I Underpaid My Taxes, Will I Still Get A Stimulus Rebate Check?

Reader Adam is wondering if he’ll get a rebate check, considering the fact that he underpaid his taxes for 2007:

I have a question about the Stimulus Checks that we will all be receiving. If we owe money to the IRS from our 2007 tax year, will it be deducted from the stimulus check and the remainder passed on to me? In a normal situation, I would say yes. Considering that the IRS wants you to spend it all to boost the economy and not pay off debt with it, it also makes sense to give it all to me. Do you know what the correct answer is? Thank you for your time.

Well, Adam, the answer is “maybe you will get it and maybe you won’t.” The IRS has the right to withhold payments if you have certain kinds of debts. Student loans in default or unpaid child support, in addition to unpaid tax obligations, are cause for the IRS to confiscate your money and they are generally not too shy about doing so. Whether they are set up to withhold this special payment is anyone’s guess. The IRS initially addressed this issue on their stimulus payment FAQ, but that question has been mysteriously deleted.

Phoung Cat Le at the Seattle Post-Intelligencer has a great tax rebate FAQ, for those of you who have more questions.

Answers to tax rebate questions [Seattle P-I]

Comments

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  1. AlteredBeast (blaming the OP one article at a time.) says:

    What I don’t get is…isn’t this stimulus rebate just an advance on next year’s refund? So weither you owe, or will get a refund for 2008, they will just subtract whatever they are sending you now?

  2. DashTheHand says:

    @AlteredBeast: No, its not. That particular question has been covered many, many, many times.

  3. mike says:

    @AlteredBeast: It’s not a refund. It’s cash money the government is giving you.

  4. sisedi says:

    It’s rich people money so go ahead and spend it like a rich person!

    Yeah no clue about your question there let’s see…I bet they won’t give you the cash until you settle what you owe, but I could be way wrong, just guessing.

  5. RBecho says:

    The stimulus check is a tax credit that they are advancing you this year.

  6. CarlR says:

    It’s actually more like a “loan the government is forcing you to take”. We’re all going to have to pay this money back someday – with interest.

  7. SHUDUPAHYOFACE says:

    Interesting … I owe each year since I do some freelance work. Usually I get a refund from my Mass state income tax filing, and the state sends my money to the IRS and it’s applied to what I owe them. I thought that that would be the same with the stimulus check. Maybe not! that would be nice, even though I should absolutely use it to pay down my debt.

  8. thepennyblack says:

    The IRS told me that the amount of my stimulus check would be applied to the amount that I owe. Just like my refund this year. That was about a month ago. I hope things have not changed…

  9. AlteredBeast (blaming the OP one article at a time.) says:

    So in 5 posts, I’m told the question was answered many many times, that it is cash money, a tax credit, and also a loan?

    O_o

  10. BStu says:

    @RBecho: No, that’s what they did last time. This time it is designed as a rebate on taxes previously paid. So if you haven’t paid your taxes, you shouldn’t be getting it. My hunch is that if you owe the IRS money, they’ll apply your rebate to that debt. The purpose of stimulating the economy is a national concern. I don’t think it would trump an individual who has not paid their fair share yet.

  11. bonzombiekitty says:

    @AlteredBeast: No, the stimulus check is an advance on additional tax credit for when you file your taxes for the 2008 tax year. Instead of applying that additional credit to next year’s tax returns, they’re just giving it to you now.

  12. mgresser says:

    My guess is you won’t get a rebate. I’d suggest selling your precious heirlooms for chump change instead.
    [impatientsufferance.com]

  13. bonzombiekitty says:

    @AlteredBeast:
    It’s cash money in the sense that you are getting money that you wouldn’t normally have gotten (via a normal tax return), the reason for this is because it is a tax credit. It’s a “loan” in a very abstract sense of the word.

  14. CarlR says:

    So here’s the full story…

    The government wants to give you a tax rebate (one-time tax cut), but it was too late to change the rules for TY2007. So they passed a tax rebate to be applied to your TY2008 taxes. Now, they didn’t want you to have to wait until you file your TY2008 taxes to get the rebate, so they are giving it to you now based on your TY2007 tax return.

