When reporting getting the third stimulus payment my refund completely plummeted . Confused as I was under the impression that wasn't going to happen.

[r_harrison]

Was I mistaken? After the first two didn't affect last year's refund, I suppose I was assuming that would hold.

[RobertB4444]

It would appear that the program had added the stimulus payment to your refund in anticipation of you not having received it for some reason.  Since you had received it it just corrected to where it should have been all along.  

[VolvoGirl]

It is not taxable and you aren't paying it back.  Your 2021 return starts out by assuming you didn't get any Stimulus payments so it gives you credit for the full amount and your refund was too high.  Then near the end you enter how much you actually got so it only gives you the difference if any.  So you don't get it again.

[Critter-3]

Try to ignore the Refund-O-Meter until you are done entering in all your income and expenses ... only then is that figure final. The tax return is a long math problem and until you get to the last line you will not know the final answer. I wish that meter was not there until the end since it causes much confusion but you do have the option to shut it off if you like ... click the arrow next to it.

What happens is the program gives you the entire stimulus credit once you completed just the MY INFO tab based off of how many people are on the return. Then the credit is reduced by the amount of the credit you got in advance when you finally get to that section at the end of the interview.

FYI ... this also happens with the CTC ... the entire credit is put in the refund amount estimate when you entered qualifying children in the MY INFO tab at the beginning of the interview and then when you are finally asked how much you got in advance later in the Deductions & Credits section the refund shown is reduced accordingly.

And with the EIC ... when you get to the EIC section you are told that you qualify for the credit but the refund doesn't increase because the credit was already reflected in the refund shown before you got to that point.

Not the most user friendly way to do this but this is how the program has been set up for decades and I doubt it will change now.