Amending return and 2021 stimulus

[ilya555]

I filed my 2020 taxes in early February and received my federal refund February 26. We just received the latest stimulus payment and it was lower than the max amount because we're between the AGI thresholds. I had planned to contribute to a traditional IRA before 4/15/21 and then file an amended 2020 return with my new lower AGI amount...this would have increased our stimulus amount significantly.

Question is, if I do the amended return next week reflecting the lower AGI, is there a way to get the additional stimulus funds based on the lower AGI? Not able to get anyone on the IRS help line and the stimulus help line suggested I would need to file the Recovery Rebate during the amended return but in reading about it that form seems to be only for stimulus not received in 2020.

[CatinaT1]

This is unclear at this point.  You are correct that the Recovery Rebate Credit is only for the first two stimulus payments.

This link continues to be updated as information becomes available.  This information is provided by the IRS - Third Stimulus FAQ  

[ilya555]

I’ve tried calling the IRS numerous times for clarity on this and the individual accounts line literally has no representatives available nor any way to queue up; just says they have high call volume and to try another day. I would like clarity on this so I can submit an amended return properly...can anyone help?

[DMarkM1]

IRS is reporting that they will be making a sweep of returns to get out any updates to stimulus payments at the end of the tax season. Additionally, when you work the amendment you will change your Recovery Rebate Credit on the amendment as well. 

Remember by contributing to your IRA to get the higher stimulus amounts, you're getting a tax savings this year as well as the potential additional stimulus amounts.  For example if you put 5,000 into an IRA to move you to the max stimulus.  Maybe you already received 90% of the joint filing Recovery Rebate amounts (.9 x 3600 = 3240) so you will get $360 extra credit now plus the 5,000 is excluded from taxes this year.   

I don't know your actual numbers but the concept is the same. 

By working the contribution and the amendment you will have some benefit either way.

[ETFtrader]

Any update on this topic?

My situation is that my wife and I were just over the 2021 stimulus AGI threshold limit for joint filers when we filed our 2020 taxes. We received only a small amount of 2021 stimulus funds due to the steep AGI phase-out over $150K.  I realized after filing the 2020 return that if I made a max IRA contribution it would increase the 2021 stimulus to nearly the full $2800 and also increase our 2020 recovery rebate by $700 since I earned no income in 2020. It also turns out that the IRA contribution will also significantly increase our Federal and State tax refund. So I intend to amend our 2020 return.

Question: If I file the amended 2020 return to reflect the IRA contribution, will the amendment trigger the additional stimulus funds to be sent?  Also, during the amendment preparation process in TurboTax, will it prompt me regarding the amount of 2021 stimulus we have already received so it computes the corrected 2021 stimulus amount (or is it not part of the amendment process)? 

[DianeW777]

Yes, the amendment should automatically reflect the correct stimulus amounts and the IRS will process it and do the reconciliation process as well. The third stimulus will be reconciled on the 2021 return, however they may send the additional amount after the amendment.

Follow the instructions carefully and be prepared for a short delay in the ability to e-file the amended return.

• How to amend (change or correct) a return already filed (and accepted at the IRS)
  • Review the information here to be sure you need to amend your return.
• Steps to amend my 2020 return
• Why can’t I file my amended return?
• How will the third stimulus impact me?

[ETFtrader]

We received a partial amount of the third (2021) stimulus after filing our 2020 return.  By partial I mean, we were phased out of additional stimulus due being just above the AGI threshold.  The amended return I am now filing will result in an increase to both the third and prior 2 rounds of stimulus since our AGI will drop below the threshold (due to a $7K IRA contribution that I am reporting on the amendment). 

Should TurboTax show the new refund totals, including the amount of additional stimulus that we will now qualify for? It's not clear from looking at the 1040-X.  I believe all that the 1040-X is calculating is the additional Federal and State tax refund amounts but its hard to tell. By my tally, the new refund amounts inclusive of the additional stimulus amounts should be significantly larger than what TurboTax is currently showing. The increase in the third stimulus amount appears to not be included at all in the new refund amount.

Do I need to report anything in the amended return regarding the stimulus amounts that have already been paid or does the IRS account for that automatically as part of their reconciliation? The only thing I plan to report on the 1040-X is a $7000 traditional IRA contribution made after filing the original 2020 return.  I do see that the 1040-X includes the total overpayment, which is inclusive of the Recovery Rebate Credits relating to the first and second round of stimulus. But if these Recovery Rebate Credits are to increase as a result of the amendment, shouldn't these also show in 1040-X? Right now its seems to not do that.

Also, do I need to show evidence of making the IRA contribution prior to May 17, 2021 in part III of form 1040-X?

[ThomasM125]

Your amended return would only reflect additional stimulus payment due you if you didn't receive all of your 1st and 2nd round stimulus payments and you entered the amount you did receive when you filed the tax return. It would not reflect any of the third stimulus payment as that is not entered on your 2020 tax return to begin with.

If you entered the amount of 1st and 2nd round stimulus payment you received on the original return, you don't need to enter anything about it on your amended return. You do need to enter the amount of refund you received on the amended return though.

In part III of form 1040-X you enter a description of why you are amending the return, which is this case is to add a deductible IRA contribution of $7,000. It is assumed it was done on time, as otherwise it wouldn't be deductible.