New Line on Tax Form Causing Errors; IRS Urges Caution to Avoid Refund Delays (IR-2002-19)

The IRS has announced that errors related to a new line on the basic income tax forms may delay refunds by a week or more for taxpayers filing incorrect returns. The Service has already found more than one million returns with these rate reduction credit errors.

This credit is claimed on line 47 of Form 1040, line 30 of Form 1040A and line 7 of Form 1040EZ. The credit is for taxpayers who did not get the maximum benefit from the 2001 advance payments, and whose 2001 income or tax amounts qualify them for an additional amount.

Taxpayers who received the limit for their filing status should leave this credit line blank. The maximum amounts are: $300 for a single person or a married person filing separately; $500 for a head of household; and $600 for a married couple filing jointly or a qualifying widow or widower.

The main errors taxpayers make on the rate reduction credit line are: entering the advance payment amount, when the line should be blank because the taxpayer has already received the maximum benefit; entering a credit amount, when the line should be blank because the taxpayer is a dependent; leaving the line blank, when the taxpayer actually qualifies for the credit; or figuring the credit amount incorrectly.

The IRS is advising taxpayers that, if an error related to this credit has been made, the taxpayer should not file an amended return until after the IRS processes the original return. The Service is checking all returns to see that the line is handled properly and should notify affected taxpayers of any change it makes. The IRS is rejecting e-filed returns that show the advance payment amount on this line or that show a dependent claiming the credit, so that the taxpayer or return preparer may quickly fix the problem and transmit a corrected return.

For help in completing the rate reduction credit line visit the IRS website at ww.irs.gov, call IRS TeleTax (toll-free) at 1-800-829-4477, press "3" to listen to recorded tax topics and choose topic 609 or call the toll-free tax help line, 1-800-829-1040.