ERROR in Turbo Tax Calculations for Federal Economic Stimulus Payment Due To TT FORM "Recovery Rebate Credit Worksheet".

[NORMB01]

IRS CP11 is saying:

We found an error on your 2020 Form 1040SR, which affects the following area of your return: Recovery Rebate Credit.  We changed your return to correct this error. As a result , you owe $713.90.

Why is this considered an error?   How do I correct this error?

[NCperson]

@NORMB01 - let's focus on Line 30 - that is the issue. 

Line 30 is simply 1) $1400 times 2) the number of people listed on your tax return 3) LESS  what you received for the 3rd stimulus between March - May, 2021, but not less than zero. 

critically, if item 3) that you were asked to enter into TT does not match what the IRS knows they sent you, the IRS will adjust Line 30 by the difference.  

Please go back and review your bank account records to determine what you received from the IRS for the 3rd stimulus.  Does that match what you entered into TT?  I bet we will find the issue there. 

(There is also a 'haircut' as your AGI exceeds $7500 and approaches $80,000 (single), or exceeds $150,000 and appraoches  $160,000 (joint) but we can deal with that later if impacts you)

[NCperson]

was the CP11 letter for 2020 or 2021 ; I gave you the 2021 analysis.  2020 is going to be a similar issue:

the IRS beleives it sent you more than you entered into TT, and hte difference reduces line 30, but it can't take Line 30 below zero. 

[VolvoGirl]

 Line 30 is only if you didn't get the full amount or qualify for more.  So check your bank account for the amounts you already got.

EIP1 The first Stimulus payment was 1,200 for each spouse and 500 for each dependent under 17.  Came out in spring of 2020.

EIP2 The second Stimulus was 600 per person and dependents under 17. The 2nd stimulus checks started going out at the very end of December 2020 and continued into January/Feb 2021.

The first 2 Stimulus payments went on your 2020 return even if you got the second one in Jan/Feb 2021.

[NORMB01]

Thanks for you feedback.  My Wells Fargo online only goes back to deposits made through May 2020 and did not see any simulus deposit.  I'll need to contact them on Manday to find out how to see older 2020 deposits.

[fanfare]

@NORMB01 

your IRS transcript for 2020 will tell you what you received.

IRS also sent letters to everyone with the amount of EIP1 and EIP2.

What happened to your letters from IRS?

[floridaflash1]

OK I was wrong!  I double and triple checked my return and the EIP3 payment and my bank account and found the correct amount and amended my return so it was not a TurboTax error. 

[NCperson]

@floridaflash1 - DO NOT AMEND YOUR RETURN FOR THE EIP3 ERROR.

The IRS will find it  and adjust without the need for an amendment.

[cep1021]

I received a letter from IRS stating that I owed the government an additional $377 because I was not entitled to receive the credit TT calculated from TT  Form "Recovery Rebate Credit Worksheet.  They added tax to this underpayment.  This is the second time TT has done this to me and the  last.  I will find another tax service next year.  If they miscalculated this error, I fear there are other mistakes and I am through with their blunders.  I am 77, on a fixed income and cannot afford their miscalculations.

[NCperson]

@cep1021 - I appreciate where you are coming from and the impact this has.....

the error is normally caused by misentering how much you actually received for the 3rd Stimulus last year. 

If what you entered did not match the IRS records, then the IRS will adjust your refund by the difference, so in effect it matches their records.

How much did you receive for the 3rd stimulus and what is on Line 30 of your tax return?  

[1Tonya-Kyle]

We received a letter from IRS yesterday stating that they (found an error on our 2021 Form 1040SR, which affects the following area of our return. RECOVERY REBATE CREDIT.  They have change return to correct the 

error and as a result they state that they do not owe us a refund and we do not owe them anything.  I would like to know what is going on. This was our first time using TURBO TAX and assumed everything would be alright, plus you 100% guarantee and verify all of the calculations.  Our Turbo Tax Order # TTWCA [removed]. Please respond and let us know how this can be corrected.  We have until July 22, 2022 to resolve the errors, which as far as we knew there were none.  We are very upset plus we paid you for this service.

Jacquelyn Walters and Hans Orban ([email address removed])  

[Pajora]

Thank you for providing clarification. Yes, that's precisely what I did wrt my 2021 taxes: a $2800 Line 30 entry which should've been blank thus, the IRS sent a taxes owed notification. I did speak with a very helpful IRS customer support person who helped me better understand this mess. I say mess, because she asked me if I had used TT, which I confirmed. She commented that I was one of many customers who did not fully understand TT's Line 30 question. 

[xmasbaby0]

@1Tonya-Kyle 

LOTS of people have made mistakes this year with the recovery rebate credit by "forgetting" that they received the $1400 per person stimulus checks last year.  They answered no to the questions for the  recovery recovery rebate credit and put the $1400 per person on line 30 of their returns.  But you cannot get it twice, so the IRS removes it when it is there by mistake.

Try checking your online account with the IRS

https://www.irs.gov/payments/your-online-account

Does the IRS show that you received a $1400  per person stimulus or EIP check in 2021?   Did you receive it?   When you were asked on your tax return did you say no?   Was there $2800 on line 30 of your tax return?

If you received the $2800 last year then line 30 should have been blank.

If the IRS says you got $1400 per person last year but you did not receive it you can have it traced.

LOST THIRD STIMULUS CHECK

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-round-economic-impact-payment-top...

If you need to trace a payment that the IRS says has been issued to you, mail or fax a completed IRS Form 3911, Taxpayer Statement Regarding Refund.

[kgibb10]

Clear to me that TT has an issue with their automated calculations 

I was not seeking any other Recovery Rebate during my use of TT services 

It came back after processing and provided me "Good News" your eligible for a $2800 credit

Which after receiving a CP11 this week I found out was in fact an error

I spent hours researching and speaking with the IRS this week

The last thing I expected from a 100% accuracy claim

I did in fact get the 3rd payment last year ....like many did not recall has it occurred in February 2021

I will not be using TT again

[xmasbaby0]

@kgibb10 

You wrote:

"I did in fact get the 3rd payment last year ....like many did not recall has it occurred in February 2021"

So you answered the questions about the 3rd EIP incorrectly and want to blame the software?

For many people, receiving $1400 per person is a memorable event.   If you were not sure if you received the 3rd EIP you could have checked your own bank account for deposits of $1400 per person in 2021, or you could have checked your online account with the IRS.  The IRS sent letter 6475 to people who received that $1400 per person stimulus money and you were supposed to use that information on your tax return.