Stimulus payment not taxable, but should be reported on return
The Internal Revenue Service today moved to stop confusion about the taxability of Economic Stimulus Payments received by many taxpayers in 2008.
“People are starting to do their taxes and are noticing that the 2008 return instructs them to report the stimulus payment they got,” said IRS spokesman Dan Boone. “Some are mistakenly assuming that means the stimulus payment is taxable.”
Boone says that is not the case. The 2008 stimulus payments are not subject to federal taxes.
“Tax filers are asked to report the amount of Economic Stimulus Payment they received in 2008 to determine eligibility for the new Recovery Rebate Credit, a sort of ‘second chance’ at getting a stimulus payment,” Boone said.
Taxpayers who did not receive an Economic Stimulus Payment in 2008, or did not receive the full amount, may be eligible for a Recovery Rebate Credit of up to $600 per individual or $1200 per married couple filing jointly.
However, the new credit generally is reduced by the amount of any stimulus payment already received.
Two online tools on IRS.gov will be available soon: the Recovery Rebate Credit Calculator will help taxpayers figure the amount they should claim on their 2008 tax return; and How Much Was My 2008 Stimulus Payment? will help taxpayers determine the amount of stimulus payment they received.
For more information about the Recovery Rebate Credit or other new tax breaks, visit www.irs.gov.