2019 Earned Income

[DaveUSAF]

As I understand it, if I use the 2019 earned income credit for 2020, you will get more back from the IRS because the stimulus payments are not included.  Is this correct and how can I fix that?

[DoninGA]

Stimulus payments are not income they are an advance tax credit based on the 2020 federal tax return.  The stimulus payments are not taxable and not entered on a tax return.

[DaveUSAF]

I understand that, but when doing my taxes it treated them like income and my return amount dropped significantly.

[DoninGA]

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@DaveUSAF wrote:

I understand that, but when doing my taxes it treated them like income and my return amount dropped significantly.

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Before you get to the stimulus questions in Federal Review, the program gave you the maximum credits you are eligible to receive based on the 2020 federal tax data you entered.  Your refund reflected those max credits.  After you entered the stimulus payments you actually received, the credits were reduced to either 0 or what you should have received.  Thereby reducing your federal tax refund to the correct amount.