.

Even if you already received your rebate check last spring and aren't entitled to any additional money, you benefit, too. The money you received is not taxable, and if your 2008 income increased about the levels that make you ineligible for a rebate, you don't have to give it back.

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