Turbotax Recovery Rebate Credit 2021

[xmasbaby0]

@dcusic That generic letter goes to people who have errors on their tax return, and is difficult for folks to understand.   In many cases the real problem lies with the catch all term computation errors---which can refer to incorrect information entered by the user resulting in a refund that was calculated based on incorrect data.

Those errors have been widespread this year, and usually have to do with line 28 or line 30 of your Form 1040, where you may have entered incorrect information for the child tax credit or the recovery rebate credit.

TurboTax does not get any information from the IRS after you file your tax return, so no one at TT knows why your refund was less.

You have not mentioned any specific amounts.  Sometimes we can make an educated guess as to the reason for your reduced refund if you mention specific amounts--for example if your refund was short by $1400 per person---it is likely to be a mix up regarding the 3rd EIP payment.    If you received the 3rd stimulus check of $1400 per person in 2021 then you got letter 6475 from the IRS about it.   You needed to enter the amount you received.   If you already received that money then line 30 on your Form 1040 should have been blank.

  If it is short by $1800 or  $1500 or  a multiple of that amount  ---   maybe a mixup regarding the advance child tax credit payments. If you received monthly child tax credit payments of $250 or $300 per month between July and December of 2021, then you got letter 6419 from the IRS, and you were required to enter the amount of the advance payments.   Only the remaining amount of the CTC should have been on line 28 of your Form 1040.

The IRS knows how much they sent to you for the 3rd stimulus check and they know how much they sent for advance child tax credit payments.   If you answered something incorrectly on your tax return then the IRS made a correction that resulted in a reduced refund for you. 

 Or---the fees you were supposed to pay for using TurboTax + the "refund processing fee" charged by the third party bank….

Did you choose to have TT fees deducted from your Federal refund?  (Remember that if you did that, you also agreed to an extra refund processing fee of $39.99 or $44.99 in CA)

How can I see my TurboTax  fees?   

https://ttlc.intuit.com/questions/2565973-how-do-i-review-my-fees-in-turbotax-online

What is Refund Processing Service?

The IRS will send you a letter that explains why your refund was reduced.   Meanwhile it might help you to check your online IRS account.

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

https://blog.turbotax.intuit.com/tax-refunds/why-is-my-tax-refund-not-what-i-expected-49240/

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.

Updated IRS FAQ about recovery rebate credit

https://www.irs.gov/pub/taxpros/fs-2022-27.pdf

[NCperson]

@dcusic - the calculation of the Recovery Rebate is totally automated by TT, with one exception: TT asks how much you received for the 3rd Stimulus.  If that doesn't match the IRS records, the IRS is going to adjust your refund by the difference between what you entered and their records.  It's that simple.  

1) how many people were listed on your 2021 tax return times $1400 is what you are entitied to.

2) how much did you receive in your bank account last year (most of the money came March - May, 2021).  You may have also received Letter 6475 from the IRS stating what you received.  However, and this is where I see most of the errors come into play, if you filed joint, there were TWO letters, once for each spouse and your were to ADD the two amounts together when TT asked how much you received.  

#1 - #2 is what ends up on Line 30 (but not less than zero). 

questions:

1) how many people were listed on your tax return?

2) what was on Line 30?

3) how much did you receive for the 3rd stimulus (please review your bank accounts or Letter 6475 - do not do from memory!) 

post back and we can figure this out without waiting for the letter in 2-4 weeks from the IRS.

[fishmilton]

IRS says I owe 1037.98 because of incorrect "recovery rebate credit".

[NCperson]

@fishmilton - here is what is occuring, and there are a number of similar posts on these boards.

When you completed the tax return, you were entitled to the Recovery Rebate or the Stimulus - but not both.

The calculation is totally automated by TT, except for one input: TT asked you how much you received for the third stimulus, which most received between March - May, 2021.  It was also confirmed on Letter 6475 that the IRS sent to you.  But here is where I see most go wrong: if you filed "joint", there were TWO letters and the SUM of the two letters is what was to be entered into TT.  

• How many people are listed on your tax return (you, spouse, children, others)
• what is on Line 30 of Form 1040?
• how much did you receive for the 3rd stimulus? (please check your bank statements or review Letter 6475 before repsonding to this question)

if you post the answer to those 3 questions, I suspect I can figure out what occured. 

[Chefkowboy]

1) 1

2) 1400

3) 1400

[NCperson]

@Chefkowboy  so as I stated above, you were entitled to either the Stimulus or the Recovery Credit but not both.  

So you were entitled to $1400, which you state you received (answer #2) last year.  

but it appears than when prompted by TT during the interview process to enter how much you ALREADY received for the 3rd stimulus, you must have answered $0.

