Tax Guru-Ker$tetter Letter
Wednesday, July 30, 2008
Rebate checks and the 1040
As we've discussed before, there has been a lot of confusion as to whether or not the advance rebate checks would affect the amount of refund or tax due with the 2008 1040. The IRS website has had conflicting info on this.
If you check the IRS's draft release of the 2008 1040 form, you can plainly see on Line 71 that there is a place for the "Recovery rebate credit" which should be a positive number for those people who did not receive the full amounts as checks during the year and either a zero or negative amount for those who received checks.
This will obviously end up affecting the amount of refund or tax due. As I have been saying, this is exactly the same mechanism as we had for the similar advance rebate payments that we had to deal with a few years ago. People who were claiming that the 2008 rebate checks were free money and would not affect the bottom lines on the 1040s were nuts.