Netting the Stimulous Check

[Snaggletoof]

Taxpayer owes $3000, but will have a $600 stimulous check.

Is considering paying $2400 and putting up with all the nasty correspondence
that will ensue, and then fully expects the IRS to pre-empt his $600 stimulous
payment and then be done with it.

Will this work?

[JohnH]

No reason why it won't work. He will probaby get tagged for a couple of dollars of FTP penalty & interest, but not anything to worry about. In effect, that's the small price he's paying to get his stimulus payment before anybody else. (and it's a heck of a lot cheaper than the RAL fees people gladly pay)

I have a half dozen people who are doing exactly the same thing.

[JohnH]

Following up on this, today I saw the first results from a client who took this approach. In round figures, he owed about $2,277 on his return and he mailed in $1,300, leaving a net due of $977. His calculated rebate amount was $1,155 (based on tax liability).

IRS sent him a net check for $164 this week, which was the $1,155 minus the $977 in tax due plus an $8 FTP penalty and $6 of interest. Not a recommended way to borrow money, but on balance a fairly painless way to handle things for someone who needed to hang onto his cash. I think the effective interest rate for the interest & FTP penalty combined was about 10-11%.