Stimulus payment and its effect on state returns

[origun]

I live in a state (Oregon) where the amount of the stimulus will affect the state return--as it could reduce the federal tax subtraction from AGI for state purposes. I have researched how to deal with this for our state return but my question is: How will I know for sure how much the stimulus payment was? Many people didn't receive the full am't as it was used for unpaid obligations such as back child support so they will just be telling me they didn't receive any. And some people won't have any recollection or paperwork. So...does anyone know if the feds will be sending out any paperwork (a 1099-G perhaps) so taxpayers and the state will know? And/or will there be a toll-free number that we or the taxpayer can call when at the tax desk to find how much they received?

[solomon]

As I recall a few years ago with the advance on CTC, there was a link on the IRS website to check this for the taxpayer. Perhaps it will be the same for the advance rebate. At any rate, if there is fudging, the IRS has the amount of the rebate.

In view of Line 70 on the draft 1040 and the associated 29 lines worksheet, one will have to know the amount one way or the other.

[Snaggletooth]

Liability without payments

I live in a state (Oregon) where the amount of the stimulus will affect the state return--as it could reduce the federal tax subtraction from AGI for state purposes. I have researched how to deal with this for our state return but my question is: How will I know for sure how much the stimulus payment was? Many people didn't receive the full am't as it was used for unpaid obligations such as back child support so they will just be telling me they didn't receive any. And some people won't have any recollection or paperwork. So...does anyone know if the feds will be sending out any paperwork (a 1099-G perhaps) so taxpayers and the state will know? And/or will there be a toll-free number that we or the taxpayer can call when at the tax desk to find how much they received?

Alabama is another state that allows federal tax liability as a deduction from state taxable income. However, they allow the specific line item for total tax liability. This is before refundable credits. No idea how Oregon does it, but if the 1040 for 2008 shows the stimulus as a "payment" it will not affect Alabama state tax.

Don't think the IRS has a good track record in providing information statements for state tax purposes. They're good about 1099-INT statements so they can collect their OWN money, but I've never known them to be anxious about providing anything for anyone else.

[Gene V]

I live in a state (Oregon) where the amount of the stimulus will affect the state return--as it could reduce the federal tax subtraction from AGI for state purposes. I have researched how to deal with this for our state return but my question is: How will I know for sure how much the stimulus payment was? Many people didn't receive the full am't as it was used for unpaid obligations such as back child support so they will just be telling me they didn't receive any. And some people won't have any recollection or paperwork. So...does anyone know if the feds will be sending out any paperwork (a 1099-G perhaps) so taxpayers and the state will know? And/or will there be a toll-free number that we or the taxpayer can call when at the tax desk to find how much they received?

Oregon say they will not tax the rebate--sure looks like to me, they are taxing it. At least to the
lower income tax payer.

1. Will Oregon tax the rebate?

No, the federal rebates and allowances are not taxable by Oregon. However, some taxpayers' federal tax subtraction on the Oregon return may need to be adjusted as a result of the rebate (see question 3 below).

3. What effect will the rebates have on the federal tax subtraction on the Oregon return?

The federal tax subtraction is a deduction on the Oregon return for the tax you owed the federal government. The tax rebates and allowances being sent by the IRS this summer represent a reduction in your 2008 federal income tax liability. The rebate must be taken into account when you figure your 2008 federal tax subtraction because it may cause a change in your 2008 Oregon federal tax subtraction. Note: You will not figure your 2008 federal subtraction until 2009 when you prepare to file your Oregon tax return for tax year 2008.

Example: Ed and Kathy receive a federal rebate of $2,100 in May 2008. Ed and Kathy receive $600 each and also receive $300 for each of their 3 qualifying children. In March 2009, they file their 2008 federal return and have a $5,000 federal tax liability. When figuring their federal tax subtraction on their 2008 Oregon return, Ed and Kathy will be required to reduce the subtraction by the rebates they received during the summer of 2008.

Ed and Kathy calculate their federal tax subtraction as follows:
1. Federal tax liability from 1040 $5,000
2. Additional tax on qualified retirement plans -0-
3. Add lines 1 and 2 $5,000
4. Tax rebates and allowances received from the federal government $2,100
5. Subtract line 4 from line 3 (if less than $0, enter $0) $2,900
6. Enter $5,500* ($2,750 if married filing separately) $5,500
7. Enter the smaller of line 5 or line 6 here and on your Oregon return(this is your federal subtraction amount) $2,900

[JohnH]

There's already a place to find out the amount of the rebate - the "Where's My Rebate" link on the IRS web site shows the amount to be paid. I expect it will still be available for lookup for any taxpayer who "forgets" whether or not they received it come next tax season. And if the rebate was applied to prior year's taxes, I believe it would be treated just like a cash payment. (Constructive receipt and all that stuff). So if your state somehow requires adjustment, then the amount of the calculated rebate is all that would matter, regardless of whether they actually received a check - right?

[OtisMozzetti]

A notice was sent, asking taxpayers to keep that notice

And some people won't have any recollection or paperwork. So...does anyone know if the feds will be sending out any paperwork (a 1099-G perhaps) so taxpayers and the state will know? And/or will there be a toll-free number that we or the taxpayer can call when at the tax desk to find how much they received?

Before the stimulus payments were made, a notice was generally sent stating the amount expected and directing taxpayers to keep that notice (which, "of course", they didn't) for reference in preparing the next year's tax return.

As a practical matter, it's going to mean a lot of referring back to the previous tax return, and a lot of calls to the IRS, and a lot of adjustments made by the IRS where the stimulus amount stated on the 2008 return isn't the correct amount. Only a small fraction of taxpayers, largely from among those who had their earlier stimulus payment limited for some reason, are going to be entitled to some additional credit on returns for 2008.

I don't have my own stimulus check recorded in a checkbook, because I took it to a supermarket which offered me a grocery spending card on favorable terms.

[taxea]

Stimulus payment and its effect on state returns

When the money is given out the client receives a document from the IRS that shows the amount paid. They need to give this to you with their tax papers next year.

[David1980]

There's already a place to find out the amount of the rebate - the "Where's My Rebate" link on the IRS web site shows the amount to be paid.

Bingo, can it get any easier?

http://www.irs.gov/individuals/article/0,,id=181665,00.html

If you haven't seen this, plug in your own information and see how it works. It's basically just like where's my refund except for the stimulus payment. Even if the payment was applied to past due debt/child support/whatever, it will give the amount.

Personally, I'm thinking of using it for every single return for new clients next year. For existing clients as long as they got what we expected I'll go with that. If they didn't get it then I will check the status on the IRS website.

[S T]

I would guess

Yes, the t/p is suppose to give us those papers that you refer to,(taxea) and some t/p are very good, but if history repeats itself, as always, I predict that there will be an easy 30% or better that will just look at you with a blank stare and say "What?" "I don't remember"

Sandy

[taxea]

Stimulus payment and its effect on state returns

This is something the client should be providing to you...not something you should have to research. My clients will be asked to contact the IRS and have them fax me a copy of the document in cases where the client doesn't "remember". I don't do the clients work, it takes up too much of my time. taxea

[Roberts]

I don't do the clients work, it takes up too much of my time. taxea

You should put that in your advertising. I get paid by my clients to do their work for them, not sure what you think you are being paid to do.

[taxea]

Stimulus payment and its effect on state returns

I get paid to prepare their return based on the information provided by the client. If they miss anything I feel the are entitled to or know must be reported I ask them to provide the information..
I provide them with a worksheet requesting the total amount for the tax year for each item applicable to the individual. I let them know that I don't need or want their invoices, receipts etc only their W-2's, 1098s, 1099s and final investment statements. Added to that list of documents would be other items needed to complete their return based on the individual's tax related actions through the year. taxea

[taxmandan]

I get paid to prepare their return based on the information provided by the client. If they miss anything I feel the are entitled to or know must be reported I ask them to provide the information..
I provide them with a worksheet requesting the total amount for the tax year for each item applicable to the individual. I let them know that I don't need or want their invoices, receipts etc only their W-2's, 1098s, 1099s and final investment statements. Added to that list of documents would be other items needed to complete their return based on the individual's tax related actions through the year. taxea

Putting a return on hold (for a week or two) while I wait for the client to get back to me with the information is way, WAY more time consuming and a bigger hassle than just linking to the site and checking for myself what the IRS says they got. Billable time of course, 2 minutes effort billed at my 15 minute minimum.

[S T]

Taxes are difficult

You know, taxes are difficult for a lot of our clients, and some just don't always keep the proper information or even know what to keep.

The Stimulus rebates reminds us of the Advanced Rebates we had several years ago. If it weren't for the IRS website and being able to check, I would have never completed the taxpayer's return correctly.

Don't get me wrong, I really don't think it is my responsibility, but I agree with a prior post relating to the Stimulus rebate, if I can access the IRS Website to find out what that particular taxpayer received, it takes only a few minutes. If the taxpayer has furnished all of the other pertinent information relating to the return, and I can access that information, the return is efiled, I have collected my fee, and I am done!

I don't need these types of returns "hanging around" while the taxpayer tries to provide me with the information they either don't remember or can't find. Actually some t/p have already provided me copies with the IRS notices from the 2007-08 Stimulus Rebate, as they just know it looks official and they don't know what to do with it. Besides, the taxpayer thanks me and it is good pr with that taxpayer!

I personally have been visiting the website early on to find out rebates and saving to the t/p file, so I already have a about 30% recorded in the client files. Going to cut down on a large amount of time come next tax season. I am hoping that I can get more into my files prior to the 2008 filing season.

Sometimes I think we just have to convey to our clients, that we do care and that they are important to us, so spending about 5 minutes per client on this stimulus issue for 2008 is not a big deal and yes I might raise my charges by $5 or maybe more for the service, but in the end everyone is happy and less stress!

Sandy