Why did the IRS reduce my 2020 tax refund by $1,200, the exact amount of the COVID-19 stimulus we received (married file jointly)?

[MayaD]

You can claim the recovery rebate credit if you didn't receive the stimulus payment. While working on your return, the refund amount includes the Recovery Rebate Credit. However, if you already received the stimulus payment, the IRS might adjust your refund since you don't qualify for the credit.

[Wingett Photography]

Thanks for your response. However, my AGI (married filing jointly) is significantly less than the income limit of $150,000. I E-filed my taxes on February 2, 2021 using TurboTax Home and Business. The refund, reduced $1,200 from the TurboTax calculated refund just appeared in my bank account marked "Pending March 10." Should I call the IRS for an explanation?

[LenaH]

If TurboTax deemed you eligible for the Recovery Rebate Credit, and the IRS disallowed it, then it is highly likely that the IRS has on record that you received the $1,200 stimulus payment. Did you fill out the recovery rebate form and enter the amount of stimulus payments you received? 

Per the IRS, if you entered an amount on line 30 (amount of your Recovery Rebate Credit) but made a mistake in calculating the amount, the IRS will calculate the correct amount of the Recovery Rebate Credit, make the correction to your tax return and continue processing your return. 

Please check Get My Payment to determine the stimulus payments that were sent by the IRS. 

@Wingett Photography

[Wingett Photography]

Thank you for your response!

I did receive the $1,200 COVID-19 stimulus deposit and I did enter 1,200 on line 30. Line 32 "These are your total other payments" shows $1,200. I did not enter this amount, TurboTax filled it in automatically. Is this the mistake? I did not file the recovery rebate form because I received the stimulus deposit. Then the IRS took it back! My thought is that the person at the IRS who reviewed my return incorrectly thought I filed as an individual, although my 1040-SR form is checked Married filing jointly. My AGI exceeds $75,000, but is far below the $150,000 income limit for a couple. Following are the details of my changed return by the IRS at IRS.gov:

"We changed the amount claimed as Recovery Rebate Credit on your tax return. The error was in one or more of the following:

• The Social Security number of one or more individuals claimed as a qualifying dependent was missing or incomplete.
• The last name of one or more individuals claimed as a qualifying dependent does not match our records.
• One or more individuals claimed as a qualifying dependent exceeds the age limit.
• Your adjusted gross income exceeds $75,000 ($150,000 if married filing jointly, $112,500 if head of household).
• The amount was computed incorrectly."

[SweetieJean]

See OP's other post (duplicate).

[Wingett Photography]

Thanks, and sorry about the duplicate post. I thought my first post was lost when I attempted, unsuccessfully to change my profile name.

[msenn2]

I have the same issue.  Did you get this resolved? 

[xmasbaby0]

@msenn2 This thread is months old.   Not sure exactly what "same issue" you have.   Did the IRS reduce your refund because of the recovery rebate credit?

TurboTax has no way to know whether you received the 1st and/or 2nd EIP payments.   When you prepared your tax return you were asked in the Federal Review section if you had received those payments.   If you said you did not receive the payment(s) then the stimulus payment was put on line 30 of your tax return as a recovery rebate credit.  The IRS cross checks every return with an amount on line 30.  If the IRS sees that they already issued the EIP payment(s) to you then they adjust your refund.

Check your IRS account---does the IRS say they sent you a payment that you did not receive? (If you filed a joint return you need to check for both spouses.)   If so you can ask for a trace to be put on the payment.

https://www.irs.gov/payments/view-your-tax-account

If you were issued a payment and have not received it, see How do I request a payment trace to track my first or second Economic Impact Payments?

[msenn2]

Hey, thanks for your reply.  Just confirmed I did print YES to receiving the stimulus checks, however TT auto placed $1200 in line 30, indicating I did not get the check.  IRS caught and changed my refund minus $1200, as they should have.  Pretty sure I'm done with TT.