stimulus rebate question (HELP)

[POCAHONTAS]

client's income was only $20142 for 2007 and wanted to claim 6 children as her dependents, but she only needed two children to qualify to get the maximum refund, so I am thinking how can she support 6 children on such small income and also claim as Head of Household, therefore to save her from being audited I showed her that she only needed 2 kids to get the maximum refund and did not need to use all 6 of her children, of course like an idiot I wasn't thinking about the stimulus rebate, now the problem is how do I get her the rebate for the rest of her kids.

I called the IRS stimulus hot line twice and was told to file 1040X for the client adding her 4 children as dependents and put ESP on top of 1040X. The client will then receive her rebate for the other 4 on the 2008 return. Just to make sure I was told the correct info I called the third time and then was told that the rebate was based on the original return and nothing could be done to rectify the problem. But upon reading the stimulus frequently asked questions, there was a question asked "what If I did not get the right amount of rebate?" the answer was that it could be claimed on the 2008 return. Please help I don't wanna get sued for this.
thanks

[solomon]

There is a line (71) on the draft 2008 1040 for it.

[POCAHONTAS]

There is a line (71) on the draft 2008 1040 for it.

thanks, but do I still have to ammend the 2007 return???

[JohnH]

I'm wondering what would it hurt to amend 2007. There's no change in the tax liability and that reflects the actual situation (assuming it IS the actual situation). It probably won't cause the additional stimuls payment to be sent now, but if it does then you're a hero. If it doesn't, there's no harm done and you'll just need to remember to claim the additional stimulus payment on the 2008 return (I bet that will get the client in the door early next tax season). It should also help impress upon the client that you're doing everything possible to help correct the situation.

[newbie]

"what If I did not get the right amount of rebate?" the answer was that it could be claimed on the 2008 return.

This seems to be the correct answer. I don't know what she could sue you for? Interest from July to when she actually receives the remainder of the stimulus in 2009? We are all human and we all make mistakes, hopefully she'll understand.

I know I have a couple people that are not happy with me this year because of this stupid stimulus rebate. Every year they rush in to file the second they get the W-2's for EIC, and being the custodial parent I have a form 8332 in the file for them to sign and give to the noncustodial parent. I have a copy of the divorce decree in the file as well which states Dad gets children in odd years. I reassure Mom she is getting the max refund anyway so why make waves - sign the form and give to Dad, your not out anything..........until this year when they came out with the economic stimulus rebate.

Our local HRB has been telling single parents....oh you don't have to "sign off", you are the custodial parent and this year you get an extra $300 per child for the stimulus and as these single parents get together, of course, I am the one that is in the wrong. I try to explain that it is wrong and contempt of court but that doesn't get them the extra $300 per child. I have a feeling my people will go to HRB's people next year. Oh well, I will just wait because one day one of these single parents are going to be taken back to court and my conscious will be clear.


Is there some reason you feel an audit would find some undisclosed income or fraudulent expenses? Maybe best to leave sleeping dogs lie and skip the amendment.

[POCAHONTAS]

thank you but my only concern is the IRS agent had specified that the 1040X must be filed in order for the client to get the extra rebate on the 2008 return.

[POCAHONTAS]

thanks newbie
somehow I found it difficult to believe that a person could support 6 children on an income of $20,000 and to claim themselves as head of household also, and that is why I thought it was better not to use the other 4 as dependents, especially they didn't make a difference. I suppose it was to save me the headache of dealing with this client if she got a letter from the IRS.

And guess what it was an HRB tax preparer who had advised me in the past to do what I did to keep clients from getting audited.

[OtisMozzetti]

Is child tax credit required to get stimulus $300 for kid?

All it says, in the IRS site, is that the taxpayer(s) must have been themselves eligible for the stimulus, that the child involved must have been ELIGIBLE for the child tax credit, and that the child must have a valid Social Security number. If so, then the child is good for the $300 stimulus payment to the taxpayer(s).

[David1980]

And guess what it was an HRB tax preparer who had advised me in the past to do what I did to keep clients from getting audited.

Well it's usually good advice. This (and next) year the stimulus payment makes it not so great advice. Last year for example I was usually the first to suggest removing a dependent from a return that rejected when it makes absolutely on difference on the tax liability.

This year however I've suggested mailing more returns than I'd like to count. Because if someone really qualifies for claiming that child it's worth $300 and I tell them that an IRS rejection doesn't mean they can't claim the child, just that they can't efile and likely will get the normal "We need more info" letters from the IRS. Which if they can't figure out I'm happy to charge them for that too!

[Jesse]

thank you but my only concern is the IRS agent had specified that the 1040X must be filed in order for the client to get the extra rebate on the 2008 return.

I wonder about this and how the stimulus rebate will be calculated for 2008.

If custodial parent waived exemption for child in 2007, therefore noncustodial parent received the $300, and in 2008 custodial parent claims the rebate will custodial parent also receive $300, thus paying $300 to each parent for a total of $600?

Or will it somehow tie to the Social Security number of the child and since paid out $300 for that child now $0 will be granted?


>>Quote:
Originally Posted by POCAHONTAS
And guess what it was an HRB tax preparer who had advised me in the past to do what I did to keep clients from getting audited. <<

I don't think this is good advice. I can understand if the return in rejected to just leave a child off the return as it makes no $$ difference(except this year - because of the stimulus rebate Check) but not to avoid an audit. With that many children and that little income she budgets well or has income from other sources, possible child support, social security, food stamps, fuel assistance, etc.........But if it's on the up and up an audit shouldn't be feared.