IRS Notice - Error in 2021 Form 1040

[spat001]

I received a notice that there was incorrect calculation on Form 1040, Recovery Rebate Credit and as a result tax is due.

I checked everything again, and I have entered all correct information.

Is this a bug in the software? Anyone else got this?

[DoninGA]

If the IRS noted an incorrect calculation then that is because you said you did not receive the 3rd stimulus payment and the IRS has records that show you were sent the 3rd stimulus payment so they removed the  Recovery Rebate Credit that was entered on Form 1040 Line 30.

Go to this IRS website for your tax account to see if the 3rd stimulus payment is entered - https://www.irs.gov/payments/your-online-account
If you are Married Filing Jointly also check your spouse's tax account.

If you checked your bank account in the March - May 2021 timeframe and there is not a EIP3 payment from the IRS then go to this IRS website for how to start a trace on the payment - https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[spat001]

I have indicated that I received the third stimulus payment. The Line 30 of the Form 1040 says the correct amount. My online IRS account shows the correct amount I received.

[DoninGA]

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@spat001 wrote:

I have indicated that I received the third stimulus payment. The Line 30 of the Form 1040 says the correct amount. My online IRS account shows the correct amount I received.

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Then you will have to use the IRS website to trace the payment.

[spat001]

You mean the 3rd stimulus payment? I already indicated that it is showing correctly in my account on the IRS website.

[VolvoGirl]

If you got the 3rd Stimulus payment then line 30 should be be blank, not the amount you already got.  Line 30 is only if you didn't get the full amount or qualify for more. 

[DoninGA]

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@spat001 wrote:

You mean the 3rd stimulus payment? I already indicated that it is showing correctly in my account on the IRS website.

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It may be showing correctly but the IRS removed the credit anyway.  So you need to find out why that happened.  If you did not receive the stimulus you will need to see if the IRS can trace the payment and tell you where it went.

[spat001]

@VolvoGirl Thank you!

I have definitely made a mistake in filing my return.

I have not actually received any economic impact payment in my account, but I reported it on my return since I received a letter from IRS saying that I have received $2800 (and $2800 for my spouse). I checked my account, and nothing has come from them.

So should I be filing an amended return, and then initiating a trace of the payment? Holding for the IRS agent for 1 hour, 40 minutes now.

Thank you for your help!

[spat001]

Thank You @DoninGA 

I am not sure where my payment went.

[VolvoGirl · Accepted solution]

You each got a letter 6475 for 2800?  So 5600 combined?  Do you have 2 dependents?  You didn't get the 5600?  And you checked your bank accounts?  They might have sent a check or debit card which would be easy to miss and think it was junk mail.  The 3rd Stimulus payment came out starting in March 2021.  How much was on your tax return line 30?

You don't need to amend for that.   If the IRS thinks they sent it to you but you didn't get it request a trace for a missing third Stimulus payment

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[spat001]

Yes, we both got a letter 6475 for $2800 each, so $5600 total.

I made a mistake of reporting only $2800 for the EIP in the Recovery Rebate Credit Worksheet, I thought since it is a joint return, only one needs to be reported.

So now IRS sent a notice that I owe the extra $2800 along with interest and penalty. When I amend the return to correctly reflect that $5600 was not received, I see a tax refund.

If I do not amend the return, the interest and penalties will keep going up?

[nikolina996]

I have the same issues 

[VolvoGirl]

@spat001   What?   Why did you say you the 5600 was NOT received?  You got letters 6475 saying you got it.  

The Recovery rebate credit on line 30 is only if you didn't get the full Stimulus payment or qualify for more.

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

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

And amending won't fix anything.   

[bgavin]

I have the same bug.

I just received IRS Form CP12 notifying me of an error in the Recovery Rebate Credit.
All numbers are calculated correct.

It appears TT entered a $2800 credit on 1040SR line #30.
TT did not ask if we had received stimulus checks, and apparently entered this amount.
IRS knows we received stimulus checks, so they disallowed this $2800 credit, resulting in tax due.

IMO, this is a bug in 2021 Turbo Tax.

[xmasbaby0]

Maybe you skipped right past the questions in Federal Review for the recovery rebate credit, which did indeed ask if you received the 3rd EIP.   You were supposed to answer those questions correctly and enter whether you already received the $2800.  Your mistake put $2800 on line 30 when line 30 should have been blank.   The IRS knows that you already received the $2800, so they reduced your refund.   You cannot get the same $2800 twice.

It was not a "bug."   It was a user error.