stimulus payment military

[Bucky]

Client was in Afganistan for most of 2007 serving in the army. Box 1 of W-2 shows $2651.
Box 12 for combat pay = $24363. IRS states is income in below the $3000 amount and no rebate. You would think they would have made an exception for the brave men and women serving our country. Am i missing something?

Thanks

Bucky

[Grumpy]

The worksheet at the following website has a place to enter nontaxable combat pay. I have not used it for that purpose, but it may help you to find an answer to your question:

http://www.irs.gov/app/espc/

[BOB W]

Client was in Afganistan for most of 2007 serving in the army. Box 1 of W-2 shows $2651.
Box 12 for combat pay = $24363. IRS states is income in below the $3000 amount and no rebate. You would think they would have made an exception for the brave men and women serving our country. Am i missing something?

Thanks

Bucky

Combat pay is over $3,000, so he qualifies.

[New York Enrolled Agent]

Did you enter it properly?

[start]Military personnel who normally would not file an income tax return because their 2007 income is not taxable can file a simple Form 1040A with the IRS if they want to receive the economic stimulus payment. They should report their nontaxable combat pay on Line 40b of the Form 1040A to show at least $3,000 in qualifying income. The Department of Defense lists the amount of excluded combat pay, along with the designation, “Code Q,” in Box 12 of Forms W-2.[end]

[erchess]

Question and Observation

Question - let's say that a return was filed for someone who qualified to receive stimulus money but the return was one of the relatively low income ones that was supposed to be done in a special manner to get the stimulus money and the steps in question were not done. Is it now too late to get the stimulus in 08? If not, when will it become too late?

Observation - the stimulus is simply an attempt to estimate the value to the taxpayer of a credit that will be available on the 08 Returns prepared next season. If you got more stimulus than your credit you do not have to pay anything back, and if you got stimulus equal to your credit you get no more but as I understand it if you for some reason have a credit but got no stimulus money you get the full amount of your credit. Therefore, while people who missed out on the stimulus are understandably ticked off, all is not lost.

[David1980]

Well there are instructions in how to preparer an amended 1040X for the stimulus payment. It seems to me it's targetted exactly at those people who had their taxes done improperly to show normally non-shown income that wasn't reported on the original. So it looks to me like they can still get the stimulus payment this year.

http://www.irs.gov/pub/newsroom/stimulus_payment_1040x_6_.pdf

[Burke]

Then tell me, if a client filed a return with net self-employment income exceeding $3,000 but because of SE tax reduction, now is under $3,000 so does not qualify.....can that person now file an amended return eliminating business deductions on the Sche C so that it does qualify, and would it be allowed? Stimulus check would exceed increase in tax. It seems to me this is the same manipulation as that to qualify for earned income credit.

[Davc]

Then tell me, if a client filed a return with net self-employment income exceeding $3,000 but because of SE tax reduction, now is under $3,000 so does not qualify.....can that person now file an amended return eliminating business deductions on the Sche C so that it does qualify, and would it be allowed? Stimulus check would exceed increase in tax. It seems to me this is the same manipulation as that to qualify for earned income credit.

Agree with the last sentence. Not taking expenses to qualify for the sitmulus on an amendment or original return is fraud.

[David1980]

Agree with the last sentence. Not taking expenses to qualify for the sitmulus on an amendment or original return is fraud.

I have had the question asked about people who are "close" (say they have $2800 of qualifying income) of whether they can just make a bogus $200 schedule C. Answer is always "Yeah, that would qualify you, but I won't touch your return since it's fraud."

[taxea]

I advise my clients to contact the IRS if they have any questions about their stimulus payment since my only involvement was the fact that the IRS required a return to be filed. This payment has nothing to do with the tax return and everytime I check the web site they have added more restrictions. I truly don't look at this issue as my responsibility to pursue for the tax client. It costs them money for me to call the IRS when they can get a first-hand explanation for free rather than going through me. taxea