Unless you put in for an extension back in April, there might not be a lot you can do with respect to claiming a recovery rebate credit.  That ship has sailed.

However, it’s worth taking a quick look at this unique 2009 tax wrinkle.  It’s an interesting little twist to the way taxes are usually calculated and it created some headaches and confusion for taxpayer and professional preparers alike.

Let’s start with a brief explanation of what the credit was all about.  We’ll take that straight from the horse’s mouth.  The IRS put it thusly:

The recovery rebate credit is a one-time benefit for people who didn’t receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.

Generally, a credit adds to the amount of your tax refund or lowers the amount of taxes owed. Therefore, the amount you receive for the recovery rebate credit will be included as part of your refund, as shown on your tax return.

That makes sense, right?  Well, sort of.  In order to understand why it worked that way this year, you need to understand the way the original stimulus checks were issued back in 2008.  It was a predictive system, which created the potential for those who didn’t appear likely to qualify to actually do so after the year’s dust settled.  BankRate.com explains:

The checks issued last year were based on individuals’ 2007 tax data, but the money technically was an advance credit against 2008 taxes. Congress and the president decided to hand out the cash early in the hopes that individuals would spend it and help lift the economy out of the doldrums.

Okay, now you know what the recovery rebate credit is/was and why it existed in the first place.  Right now, you might be wondering whether or not you actually did what was necessary to check your own personal eligibility and to stake your claim to a credit if you qualified.

There were four different groups of people eligible for the credit.

First, those who experienced a dramatic change in their financial situation between ‘07 and ‘08 may have qualified.  As you’d guess, the IRS’ definition of “drastically” is, well, pretty drastic.

Second, you could qualify if you didn’t file a 2007 return and your 2008 numbers indicated eligibility.

Third, if you had an additional qualifying child during 2008, that could entitle you to some more loot.

Fourth, those who were “claimed as a dependent on someone else’s return in 2007, but [could not] be claimed as dependent in 2008″ got a shot at the recovery rebate credit.

So, did you remember to check your eligibility?  You can start by pulling out your tax return and looking at Line 70 of your 1040.  That was the spot to do it (there were similar lines on 1040A’s and 1040EZ’s).  There was one of those oh-so-much-fun worksheets in your instruction manual to help you pin down whether and/or what you were owed.  If you used TurboTax or some some other program, it probably prompted you for the information necessary to determine eligibility.

You could qualify for a little extra “stimulation” via the recovery rebate credit.  It would then stand to reason (and be wholly consistent with our expectations for the IRS) to assume that you could also have your already-issued stimulus money cut down to size if you were overpaid, right?  Well, that’s one nice thing about this whole deal.  You could ask for your fair share if you were underpaid but the government didn’t ask for a dime back from you if you were overpaid.  Don’t blink.  You’ll miss it.  And it will be the last time you ever see something like that happening!

Have you ever wondered what would happen if the IRS decided to give out credits based on predictions of future financial situations and then had to deal with those who had inaccurate predictions?  Now you know.  They cut one check, were willing to cut another and didn’t ask anyone of the overpaid folks to pay anything back.

The recover rebate credit definitely wasn’t the norm when it comes to tax preparation or IRS behavior!