How Will My Rebate Go if I TurboTax and Owe??

Yes, it rhymes. But let's get past that...

IRSMind has gotten some good questions lately. One of their most recent ones goes as so:

"What if I file through TurboTax and owe? The software will show a balance due but the rebate will probably cancel that balance out. Should I pay the IRS and then get the money back or should I just file and not pay, and allow them to keep my rebate?"

The answer is that your balance due has no bearing on your rebate. Essentially, they are two separate transactions so treat them as so.

Now, here's my two cents. Pay your balance and then wait for your rebate. You don't want to play the odds and risk getting penalties and interest on the money you owe for not paying on time. Although the tax rebates are set to go out in May, anything can happen. So don't rely on your rebate to pay your balance. And don't try to hold out on filing to get the rebate first and use it to pay your balance. To get a rebate, you must file.

Simply put: there's no way around paying a balance. If you owe, pay it. A rebate during the spring will eventually lessen the pain.

See IRSMind's original write-up here. Also, see my most recent post "The Tax Rebate in Plain English" for the final shakedown, the events leading up to the rebate in its final version, and my opinion on the rebate.