Amending 2020 Return and Additional 2021 Stimulus

[ETFtrader]

I am amending our 2020 return that was filed in early March to include an IRA contribution. Shortly after we filed the 2020 return in March we received a 2021 stimulus payment (American Rescue Plan Act of 2021) based on our AGI at that time (which was slightly above the AGI phase out). As a result of the IRA contribution our AGI will drop below the phase-out threshold so we will qualify for the full 2021 stimulus.

Two questions:

1. In the Amended 2020 return do I need to report the American Rescue Plan Act of 2021 stimulus (i.e. third stimulus) payment we already received? TurboTax does not appear to ask for this when completing the amendment, but I may have missed it.

2. Should TurboTax (form 1040-X) show the additional 2021 stimulus amount to be received?  Also, is there any clarity on when the payment would be made for amended returns?  I have read that the IRS/Treasury will automatically pay this amount after we file the amendment as they will do a reconciliation -OR- it might be included in the 2021 tax filing year as part of a reconciliation then. 

[Critter-3]

1. In the Amended 2020 return do I need to report the American Rescue Plan Act of 2021 stimulus (i.e. third stimulus) payment we already received? TurboTax does not appear to ask for this when completing the amendment, but I may have missed it.   NO ... it is NOT part of the 2020 program.

2. Should TurboTax (form 1040-X) show the additional 2021 stimulus amount to be received?  Also, is there any clarity on when the payment would be made for amended returns?  I have read that the IRS/Treasury will automatically pay this amount after we file the amendment as they will do a reconciliation -OR- it might be included in the 2021 tax filing year as part of a reconciliation then.  The IRS may send a "plus up" amount for the increased third stimulus when they process the amended return but if they do not then you may qualify for it on the 2021 return you file next tax year.  

[ETFtrader]

As of April 10, 2022 our amended return from 2021 which was e-filed via TurboTax and accepted by the IRS in May 2021 has not been processed.

The effect of that amendment was to increase our refund, increase the 1st/2nd stimulus amount due to lowered AGI as a result of the amendment, and increase the 3rd stimulus amount due to our AGI now falling below the phase-out threshold for the 3rd stimulus. 

For the 2021 tax filing year I am not sure what, if any, amounts from the above I need to include on the 2021 return. Based on our original 2020 tax filing (not the amendment), we received a 3rd stimulus for which we received a Letter 6475 from the IRS. The amount on those letters did NOT include the additional amounts mentioned in the preceding paragraph arising from the amendment which I believe we are due.  

I have tried to reach the IRS on the phone and have been unsuccessful.  

[RobertB4444]

@EFTrader  The IRS is six months behind on their correspondence.  It's annoying but there isn't much you can do about it.  For the 2021 return, however, you should enter the actual amount that you received for the 3rd stimulus on your tax return, not the amount that you anticipate receiving.  In addition, if the program asks about your AGI in order to file then use the AGI from the original return, not the amendment.  That hasn't been processed so the adjusted AGI isn't in the system yet.

[ETFtrader]

Thank you!  Do you know where in the IRS Forms or in TurboTax Step-by-Step I would find the place to enter the Letter 6475 amounts? I am using the TT CD on Windows version.

[Cynthiad66]

Go to forms and search for the Recovery Rebate Credit form.

When you answered questions in Federal Review for the recovery rebate credit you were supposed to enter how much you received. Did you do that? Or did you prepare a return without answering the question?

[ETFtrader]

Thanks, I found the Recovery Rebate Credit Worksheet. Your instructions failed to mention that once you are in the Form view within TurboTax you then have to click on Open Form, then a search bar appears to search for other forms/worksheets. Unless you click on Open Form, no search bar is available within the forms portion of TT.  When I looked at the Worksheet it was completed and the result showed that we didn't qualify based on our 2021 income.

I made a discovery from another TT forum that the 3rd stimulus payment that was made in early 2021 was apparently an advance payment based on 2021 income.  I am now curious, if the government paid us a 3rd stimulus based on our 2020 tax year filing, but now when we file your 2021 taxes and don't qualify per the worksheet, do we need to refund the amount they paid as an advance?   If yes, then where does TurboTax evaluate and what form or line is this reported on? My assumption is the amounts that appear on Letter 6475 for 2021 EIP are only the 3rd stimulus payments and does not include the 2nd or 1st.

[DoninGA · Accepted solution]

@ETFtrader On the 2021 Recovery Refund Worksheet it is only for the 3rd stimulus payment.  The first and second stimulus payments were only reported on the 2020 tax return.

If your 2021 Adjusted Gross Income is over the maximum allowed based on your filing status for the 2021 Recovery Rebate Credit then you do not report receiving the 3rd stimulus on the 2021 tax return.  You do NOT have to repay the 3rd stimulus payment you received.

[ETFtrader]

That is good to know with regard to not needing to refund the EIP.  Did the IRS publish something to confirm this?

[DoninGA]

@ETFtrader 

Go to this IRS website for the 3rd stimulus payment FAQ's - https://www.irs.gov/newsroom/questions-and-answers-about-the-third-round-economic-impact-payment-top...

I received a third-round Economic Impact Payment. Do I need to pay back all or some of the third-rou...

No, there is no provision in the law that would require individuals who qualified for, and received, a third-round Economic Impact Payment (including a plus-up payment) based on their 2020 or 2019 information, to pay back all or part of the payment if, based on the information reported on their 2021 tax returns, they would have qualified for a lesser amount.

[ETFtrader]

Awesome! Thanks for the link.