Turbotax Recovery Rebate Credit 2021

[johnclanc]

Turbo Tax (CD at home) computed a $1,600 Recovery Rebate Credit and the form was electronically submitted to IRS. I just received a letter from the IRS stating they have corrected/make changes to my return in that the $1,600 was incorrect and apparently should/is zero there by reducing my refund?? How could this happen?

Makes me wonder about the overall accuracy of Turbo Tax's calculation!!

John [PII removed]

3/5/2022

[DanaB27]

To verify, did you receive the third stimulus payment in 2021 and entered this when TurboTax asked? You only can qualify for the Recovery Rebate Credit if you did not receive it and met the following requirements. 

You cannot be claimed as a dependent by someone else to be eligible. 

Your credit amount will be reduced if your 2021 adjusted gross income (AGI) is more than: 

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 for eligible individuals filing as a single or as married filing separately.  

Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above. (IRS FAQ Recovery Rebate Credit )

Also, the maximum amount is $1,400 ($2,800 if married filing jointly) plus $1,400 for each qualifying dependent. 

[LinoMar]

I just received a letter from IRS correcting my recovery rebate credit. It states that I didn't place the rebate on the form, but I did. I see it on the form. I didn't get the third stimulus check and reported that I didn't. I wonder if that is a problem that many will see. Either IRS made error or TurboTax. IRS says that I owe money. Hopefully, it can be fixed.

[JillS56]

TurboTax will calculate the amount of Recovery Rebate Credit you should have received based on the information you are entered into your 2021 return.  The IRS issued a Recovery Rebate Credit based on the information from your 2020 return.    The IRS sent out Letter 6475 to let the taxpayers know what the IRS records show was paid to each taxpayer.   The Taxpayer is asked what they received.   

This is not a problem with TurboTax as the taxpayer has to enter the amount received or not received.   If this amount is entered incorrectly that is not a TurboTax problem as it can only calculate based on what it is told.   TurboTax has no idea what you received.

Your statement is a little confusing. I am not aware of the IRS sending out letters to taxpayers that they did not get the Recovery Rebate Credit.   The Letter 6475 that was sent out to taxpayers told them what the IRS records show they received.   If the IRS is not sending you the Recovery Rebate Credit (3rd stimulus check) then that tells me that you have already received the credit.   To verify that they are correct, go back to your bank and look for a deposit made sometime during February or March 2021.  

I have not heard that there has been a problem with this process of reconciling the Recovery Rebate Credit for the taxpayers.  

[LinoMar]

I checked the IRS website for funds that were deposited, it only demonstrates the first one being deposited (The Advance Child Credit Payments), and it says that I have received the payments. I checked to see if the 3rd stimulus rebate was sent or deposited, but it only says that I may qualify for it.

I was waiting for IRS to send the 3rd stimulus check after the installment payments, but never received the recovery rebate credit. I checked and double checked all my accounts, and there was no deposit from IRS. I don't know where the error is, but IRS is saying that they made a correction and I owe $4950. What do you suggest I do, if the IRS is saying that I received it? Which I am assuming they are. How do I track the refund if I never received it?

[ErnieS0]

Check your Form 1040 to verify that you did include a Recovery Rebate Credit amount on line 30 @LinoMar.

The IRS is correcting tax returns will incorrect stimulus amounts, but will not fix a return with $0 on line 30.

If you listed an amount on line 30 and believe your return is correct, call the IRS at the toll-free number listed on the top right corner of your notice.

If line 30 is $0 and you never claimed the Recovery Rebate Credit, file an amended tax return.

For instructions see How to amend (change or correct) a return you've already filed.

[CiscoKid9]

Received similar IRS letter of error "Recovery Rebate Credit", and Adjustment of -1400 listed.  Could not find IRS Letter 6475.  Suspicious as everyone else.  My records showed EIP3 March 17, 2021 and tax refund March 23, 2021.  Would you have looked further ... I didn't.  Bank record next page showed a second EIP3 for $1400 on March 31, 2021.  I think I made an error by not recognizing this second EIP3, shorted the value I put in TurboTax, resulting in the IRS letter of error.

I will verify ... but since this was a surprise learned during a study of the IRS letter .... I bet that's it for my return.

[markpw]

I had the same problem. Received a letter from the IRS telling me I owed an additional $1497 because the Recovery Rebate Credit was not handled properly by turbo Tax. I also had a huge problem with my state taxes for AZ since the state had made all military retirement income non-taxable. Turbo Tax failed me this year.!!

[Affordabletaxes2021]

TurboTax doesn’t handle the stimulus payment You control that by entering the information into the tax return correctly. The IRS made it pretty clear on all tax forms that the amount of stimulus payments you report should align with IRS records. That’s why they sent letters, to avoid this confusion. If the amount does not align with IRS letter than it will be denied. You can’t get the credit twice.  If the IRS  says you got a payment you never received, then file form 3911 to trace the refund to find out what happen to it.

[mikeH2Oski]

I just received by IRS refund but it did not include the recovery rebate.  Does anyone know if this will be paid our separately?  When I did my taxes in Turbo Tax Deluxe it calculated a recovery rebate credit and added it to my total refund.  

[DoninGA]

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@mikeH2Oski wrote:

I just received by IRS refund but it did not include the recovery rebate.  Does anyone know if this will be paid our separately?  When I did my taxes in Turbo Tax Deluxe it calculated a recovery rebate credit and added it to my total refund.  

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If your refund is short 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...

[ewiggins10]

What gives IRS??? My daughter and her wife have been married - legally - for 7 years. Their joint income is below the $150,000 for getting credit under the Recovery Rebate Credit section AND they never received their 3rd stimulus check, just like Turbo Tax asked. So it was input into their return. Today - 1st shocking the IRS is already reviewing 2021 taxes - they received the letter - NO RECOVERY REBATE CREDIT. Pay us money! Let's see; married.....filing jointly......under $150,000. Seems legit. Turbo Tax, you need to file a suit against these guys!

[jd139]

I received the IRS letter yesterday indicating that I claimed this credit incorrectly.

I went back to turbotax to determine what I did wrong and it does not show the incorrectly claimed 1400 in the "I'll choose what to work on"  summary for "Decudtions & Credits" or "Wages & Income".  It is clearly on the 1040 form and you can zoom to the worksheet, but I never filled out the worksheet  and I still cannot find where the program asked me for this information.

Ok, after searching for 6475, I found the question under "Federal Review".  I also did not receive this letter.

My situation is a bit more complicated as well.  The IRS based the credit on my 2019 taxes because I had not filed my 2020 yet.  In 2019, I had two dependents plus my wife.  In 2021, I had one dependent plus my wife.  Even my IRS account does not have the correct amount.  Anyway, It comes down to paying an extra 1400 plus interest.   

I updated the EIP amount received.  The program is including a penalty which the IRS is not requiring.  Paid online including the 2 dollars interest.

I still consider this to be a problem with the program.  The amount it calculated was based on my current dependents and not what the IRS was thinking in early 2021 and since I did not get a letter, I assumed the program was entering the correct amount.

[DoninGA]

@jd139 If an estimated tax penalty is shown on Line 38 that amount will also be included in amount of taxes owed on Line 37.

[deonhes92]

I didn’t qualify for any stimulus checks as here on a work visa, but IRS sent letter and lowered my return. How do i contact turbotax to help me with this?