Adjusted Refund

[Joeyfwb]

Hi All, I used Turbo Tax Premier to submit my taxes.  Just got a letter and a $1400 refund check from the IRS stating they "found an error" on my 2021 Form 1040 which affects the following area of your return: Additional Tax.

They say they changed my information because the amount shown on Schedule 2 of my tax return as additional tax from Schedule 8812, Credits for Qualifying Children and Other Dependents, because I received advance Child Tax Credit payments and either didn't reconcile them or made an error on Schedule 8812 in one of the following: Computation of the Child Tax Credit on Schedule 8812, The Reconciliation of advance Child Tax Credit payments, or Transferring the amount of tax from Part III to my tax return. 

I am single, not married, no children.  I am not claimed under anyone.  How can I verify this? It's a little confusing when trying to back track on Turbo Tax.  Is this related to a $1400 Covid stimulus check I got back in March?  

[NCperson]

@Joeyfwb - the Advance Child Care credit (LIne 28) and the Recovery Credit (line 30) are separate issues.

the Recovery Credit is in multiples of $1400 so it may be coincidence that the additional refund to you was $1400 or maybe it was related to the Recovery Credit and the wrong letter was sent, but the whole thing does seem "odd". 

a few things to check (and please post back)

1) what is on Line 30? since you state that you received the 3rd stimuls last spring, this line should be $-0- please confirm

2) what is on Line 28? since you state you claimed no children, this line should be zero as well. 

3) was there a form 8812 completed as part of your tax return? there shouldn't be if there were no children claimed.

4) access your transcript at IRS.GOV and see if  you can decipher any clues on why they think they owed you $1400. 

[Joeyfwb]

@NCperson Thank you for your help and very quick reply.  If I go to Schedule 8812 in Turbo Tax (if that’s where you were asking me to check those lines)

Line 28 a) Enter the amount from line 14f or line 15e, which applies: 1,400

B) Enter the amount from line 14e or line 15d, whichever applies: 0

Line 30: Enter the number of qualifying children …. : 0

… to answer your 3rd question, I assume based on the above, that yes, a Scheduler 8812 was filed via TurboTax but I have no idea how or why.  In the section after line 12, Principal Place of Abode and Letter 6419

A1 is marked as No in blue

A2 is marked as No in Blue

B1 “Advance child tax credit payments from from Letter 6419 - taxpayer” shows 1,400 in blue. 

… I’m not exactly sure where to look on irs for more info, but when I click tax records, it shows this:

"2021 Advance Child Tax Credit Payments Information

Use the amounts on this page to reconcile the advance payments of the Child Tax Credit on your 2021 tax return.

If you file as Married Filing Jointly, each spouse should see their own amount within their own account. All amounts must be considered if filing jointly.

• Total Amount You Received for 2021 Payments (Box 1)
• (If filing jointly, your spouse’s amount must also be added to your amount.)
  $0.00
  Number of Qualifying Children for 2021 Payments (Box 2)
  0

If the amount on this page is $0.00, you may have unenrolled from or were ineligible for the advance Child Tax Credit payments. Reconciliation may still be required when filing your 2021 tax return."

Thank you in advance

[NCperson]

@Joeyfwb  - something is weird, but let's review (again)

sorry for the confusion ,but I meant what is on lines 28 and 30 of Form 1040.  I suspect zero for each. Please confirm

there should not be a form 8812 if you claimed no children.  what is on lines 4, 5, and 6.  if those are all zero, then the rest of the line items should be zero as well.  do you see where the $1400 is generated (and that is an "odd" number for the child tax credit in any event). Can you tell me what line numbers generate the $1400? 

[Joeyfwb]

@NCperson 

Thanks again for your help and quick reply.  Form 1040:

Line 28: Refundable child tax credit or additional tax credit from Scheduler’s 8812 is blank

Line 30: Recovery rebate credit is blank

If you meant lines 4a-b, 5a-b, 6-b on Form 1030, those are blank. 

If you meant lines 4-6 on Scheduler’s 8812 , those are blank as well. 

“Trying” to answer your question about what line numbers generate 1,400 .. on Form 1040, ***Line 23*** “Other taxes, including SE tax, from Schedule 2, line 21” shows 1,400. 

I’m assuming that’s the problem line? Because in the IRS letter, they show payment I made which is line 24, tax I owed which is line 22 and that difference is 1,400 … which looks like it was added from line 23. 

[NCperson]

@Joeyfwb - i think we are getting closer, but not yet to the answer.... a few more questions.

1) please look at Form 1040 Schedule 2 (look at the upper left corner for the schedule #, title of the form is "additional taxes").  Do you see where the $1400 is coming from? what line number? if it's line 17, please provide the letter (.e.g 17a, 17b, etc). 

2) On form 8812, just check that you don't see the $1400 on any line item.  if you do, which ones? if you don't then the IRS letter referencing 8812 is a 'head fake' and the reason for the refund is elsewhere. 

3) on Form 1040, please re-confirm that Line 23 on the tax return you submitted shows $1400.

post back and hopefully we can figure this out. 

[Joeyfwb]

@NCperson 

1) On Form 1040 Schedule 2, the $1400 is on line 19 (Additional tax from Schedule 8812)

2) On Schedule 8812, I see $1400 on the following lines:

B1 (Advance child tax credit payments received from Letter 6419-  taxpayer)

15e (Aggregation amount of advance child tax credit payments …)

28a (Enter the amount from line 14f or line 15e)

29 (Excess advance child tax credit payments …)

40 (Subtract line 39 from 29)

3) On Form 1040, Line 23 (Other taxes, including SE tax, from Schedule 2, line 21) does indeed show $1400

[NCperson]

@Joeyfwb - okay, I figured this out.

1) the stimulus was $1400 and you were asked in TT to enter how much you received last year.  You correctly entered $1400, which is why Line 30 of Form 1040 is correctly zero.  zero means you were due nothing additional (each person on your tax return was worth $1400 and you received $1400, so not due anything more).  So far so good.

2) but somehow you also must have inadvertantly entered that you received $1400 for the Advance Child Tax credit which you really never received.  Turbo Tax was smart enough to know that by the IRS rules, you needed to pay back the $1400 (your income level required it - there are a myriad of rules pertaining to 'payback'), so it entered $1400 as additional Tax on Form 1040 Line 23, which means your refund was $1400 lower / tax due was $1400 higher than necessary. In essence you paid back $1400 that you never received in the first place.

3)  When the IRS processed your return they see that you stated you received $1400 for the Advance Child Care Credit, but the IRS could also tell from its own records that you did not receive that money, so you did not owe the 'tax' on Line 23 of Form 1040.  They refunded that to you! 

Cash the check!

make sense? 

[Joeyfwb]

It does make sense definitely not without your help ... so thank you so much!  My main concern was this being a flag of identity theft ... Inadvertently entering in the wrong line is much better than inadvertently having a child I didn't know! Ha! Thanks again! Enjoy your weekend!