Per Turbotax my 2021 refund should be $2,755. The IRS changed my refund to $694. I printed a transcript but not seeing why the huge difference.

[DanPaul02]

There may be an error on your return.  The IRS may have offset your refund for something that you owe.  You can contact the IRS and ask for more explanation.  

[VolvoGirl]

I would check over your return and see if you can see anything wrong especially in the payments section. Make sure you agree with all the amounts listed. Like is the difference the same or close to the refund you got last year? Maybe you put down that you applied last year's refund to this year? Or you applied part of your refund to next year as an estimated payment. Or you put down you made a payment with an extension or paid an estimated payment that you didn't make?

A common adjustment is if you claimed the Recovery rebate credit on 1040 line 30 when you already got the Stimulus payment or got the second one after you filed or reported the wrong amounts or entered them in the wrong box. Do you have an amount on line 30?

[khanushek]

I'm going to call them tomorrow. Thank you. 

[khanushek]

$0 in line 30. thank you. 

[khanushek]

I called the IRS and got an explanation.  There was an amount of $2,069 on line 31, which came from schedule 3 line 2 - Deferral for certain Schedule H or SE filers. This amount only applies if I owe money which I don't.  Would this be considered a Turbotax error since my refund amount was overstated? 

[VolvoGirl]

I don't know why the IRS changed for that.  If you owe self employment tax you can defer it.  This is all I know about it.

Did you have self employment income and a Net Profit on Schedule C?  You probably owe self employment tax.

The self employment tax deferral is an optional benefit.  It is also a deferral rather than forgiveness, so those amounts will eventually need to be repaid. Half of the deferred amount is due on December 31, 2021, and the other half is due on December 31, 2022.

Check if you have a Schedule 3 line 12e which goes to 1040 line 13.

See 1040 instuctions page 104 for schedule 3 line 12e SE tax deferral

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

IRS self employment tax deferred info

https://www.irs.gov/newsroom/how-self-employed-individuals-and-household-employers-repay-deferred-so...

And see (starting with question 18)

https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-20...

See screen shots on this post by Critter

https://ttlc.intuit.com/community/after-you-file/discussion/i-got-an-irs-letter-3064c-stating-that-i...

[khanushek]

Yes, $2069 is on line 12e of schedule 3 then on line 31, but per the IRS that shouldn't be there, because I don't owe any taxes, and therefore there's nothing that needs to be deferred. 

[VolvoGirl]

Well you do owe self employment tax on your Schedule C.  Do you have a Net Profit?   See if the tax is listed on 1040 Schedule 2 line 4 which goes to 1040 line 23.  That was being deferred. And now the IRS is saying you can't defer it.   

[khanushek]

Yes, there's $6,633 in SE tax. 

[jennbackus]

I believe the reason why my refund was reduced was due the Recovery Rebate Credit. I have a dollar amount entered in line 30. I also received stimulus checks. I believe 2 in 2020 if I remember correctly.

Did this amount automatically key in from Turbo Tax? Not sure I remember entering it. I have only one child that is eligible. My son was 18 in 2020. Daughter was 11. 

[DanPaul02]

For a while in January and February TurboTax started out assuming you did not receive the stimulus and you had to tell TurboTax that you did receive the stimulus.  If you missed that step, you would have claimed stimulus payments that you already received and the IRS would have adjusted the math.