Line 30 is what you were entited to ($1400) less what you state you received ($0), so $1400 posted on Line 30 which inflated your refund by a like amount.

Therefore, when the IRS reviewed your return, and they knew what they sent you, they reduced line 30 to zero, which indictes you are not due anything more than the $1400 you received last spring.

hence the refund was reduced by the same $1400

does that make sense?  

[Chefkowboy]

TT asked me how much I'm entitled too from Letter, I entered 1400.  Then TT asked to verify that this is what I received.  I answered yes.  There was no question of how much I received so I was never prompted to enter an amount.  It is at this point in the programming that some switch is not being thrown to show that I have received my stimulus payment.

[NCperson]

@Chefkowboy - 

suggest going back into the software and review that you entered $1400 and not zero..... (memories sometimes fail the reality)

the math on Line 30 is quite simple: 1400 times the number of people on the return less what you entered that you already received.

also, if you did in deed receive the $1400, then you are not entitled to more, that is why the IRS adjusted your return...Line 30 was supposed to be zero. 

[Chefkowboy]

I have and there were no errors on my end.  I'm pretty sure this was a bug in the software that was corrected quickly but only after my return had been submitted.  Now that it has been corrected, my attempt to amend my return to correct another of the confusing TT quirks, namely the fact that it doubled the amount of o&g royalty due to asking essentially the same question in personal and in business without catching the duplicate info, has now resulted in a tax balance due because it is correcting the $1400 mistake.  So I don't know if I should send in the amendment.  Will IRS figure out that I in fact am due an additional refund for the royalty correction?

[Missie7511]

I am the same position. I can not find any recovery credit in February or march in my bank. I thought i was to recieve the 1400 recovery act, but when I checked on my refunding stated my refund was reduced by the 1400, rather getting 2093 I would be recieving 693. But when I checked my bank it show 623 deposited. I have used turbo tax for years, never any problem till this year, especially  having a 3rd party with my refund. This isn't right, I've done turbo tax like I sated for years. Never had any problems. I've had a few replies to my original post, does not make sence. The only difference is I bought the cd off Amazon instead of sams club

[NCperson]

@Chefkowboy - i'd sent in an amendment for the royalty issue...but I would NOT correct the Recovery Credit issue as the IRS has already made that correction...

[NCperson]

@Missie7511 (and I assume you are filing single?)

1) check your bank statements from March through May, 2021  (February is too early)

2) check your account at the IRS website to see if it was issued (esp. the date it was issued as it would be in your bank account a few days later) and / or redeposited (i.e. not delivered to you)

3) if the IRS website indicates it was sent to you and you have no record of receipt, then you'll need to ask the IRS to trace the payment..... using the form in the link below

https://www.irs.gov/pub/irs-pdf/f3911.pdf

Where you file a paper tax return/mail Form 3911 depends on where you live. If you live in Alabama, Florida, Georgia, the Carolinas, or Virginia, mail Form 3911 to the Department of the Treasury, Internal Revenue Service Center, Atlanta GA 3991-0002. 

If you live in Kentucky, Louisiana, Mississippi, Tennessee, or Texas, mail to the Department of the Treasury, Internal Revenue Service Center, Austin TX 73301-0002. 

If you live in District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, or Vermont, mail to the Department of the Treasury, Internal Revenue Service Center, Andover MA 05501-0002. 

If you live in Arkansas, Connecticut, Delaware, Indiana, Michigan, Missouri, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, or West Virginia, mail to the Department of the Treasury, Internal Revenue Service Center, Kansas City MO 64999-0002. 

If you live in any other state, mail to the Department of the Treasury, Internal Revenue Service Center, Fresno CA 93888-0002.

[glennda1943]

We did not receive the last payment and just got a letter from the IRS amending our return and taking us from a refund to owing money.     There is definitely some problem here.   And yes, I we fit every other qualifying situation.   

[NCperson]

@glennda1943 - then see my post above..... if you beleive you didn't receive the stimulus, the IRS things you did, hence suggest completing and sending in the trace form.....

suggest reviewing your transaction history at IRS.gov as it will tell you the date the IRS paid you.  Check your banking accounts for shortly after that date one lst time and if no luck seeing the payment deposited into your checking account, the trace form is the way to so. 

[nblackburn3]

I received a letter from IRS stating that they found an error on form 1040SR area of my return, RECOVERY REBATE CREDIT. Amount owed is $444.14 which I was to receive a refund.   

I trusted Turbo Tax to guide me and do my taxes correctly. I hope that this can be corrected.