With the 2020 tax year software came the introduction of Worksheet 8. After 2022 this form was renamed to Worksheet 9.
The program will start a new return with a refund to start accounting for the stimulus payments. However, the system does not know if your client received the stimulus payments. On the 2020 tax return, you are accounting for the two stimulus payments for 2020. One in early May, the second in December 2020/January 2021. If they received their second payment in January, or before you file the return, then you account for it on this form.
An example of the refund before you enter anything into a return:
Fill out the information about the return, Client and Spouse, dependents, and income, fill this worksheet out as one of the last things you do. You will notice the refund will go up based on the number of dependents on a return. That is how the stimulus was calculated, based on the number of dependents.
Now on 1040 Wkt 8, you have to adjust for what the client got. They will not be paying tax on the Stimulus money and they will not be paying it back. If you believe they are, you can continue to read Wkt 8 with all detail and refer to IRS.gov which discusses the stimulus payments and tax treatment.
The following image shows the boxes that you must fill in or they will calculate once you start filling them in. The description next to the line number describes exactly what you need.
If you call into our office to discuss this worksheet, we have to simply read the line descriptions too. You have to know what your client got as a stimulus to properly file their taxes.
There are some tools at IRS.gov to help you determine what your client received. UltimateTax does not have any other inside information on this form and numbers.
