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Recovery Rebate Credit TurboTax calculation error

Forum|Forum|5 years ago
April 11, 2021
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There appears to be a calculation error in TurboTax regarding the Recovery Rebate Credit. I'll cut right to it, I'm filing married filing jointly, and the totals of EIP1 and EIP2 received was $4769.08. As married with two dependents, I was eligible for $3400 in the first-round (EIP1) and $2400 in the second-round (EIP2), for a total eligibility of $5800. The Recovery Rebate Credit is reduced by 5% of the amount by which my AGI exceeds the married filing jointly threshold ($150,000). According to TurboTax, my 2020 AGI was $169,412. I exceeded the threshold by $19,412. 5% of $19,412 is $970.60. So taking the $5800 total I was eligible for and subtracting $970.60 from it, I get $4829.40. That's the total amount I should have received in total from EIP1 and EIP2. Again the total we received for EIP1 and EIP2 was $4769.08. Subtracting $4769.08 from $4829.40 is $60.32. So I think I should be receiving a Recovery Rebate Credit of $60.32. It's small but it's significant. There is no way in the program to manually calculate the credit, so I'm stuck with what appears to be a wrong calculation. So unless my understanding of the Credit is wrong, there is a bug in TurboTax potentially not giving taxpayers their full refund.

Best answer by NCPERSON1

@deskcomm - the calculation is quite simple:

you are eligible for the Recovery Rebate Credit or the 3rd stimulus - NOT both

1) Number of people listed on your tax return

2) TIMES $1400

3) MINUS what you received for the 3rd stimulus last year (look at your bank account statements between March and May, 2021)

4) EQUALS Line 30, but not less than 0.

Most made the mistake on #3 - not entering what they actually received when prompted by TT. Since the IRS knows what you received (since they sent it to you!), if this number does not match their records, they will reduce Line 30 by the difference, which has the effect of reducing your refund by the same amount.

does that help?

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NCPERSON1

suggest walking your math through the official IRS worksheet; please post back if you think it is still in error.

The $970.60 gets substracted from the eligibility of each payment and the eligibility of the two payments is assessed separately; you appear to be combining everything.

see page 58 and then see lines 14 and 18

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

D

Dave5550

Turbotax says based on my AGI of $79,805 I'm eligible for the full $1200 first stimulus and the full $600 second stimulus. I received $698.50 from the first stimulus already. When I plug that in, it says I'm only due a $621 credit. That doesn't add up to the expected $1,105.50. What gives?

Further I don't understand where Turbotax is getting my AGI from. It looks like it excluded $10,800 out of $17,892 from my AGI. But, didn't the IRS come out and say all unemployment is excluded from AGI for purposes of calculating stimulus payments?

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Cynthiad66

The IRS clarified on Tuesday that the unemployment benefits will not count toward adjusted gross income, the figure used to determine whether people are eligible for the $1,400 stimulus payment. That means more people will be eligible for the stimulus checks.

With the new stimulus bill, up to $10,200 in last year's unemployment payments can be exempt from taxes if your adjusted gross income (AGI) is less than $150,000, according to new exclusions from the IRS. If your AGI is higher, you can't exclude any unemployment compensation

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity. See the specific form or instructions for more information. If you file Form 1040-NR, you aren’t eligible for all of these deductions. See the Instructions for Form 1040-NR for details.

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E

efhask99

Employee

TT showed a $3,600 Rebate Credit as my "Refund Due". But IRS web says we are due $0.00. TT advertising "guarantees accuracy" so when is TT going to send me the $3,600 mistake it made?

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michaelhinton

Why is turbo tax adding money to your refund that IRS is taking back. It ask if i got a third stimulus and the answer was no so my refund went up. Then The IRS said that was an error. Turbo tax need to change the way they ask that question. Turbo tax is making mistakes we deserve some of refund

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BillM223

When TurboTax in the Review asked you if you received the first and second stimulus payment, how did you answer? Did you tell TurboTax that you had received these payments and told TurboTax how much for each one?

TurboTax is not liable for errors in input.

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pfanneda

Bill, turbotax may not be liable for the input, but they are responsible for how they pose the questions. They are also responsible for how it handles the input. So I ran across this issue today. 6/7/2021 Turbotax presents: "Lets double-check the amount received" (in regards to stimulus). Then it presents the amounts for first and second round payments. It asks; "Is this what XXX received?" If one answers yes, then it processes that as you received no stimulus payments. This may have been corrected now, but on 6/7/2021 that's how it processed (I screenshot it for documentation purposes) that input. That to me clearly indicates an issue with how it displayed data and incorrectly processed it. Does turbotax offer rebates/refunds for incorrectly processing input?

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xmasbaby0

Employee

"It asks; "Is this what XXX received?" If one answers yes, then it processes that as you received no stimulus payments."

When TurboTax asks if you received an amount of stimulus money and you answer "Yes" you are saying that you did receive the stimulus money. So the software does NOT put it on line 30 again.

If you are asked if you received the money and you say "no" then the software puts it on line 30 as a credit.

If you have a screenshoot that shows that a user can say "yes" to receiving the stimulus money and then having the software treat that "yes" answer as if the user did NOT receive the money, and putting it on line 30 please share that screen shot with us, since that would have to mean the software got it backwards.

**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.**

K

kathya

I haven't had a chance to figure out why, but my refund was cut in half from $1200 -$600 by the IRS with the message there was an error in calculations, no details given. Since u used TurboTax and have a pretty straight forward return I can only assume there is a glitch in TurboTax.

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ssarfati

Like kathya, we filed with TT only to find that the glitch messed things up. So instead of a refund, we now owe.

Not very happy about this.

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xmasbaby0

Employee

@ssarfati Lots of people gave incorrect answers when they went through the recovery rebate credit section of their tax returns, resulting in a bigger refund showing on the Form 1040 than they were really entitled to get. The IRS cross checks the recovery rebate credit on line 30 and when it sees that you already got money you said you did not receive, they recalculate and reduce your refund. They will send a detailed letter in several weeks.

**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.**

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kleinrl

I agree, there is a calculation error with the Recovery Rebate Credit. Unfortunately, I did not notice this until I got a letter from the IRS. The letter basically stated there was a miscalculation, but they fixed it for me. And, of course, reduced the refund amount to the correct value. I guess I was lucky that they didn't decide to audit me on this. But, they apparently knew about the TurboTax problem and just fixed it for me.

I went back into Turbotax and sure enough, it thinks that my combined adjusted gross income was $10,996...and that is not even close to what it really is.

And to make things worse, the Tax Summary even shows the wrong adjusted gross income value.

So, what the heck happened. TurboTax is all messed up, and now I cannot trust it anymore.

Looks like I will be using a different Tax software starting next year.