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My state tax return went down when I added my stimulus payments. It is not taxable. I cant figure out why this happened. Is this a bug?

Forum|Forum|5 years ago
January 24, 2021
2 replies
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Happened as soon as I input stimulus check and nothing else changed

TurboTax Deluxe Online

Best answer by DMarkM1

Your state return gets updated with all information in your return when completing the "Federal Review". Your state refund changed due to all the entries made to that point in the interview. It is coincidentally, just after entering the stimulus payments.

DMarkM1

You are correct the stimulus payments are not taxable income since tax credits are not taxable. Be sure you are entering the stimulus payments only in the "Federal Review" interview section. Which state program are you working in?

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brys14Author

It was for Oregon. I did enter it in the federal review section. It was at the end where it asks if I received the stimulus and I input the amounts (I did enter the correct amounts) which then lowered my state return directly after I entered it. Just confused how it had affected that. It did not affect my federal return.

DMarkM1Answer

Your state return gets updated with all information in your return when completing the "Federal Review". Your state refund changed due to all the entries made to that point in the interview. It is coincidentally, just after entering the stimulus payments.

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richjenn02

I am from Texas and my taxes did the exact same thing...crazy..I went from getting $649 back to owing $2,000...crazy

ReneeM7122

You are absolutely correct. Stimulus payments are not taxable. They are not part of the calculation to determine Federal or State taxes. The recovery rebate tax credit and stimulus checks are two parts of the same thing. The way the law is written, both the first ($1,200) and second ($600) stimulus checks were simply advance payments of the credit. So, if the combined total of your two stimulus checks (i.e., advance payments) is less than the recovery rebate credit amount, you may be able to get the difference back on your 2020 tax return in the form of a larger tax refund or a lower tax bill. If your stimulus checks exceeded the amount of the credit, you don't have to repay the difference.

To check why your refund changed to an arrear

Navigate over to Forms View and look at your 1040, line 30. This is where you can see the recovery rebate credit.
Then check the Refund and Amount You Owe fields to see what the software has calculated. These are boxes 34-37.

Here is a screenshot: