Deductions & credits

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@smandel1980 wrote:

Ok.  That makes more sense.  Honestly, I have no idea why I am paying less.  I did not generate that number.

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Well, when you reported that you bought a house and owe repayment, Turbotax asked you some questions to calculate what you owed.  You may have entered the numbers incorrectly. 

I suggest you prepare an amended return, fix your numbers, print the amended return, and send it to the office that sent the notice, along with a check, and a brief letter explaining that you still live in the home, that you owe the full $500 repayment, and you made an error in your tax software causing it to under-calculate the payment, and that you are including an amended return and correct payment.

If you have other tax forms, you only need to mail the main 1040 and schedule 2, you don't need to mail all the other forms that won't have changes. 

If this is for 2020 tax season (this year), then you won't owe a late fee as long as you send the check by May 17.