The IRS rejected the $700 credit on Line 30 on our 1040 SR return and sent us a notice that the rebate credit amount was "computed incorrectly" and we need to pay $663 instead of getting a $37 refund. Our recovery rebate check totaled $2100 in 2021. Any idea(s) for this denial?
Are you mailed and claim a dependent on your 2030 return? Did you claim the dependent on 2021? You should have each gotten IRS letter 6475 saying what they sent you. You each get a letter for half. So I'm assuming you got a letter for 2100 and you spouse did too. 2100 is half of 4200. Which is the 3rd Stimulus payment for 3 people.
Double check your bank statements and Check your IRS account (both accounts if married)
Your Online Account | Internal Revenue Service
If the IRS thinks they sent it to you but you didn't get it request a trace for a missing third Stimulus payment
We claimed our youngest as a dependent in 2020, but not in 2021. I misplaced one of the 6475 letters. We received $4200. Does that explain it?
Yes. That's exactly how I explained it above. You should have entered you got 4200, but you must have only entered half 2100 from one letter. On your 2021 return you only qualify for 2800 (2x1400). But you entered you got 2100 (from 1 letter). So you tried to claim the 700 difference on line 30.
But you really got 4200 which is more. Line 30 should have been blank. And you don't have to return the 1400 you got for your dependent.