Nearly 2 million early-filing taxpayers have improperly claimed last year’s economic-stimulus payments on their returns, according to the Internal Revenue Service.
Some inaccurately counted the money as income — though it is tax-free — while others listed the money on a line of the tax form to be used by filers who didn’t get a stimulus payment but should have.
In all, 1.9 million taxpayers who made the mistake are to get letters this week from the IRS saying their returns had to be recalculated and, in some cases, their refunds delayed, spokesman David Stell said.
“This is the largest number of errors we’ve had in years,” Stell said.
The confusion arises from how taxpayers are treating the stimulus payments — an amount that ranged from $300 for an individual to $1,200 for a married couple, plus $300 for each qualifying child.
Some are reporting the payments as income, while others are placing it on a line of their return intended for a “recovery rebate credit,” an amount due to taxpayers who qualified for a stimulus payment but either didn’t get one or didn’t receive as much as they should have.
“We’re seeing people putting the stimulus payment on the tax-form line for ‘recovery rebate credit,’ which is wrong,” Stell said, noting that returns prepared with tax software calculate the credit automatically and accurately.
Local tax preparers say they’re seeing a number of taxpayers qualify for an economic-stimulus credit who hadn’t realized they were eligible for a check last year.
“About 40 percent of those visiting our office are getting additional monies they didn’t know they qualified to get,” said Susan Baca, office manager of an H&R Block in Arvada. “Just because you didn’t file for it doesn’t mean you don’t get it.”
The stimulus check was for 2008 but preliminarily based on 2007 returns, to be adjusted with this tax cycle. So if a taxpayer’s situation changed last year — such as a child born or adopted by a family, or a new job for someone unemployed — chances are they could claim a part of the credit on tax returns.
“The credit is a second chance for those who didn’t file a return in 2007 or who otherwise weren’t qualified,” Stell said. “If you were a couple who had a baby last year, you didn’t see the extra $300, so this is how you get that.”
One good thing for taxpayers: Anyone who received $300 for an ineligible qualifying child, such as one who was 16 in 2007 and turned 17 last year, can keep the money, Baca said.
David Migoya: 303-954-1506 or dmigoya@denverpost.com