    If your situation changes when you file your TY2008 return, AND IF YOU THEREFORE QUALIFY FOR A LARGER REBATE, you will get an additional rebate payment at that time.

    But it’s not FREE MONEY. Your government is borrowing this money for you on your behalf. And someone is going to have to pay that money back – someday.

  15. xphilter says:

    anyone know if married couples will receive one payment or two? I just received a payment for $600 (half of what I thought, we make much less than 150 combined) and am wondering if my wife will receive a payment too….If not then I’ll totally have to return my new R2D2 DVD projector….

  16. tkozikow says:

    The IRS should apply the stimulus payment against any tax owed. My brother entered into a repayment agreement with the IRS for his 2007 taxes which came to about $2500. The payment is due at the end of July or August and he was told that the stimulus check would be applied against this and he will pay the rest plus interest. Borrowing from the IRS seemed to be a better deal than using other forms of available credit and it was zero hassle. It also doesn’t appear that they checked his credit which is another plus.

  17. robocop is bleeding says:

    So my wife and I owed money this year. We paid via direct debit via H+R Block’s online tax preparation in March. Both our SSNs are below 20. There was no place to fill out our direct deposit information, although the IRS clearly has our banking info and took their pound of flesh weeks ago.

    Am I correct in assuming the worst case scenario and should we expect our check via the mail rather than direct deposit today?

  18. SCAdvanced says:

    From the IRS Website:

    Q. The notice I received shows that I should have gotten more than the government actually deposited into my bank account. Did something go wrong?

    A. It could be that the amount deposited into your bank account was what remained of your stimulus payment after it was offset for money you owed on back taxes or other debts such as a student loan or child support. If this is the case, you’ll receive an additional notice, providing details on the offset.

  19. chrisjames says:

    @xphilter: From the language, it appears that if you file jointly you should get a single stimulus check with the total amount for two people. The max for two people then being $1200. But it may be that even if you filed jointly, you’ll still get two separate $600 checks/deposits. Wait till your wife’s SSN slot comes up.

    From irs.gov:
    “Q. I’m eligible for a payment but I still owe federal income tax from a prior year. Will my payment be reduced?

    A. Yes. For this purpose, the stimulus payment is treated like any other tax refund. This means that part or all of your payment can be used to pay past-due federal or state income taxes or non-tax federal debt such as student loans and child support.”

    So yes, they can use the payment for previous debts. I imagine they also can for current debts, although the other questions mention that you should go ahead and pay off any unpaid taxes while filing, instead of waiting to use the stimulus check to pay. That, to me, suggests that they will not use the check to pay off your current debts.

  20. dmann99 says:

    Come on people, the original posters question is answered right in the IRS Faq:

    Your payment may be less than the maximum for one or more of the following reasons:

    You owe back taxes.

  21. Gorky says:

    If he was to get the stimulus check he SHOULD be sending it in to pay for his taxes anyway instead of blowing it on a new TV. He OWES money and should PAY it. Its bad enough he didnt pay it when it was due in April of 07!!!

  22. matsayz says:

    my girlfriend got her check today, $300. we both paid our taxes on time and each made around $22,000, we were deployed for part of the year. what happened to the supposed $600??

  23. richcreamerybutter says:

    @matsayz: I think these are sent separately, yes? My boyfriend received a letter saying he would be receiving one, and that they would be sent in May. Perhaps they go out after May 9 with the other paper checks?

  24. Lance Uppercut says:

    @matsayz:

    You have to make at least $35,000 to get the full $600.

    [www.irs.gov]

  25. WV.Hillbilly says:

    @AlteredBeast:
    No it’s not.

    See this:
    [www.irs.gov]

    Question #8

  26. johnva says:

    @dabrown: No, that’s incorrect. That’s just an example they are using of how much a person making $35,000 would get. You just need to have tax liability exceeding $600 to get the full $600.

  27. johnva says:

    @matsayz: Go to the IRS Economic Stimulus Payment Calculator and plug in your actual numbers from your tax return. That should tell you what you “should” have gotten.

  28. AustinTXProgrammer says:

    @CarlR:
    I’m a lazy bum (well, working 90 hours a week, so I haven’t had much spare time) and have filed an extension, so I have no idea when I’ll see my rebate (I have to file first, and I’m sure they will make me wait).

