Last year, Congress authorized the IRS to provide “Economic Stimulus Payments” (often abbreviated ESP). Many of our clients received these payments last year. They were worth $300 if you had any income at all, $600 if you owed income tax, plus $300 per dependent child.

This year, ESP’s twin is the Recovery Rebate Credit, or RRC. The calculations are the same, the law is the same, but the name is different.

While this is confusing for some people, just remember it this way:

• The ESP is based strictly on 2007 tax return information
• The RRC is based strictly on 2008 tax return information
• You’ll get whichever amount was higher. If RRC is higher, consider the ESP an advance; you’ll get the difference this year.

Categories: Tax News and Tips
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