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 FREE INCOME TAX PREPARATION
      Electronic filing for low to moderate-income; elderly; limited English proficiency, and disabled workers and families
 

E-filing for 2008 Tax Return Beginning January 21st!

 

 
TAX TIP OF THE WEEK

 

Personal Exemptions

 

2007 Changes

The amount you can deduct for each exemption has increased to $3,400 for 2007.

You lose part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which the phaseout begins depends on your filing status. For 2007, the phaseout begins at:

  • $117,300 for married persons filing separately,
  • $156,400 for single individuals,
  • $195,500 for heads of household, and
  • $234,600 for married persons filing jointly or qualifying widow(er)s.

You can lose no more than 2/3 of the dollar amount of your exemptions. In other words, each exemption cannot be reduced to less than $1,133.

If your adjusted gross income is above the amount shown for your filing status, use the Deduction for Exemptions Worksheet in the Form 1040 or Form 1040A instructions to figure the amount you can deduct for exemptions.

See Publication 505, Tax Withholding and Estimated Tax, for more information on figuring the amount you can deduct.

Qualifying relative clarified.

A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either:

      This clarification of the definition of qualifying relative applies to 2005 and later years. If you did not claim an exemption you could have claimed in 2005 or 2006, you can claim it by filing Form 1040X, Amended U.S. Individual Income Tax Return. Generally, you must file Form 1040X within 3 years after the date you filed your original return or within 2 years after you paid the tax, whichever is later. See Form 1040X and its separate instructions

 

 

        

 

 

 

 

 

 

  

 

 

 

 

 

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Recovery Rebate Credit Information Center

 

En Español

The Recovery Rebate Credit is a one-time benefit for people who didn't receive the full Economic Stimulus Payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.

Generally, a credit adds to the amount of a tax refund or decreases the amount of taxes owed. Therefore, the amount you receive for the Recovery Rebate Credit will be included as part of your refund, as shown on your tax return. Unlike the 2008 Economic Stimulus Payment, it will not be issued as a separate check.

You May Be Eligible:

People who fall into the categories described below may be eligible for the Recovery Rebate Credit this year:

  • Individuals who did not receive an Economic Stimulus Payment.
  • Those who received less than the maximum Economic Stimulus Payment in 2008 — $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low.
  • Families who gained an additional qualifying child in 2008.
  • Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008.
  • Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008.

How to Get the Recovery Rebate Credit

You need to claim the Recovery Rebate Credit on Form 1040, 1040A or 1040EZ. The instructions for these forms will show you which lines to use. Unlike the Economic Stimulus Payment, the Recovery Rebate Credit will be included in your tax refund for 2008 and will not be issued as a separate payment.

The IRS Will Figure the Credit for You in Most Cases

You can choose to let the IRS do the work when you file your 2008 Form 1040, 1040A or 1040EZ. If you're filing on paper, simply follow the line-by-line instructions to choose this option. If you're filing electronically, the software will figure the credit for you.

Or You Can Figure It Yourself

Likewise, you can figure and claim the Recovery Rebate Credit on your 2008 Form 1040, 1040A or 1040EZ. Two interactive online tools will be available to help you with the calculation: The Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment?

The Recovery Rebate Credit Calculator will help you figure the amount you should claim on your 2008 tax return. Or, you can use the worksheet in the Form 1040 instruction booklet to help you figure your credit by hand. To use the Recovery Rebate Credit Calculator or complete the worksheet, you'll need the amount of the Economic Stimulus Payment you received in 2008, if any. This amount was provided on Notice 1378, Economic Stimulus Payment Notice, sent by the IRS to taxpayers who received a payment.

You can use How Much Was My 2008 Stimulus Payment? to determine the amount you already received, if you don’t have or didn't receive Notice 1378.

Find the Answers to Your Questions 

You might find what you're looking for on our question and answer page.  

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