2020 Recovery Rebate Credit reduced from $1800.00 to $1203.46

[PML1995]

Hello:

TurboTax efiled our Form 1040-SR, on 15 February 2021 and it was Accepted by the IRS system within a few minutes. I filed "Married Filing Joint Return". I used the IRS Free File edition of TurboTax and began on the IRS web site.

We live overseas. I am a U.S. Citizen with an SSN. My wife is a non-resident alien with an ITIN number.

Today, 22 May 2021, when I checked the IRS web site about the refund, I saw a welcome change. Instead of it showing that my return was being processed, this morning it shows that the Refund was approved. However they reduced the amount by almost $600.00 USD.

The $1800.00 USD is the total amount of the two (2) Stimulus payments the IRS sent to millions of people in the USA during 2020. TurboTax showed that the total for the Recovery Rebate Credit was $1800.00, which was for the 2 Stimulus payments the IRS issued during 2020, neither of which I received, if they were mailed to me. If they sent Checks for those 2 payments in the mail, I did not receive them and I will never receive them in the mail.

The notice says they will Deposit  $1203.46 in our bank account in the USA next week.

Note: When I click to get more details of why the IRS reduced the amount of the Refund, it shows this as one of the possible reasons:

"Details:

We changed the amount claimed as Recovery Rebate Credit on your tax return. The error was in one or more of the following:

You (or your spouse if married filing jointly) used an Individual Taxpayer Identification Number (ITIN) and there is no indication that one spouse was a member of the Armed Forces of the United States at any time during the tax year, so that an exception does not apply to the rule that both spouses must have a Social Security number."

QUESTIONS: (a) Is there a possibility the IRS is incorrect and that we are also entitled to the other $600.00 as TurboTax calculated on 15 February 2021?

It says please mention Reference Number 9021 to the IRS Customer Service Representative.

(b) After the $1203.46 is in our bank account, should I file an Amended return for the 2020 tax year, changing Filing Status from "Married Filing Jointly" to "Married Filing Separately" so that I, the U.S. Citizen, receive the other $600.00 USD?

(c) Was TurboTax correct in calculating a total refund of $1800.00 USD, or, is the IRS correct in disallowing the $600.00 USD?

Mail from the USA is not delivered to our house so any mail the IRS sends to me will never arrive here.

Thank you, in advance, for your time and your help, and for sharing your expertise, which I greatly appreciate!

[Critter-3 · Accepted solution]

QUESTIONS: (a) Is there a possibility the IRS is incorrect and that we are also entitled to the other $600.00 as TurboTax calculated on 15 February 2021?   The IRS is asserting that the $600 was mailed to you so you cannot have it on the return as a credit.  So you will need to initiate a TRACE on that payment.  See the third + here:    https://www.irs.gov/coronavirus/second-eip-faqs

It says please mention Reference Number 9021 to the IRS Customer Service Representative.    

9021– Reference Code for all math error conditions.

Note that a "math error" can occur if you make a data entry mistake, or forget to claim some income; and thus the refund amount is incorrectly calculated..  The IRS will be sending you a letter. They do not notify TT. 

(b) After the $1203.46 is in our bank account, should I file an Amended return for the 2020 tax year, changing Filing Status from "Married Filing Jointly" to "Married Filing Separately" so that I, the U.S. Citizen, receive the other $600.00 USD?          That  will not work AND  you cannot switch from MFJ  to  MFS  after the due date of the return.  And the $3.46 is interest for taking too long to process the return ... it is taxable income on the 2021 return.

(c) Was TurboTax correct in calculating a total refund of $1800.00 USD, or, is the IRS correct in disallowing the $600.00 USD?    TT calculated it based off what you entered ... but the IRS disagreed with the amount you said you got in advance ... again initiate a trace. 

Mail from the USA is not delivered to our house so any mail the IRS sends to me will never arrive here.   Then you best fix this ... the IRS should always have a place on file to send you mail.   If the address you had on the last return it not good then mail in a form 8822 to update the address.   https://www.irs.gov/pub/irs-pdf/f8822.pdf

[PML1995]

@Critter-3   Thank you. From what you wrote, it looks like the IRS mailed a check for $600 USD for the EIP2, which I didn't receive.  After the $1203.46 is in our bank account, I will contact the IRS and let them know that if they mailed a Check for $600 for EIP2, that I did not receive the check and to please put a "Stop Payment" on the check and replace it with a Direct Deposit.  Much appreciated!