Question

Recovery Rebate Credit

Forum|Forum|4 years ago
May 30, 2022
3 replies
0 views

I'm wondering why Turbo Tax didn't find my error in reporting the Recovery Rebate Credit. I've had confidence that turbo tax would prompt me to accurately file my taxes, but because of this I went from a decent refund to owing almost $3000!

X

xmasbaby0

Employee

How do you think TurboTax would know if you received the 3rd EIP payment? The software makes its calculations based on the answers you give to the questions. You were asked if you received the 3rd stimulus check. If you said no, then the software calculated the recovery rebate credit for you and added it to your refund. If that was incorrect, the IRS cross checked and removed the recovery rebate credit and reduced your refund to the amount you are actually entitled to receive.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

H

hausedAuthor

I have to say I don't appreciate your snarky answer. I used Turbo Tax, rather than a tax professional, because I had confidence they would catch all possible eventualities (like I answered no - I didn't receive a 3rd payment, but then it should have been flagged that I didn't receive it because of our combined income).

rjs

Employee

The stimulus payments were based on your 2020 tax return (or 2019 in some cases). The income on your 2021 tax return does not provide any clue as to what, if any, stimulus payments you received.

@haused wrote:

I answered no - I didn't receive a 3rd payment, but then it should have been flagged that I didn't receive it because of our combined income.

I don't understand your statement. If you answered No, that you didn't receive a third stimulus payment, and you actually didn't receive it because of your income, then your answer was correct, there was no error to catch, and your tax return would have been correct.

rjs

Employee

I assume that your error was that you said you did not receive the stimulus payment, although you actually did receive it, or you did not enter the correct amount that you actually received. (If you filed a joint tax return, "you" means you and your spouse combined.) TurboTax has no way of knowing what stimulus payments you received, or how much you received. That's why it asks you. It has to rely on you to enter the information accurately. Your entries are TurboTax's only source of information, and it has to assume that you enter it correctly. TurboTax does not have access to the IRS records of payments that were sent to you. It has no way of knowing if your entries are not accurate.

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NCPERSON1

@haused - TT is dependent on your response to how much you already received for the 3rd stimulus to determine the Recovery Rebate Credit"

here is the calculation (pretty simple) for Line 30 of Form 1040: $1400 times the number of people listed on your tax return LESS what you received for the 3rd stimulus last year, but not less than zero.

If what you entered into TT as the amount you received last year and that does not match the IRS records, the IRS will reduce Line 30 by a like amount. That in turn will reduce your refund / increase what you owe

suggestions:

1) look at your bank account statements from last March - May, 2021 and reconfirm what you actually received.

2) if you have Letter 6475, THAT is what you should have entered when prompted by TT. WARNING: if you filed married -joint, there were TWO letters, once for each spouse, and they HAD TO BE ADDED TOGETHER (#1 error I see on these board - failure to add in the 2nd letter!)

does that help?

rjs

Employee

@NCPERSON1 wrote:

here is the calculation (pretty simple) for Line 30 of Form 1040: $1400 times the number of people listed on your tax return . . .

@NCPERSON1

It's not that simple. The OP, haused, indicated earlier that their income might be a factor. For married filing jointly the Recovery Rebate Credit begins to phase out for AGI above $150,000, and is completely phased out for AGI of $160,000 or more. The AGI limits for other filing statuses are lower. There is a worksheet for calculating the credit in the IRS instructions.