    My wife collects Social security disability, and I made enough to easily get the full $1200. We file jointly, as she would barely squeak by for the $300 if we filed separately (Social Security Disability qualifies, but SSI doesn’t. We certainly don’t collect SSI). We also have one child, so we should see $1500.

    The 2nd child is expected this month, so this means we will get an ADDITIONAL $300 next year when we file?

  29. Norcross says:

    Well, I accidentally underpaid this year, due to a W2 from a part-time job that I flat-out forgot about. I filed an amended return, but made a math error and ended up owing them more money. They withheld the amount of the stimulus check from what I owed them. Since I had actually mailed them a check, they’re mailing me the difference.

  30. Norcross says:

    @AustinTXProgrammer: It’s not income, rather, tax lability. My wife was a student and didn’t make any money. I made enough, and we have a kid. We only got $900.

    Look at line 57. If it’s zero, you only get $300 per person.

  31. snoop-blog says:

    What has got me ticked off is that they said mine would be in my account by no later than today. shit’s not there yet. i should have known to never count on the irs for anything. i have not talked to one person who has gotten theirs yet.

  32. CarlR says:

    @AustinTXProgrammer:

    Congrats on your 2nd little munchkin!

    As I understand it, yes – you should get the $300 rebate for your 2nd child after you file for TY2008.

  33. chrisjames says:

    @dmann99: The original poster’s question is about 2007 taxes, not back taxes.

  34. Throtex says:

    Wait … so if my wife and I make more than 150k in FY 2008, do I need to give the money back on my 2008 return?

  35. chrisjames says:

    @Throtex: No, you’re getting a $1200 bonus (assuming you’ll get that full amount). The catch on TY2008 is that if next year’s stimulus is more than what you’re getting in the advance this year (before subtractions I presume), then you get paid the difference next year. If it’s less, you do not have to pay the difference.

  36. alice_bunnie says:

    @robocop_is_bleeding:

    I’m trying to figure this out, too. I thought that it’d be direct deposited, since they had the bank info.

    You can try to see if you can get an answer at “Where is my stimulus check?” However it was saying the information I was entering was incorrect, when I know it wasn’t. :/ My money was not in my account this week.

    I would really like to have it direct deposited. I thought that I got a letter that said it would be direct deposited a while back. Maybe it will be there early next week.

  37. DJ-Pandemic says:

    I miss Tax Cat…. :(

  38. Tzepish says:

    I have a question… those of us who received our tax refund to our bank account via direct deposit were supposed to receive the rebate this week, right? What do you do if you don’t get yours this week (as I haven’t)?

  39. portus says:

    From CPA: Yes. You will be refunded the remainder of stimulus check.

  40. alice_bunnie says:

    @Tzepish:

    See my comment two above you. I haven’t gotten mine either. See if the link in my comment works for you. It doesn’t work for me.

  41. nybiker says:

    All this talk of the stimulus check got me all stimulated to check my checking account – woo hoo, my $600 was deposited this morning (one week early too, since they started earlier)!

  42. Tzepish says:

    @alice_bunnie: Thanks… but it didn’t work for me either.

  43. alice_bunnie says:

    us.@Tzepish:

    Bummer… I wonder if they forgot us.

  44. imrcly says:

    Payment Schedule

    Please allow 2 weeks from the date shown on the schedule to receive your payment.

  45. Tzepish says:

    @imrcly: I hope that’s the case, that I’ll receive mine within 2 weeks…

  46. LemuelaCyparissus says:

    @Norcross:

    I also underpaid taxes and had mailed a check before I received the stimulus check (from which they had deducted the amount owed in taxes). Will they automatically refund the amount I essentially paid twice?

  47. katoninetales says:

    @CarlR: So, if you have any debts you’re paying interest on now, put the money into those, and you’ll have more wealth or less debt by the time we’re all paying it back. If you don’t, make sure you’re earning that interest on the money privately so you can pay it back.

    @xphilter: If you filed jointly, you should get one check. If you filed separately, two. My husband and I were in the first group of direct deposits, but if we were separate, I would have been in a later group.