The IRS is noticing that there is some confusion about the the Recovery Rebate Credit and whether or not you have to pay taxes on the stimulus check from last year.

“About 15 percent of the returns have errors involving that credit,” said Clay Sanford, a spokesman for the IRS in Dallas.

The Recovery Rebate Credit is a one-time benefit for people who did not receive a stimulus check in 2008 or who did not receive a full economic stimulus payment. These people may have seen their economic circumstances change, making them eligible for the credit.

You may qualify for a Recovery Rebate Credit if:

• Your financial situation changed dramatically from 2007 to 2008
• You did not file a 2007 tax return
• Your family gained an additional qualifying child in 2008
• You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as a dependent by someone else in 2008.

Under certain circumstances, individuals filing a return can receive a $600 credit, while married couples filing jointly can receive $1,200. People under age 17 may fetch a $300 credit.

LAST YEAR’S STIMULUS PAYMENT IS NOT TAXABLE. But taxpayers need to know how much their stimulus check was so their income tax returns can be properly processed.

The Stimulus checks received last year and the Recovery Rebate Credit available to some this year are completed different. But, they are related when filing tax returns.

People filing paper returns will need to include the size of their stimulus checks when completing a work sheet. For people using tax software, the stimulus payment amount will be needed as well, but the software will figure whether a Recovery Rebate Credit is due.

DO I HAVE TO TAXES ON MY STIMULUS CHECK FROM LAST YEAR? The answer is No, No, No!

For most taxpayers, the correct entry for the Recovery Rebate Credit will either be blank or zero. If there is any question as to the amount that should be reported for that credit, the taxpayer or preparer should enter a zero on the appropriate line. The IRS will determine from records whether a rebate credit is due and for how much.

If you have a specific question about your Federal Tax return you can call the IRS and receive Live Telephone Assistance. Here are the particulars:

Telephone Assistance for Individuals:
Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Telephone Assistance for Businesses:
Toll-Free, 1-800-829-4933
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

source: irs.gov