VIRGINIA BEACH, Va.--(BUSINESS WIRE)--Most of the 119 million taxpayers who received a full economic stimulus payment in 2008 may not be eligible for the new Recovery Rebate Credit (RRC), reminds Liberty Tax Service. However, some taxpayers who didn't receive an economic stimulus payment and even some of those who did may qualify to claim the RRC. People who didn't file a 2007 return last year can probably claim the entire portion of the RRC.
"Taxpayers who are experiencing changes in income and families which gained additional qualifying children in 2008 may qualify for claiming some or all of the RRC," said John Hewitt, CEO and Founder, of Liberty Tax Service. People who weren't claimed as a dependent in 2008 but were considered dependents in 2007 may also receive a full or partial RRC.
Those taxpayers who owed back taxes or child support and had their economic stimulus payment reduced or eliminated should report the original amount of the economic stimulus before the reduction on their RRC worksheet. If your filing status changed from Married Filing Jointly in 2007 to a different filing status in 2008, you must claim half of the stimulus payment received as a couple. If you received a Notice 1378 from the IRS, the correct amount of your economic stimulus payment is reported there and should be used when you calculate whether or not you will receive a Recovery Rebate Credit. If you can not find the notice, the amount you received can be found at: http://www.irs.gov/individuals/article/0,,id=185471,00.html
To be eligible for the credit, taxpayers must either:
$8,950 – Single or Married Filing Separately
$11,500 – Head of Household
$14,400 – Qualifying Widow(er)
$17,900 – Married Filing Jointly
The amount of the credit is up to $600 for all filing statuses except for married filing jointly which is $1,200. An additional $300 credit is allowed for dependents who are qualifying children for the child tax credit. This total credit is reduced or eliminated by any economic stimulus payment already received. The economic stimulus payment is not taxable is not considered income for the year 2008.
If using tax software, the amount of the rebate recovery credit will automatically calculate and be properly reported if the taxpayer is to do the tax return. If using the paper method, the taxpayer calculates the rebate recovery credit by using the worksheet and reporting the amount on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ.
Liberty Tax Service is the fastest growing retail tax preparation company in the industry's history, with over 3,000 offices in the United States and Canada. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 6,000,000 individual income tax returns. With 40 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service (NYSE: JTX).
Liberty Tax Service provides computerized income tax preparation, electronic filing, refund loans, and online filing through eSmart Tax at www.esmarttax.com. Each office offers customers audit assistance, a money back guarantee, and free tax return checking. The Liberty Tax Service franchise opportunity has climbed to #3 on the latest Entrepreneur "Franchise 500."