Stimuls check rec'd from erroneous return?

[tacks]

In 2007 a full time college student erroneously claims an exemption for herself. She receives a stimulus payment based on this false information. (She should have been claimed on parent's return!! )

I want to amend 2007 even if it means having the girl give back 300 dollars. (It would yield a bigger benefit overall.)

How is this done? Should we refund the 300 dollar stimulus payment? I would not think that girl could keep the 300 dollar stimulus payment as it's based on false information.


We had discussed this briefly before:

http://www.thetaxbook.com/forums/showthread.php?t=12048

[Jesse]

Since the stimulus was an estimate based on the 2007 tax return, it is my understanding that if the stimulus payment was received in error you do not have to pay it back. Same true if you received less than what you were entitled to based on 2007's filing.

For example let's say you are divorced and alternate years that you claim a child, but you mixed up your odd and even numbered years. If the child would have qualified for the $300, but you forgot to claim the child so you amend 2007 taxes in 2008 you will not receive the additional $300, and because you cannot now take the child in 2008 you are just out of luck. Does that make sense?

Does my explanation (not the IRS) make sense? ;-)

[JohnH]

No, it doesn't make sense, which just means there's a high probability that it's an accurate description of how the stimulus payment worked. So your analysis looks correct.

[tacks]

thanks

Thanks to Jesse and John!!

Your comments were both helpful and consistent with what i've heard elsewhere. Gave me a good chuckle also.

[tacks]

straight from the horses mouth

I called the 1 800 IRS help line. They transferred me to a special 'stimulus department.' I explained the situation in detail.

The help lady seemed to fully understand my question and how it would be handled. "We will NOT go after her [my client's daughter] for the stimulus she received. The stimuls is over and done."

(thanks again to all who helped me with this)

[JohnH]

So now you can be confident that you've received answers from both ends of the horse. (no reflection on Jesse intended here)