Stimulus Payment...

[Gordy from NM]

I apologize in advance, BUT, I know I am fielding a bunch of questions this week since the payments are coming out starting Monday. What I read basically says that it is an ADVANCE on next year's refund...

1st) I am assuming that if Client X is supposed to receive $2000 as a refund for the 2008 return and they got $1200 stimulus payment, then they would only receive $800 refund. Is this your understanding as well?

2nd) But what if they OWE next year? Same example but Client X owes $2000 and receives a stimulus payment of $1200...will they now owe $3200?

I know it's NOT free money...any responses would be greatly appreciated!

[taxtrio]

No, not correct. On the 2008 return there will be an additional "credit" that will be computed.

After computing the special "stimulus rebate credit" then you will enter the amount of the Advance Credit they get this summer. This will reduce most people's credit next year to zero.

If there circumstances change and they did not get the maximum "advance rebate" this summer--- then they might qualify for more next year as an addition to their 2008 refund.

For example: My daughter is a college student, made +4,000.00 this year. and is over 25.

As I cannot claim her, and she made over 3,000.00 -- she should qualify for the 300.00 advance rebate this summer. Next year, when we complete her 2008 return-- if she works more and has a larger tax liability; she should qualify to get some additional rebate as part of her 2008 refund (up to the maximum amount..) in other words -- she gets a second change at getting the rest of the rebate then.

Hope this helps..

P.S.

[Jack from Ohio]

Before you give your clients information or advice, you should school yourself on the information first. The IRS has had a group of pages, with answers to all the questions you pose, since early March. Here is the link. It would be a good thing for you to do some research.

http://www.irs.gov/newsroom/article/0,,id=177937,00.html

"Barbershop Tax Information" is worth exactly what you pay for it.

[JohnH]

When your clients call, you have been given an opportunity to accomplish a more important task. I were you I'd ask for their email address if they use email. Then email them the link Jack just gave you. That way they can figure it out for themselves and you'll be out of the information loop (unless they insist on your calculating it for them). My email message to them says "This is the official IRS information, but if you still have addiitonal questions specific to your situaiton, feel free to email them to me."

The added benefit is that you will be moving them in the direction of exchanging tax questions on any tax matter via email in the future rather than by phone, which is infintely more efficeint for you and your clients.