@acwebtdx wrote:
I just got off the phone with the IRS, who confirmed the Recovery Rebate Credit was inappropriately claimed as we were above the AGI, causing us to go from a refund to owing. The calculation is actually quite clear in the IRS paperwork, so the error lies in the TT software, which failed to note that there was an AGI ceiling before applying the Recovery Rebate Credit. If not a deliberate error, then definitely poorly crafted to not follow specific IRS guidance. TT should note the error to users and promise corrections. I am disappointed TT is not acknowledging the error and compensating users.
The Recovery Rebate Credit Worksheet in the TurboTax software is exactly the same as the worksheet in the IRS Form 1040 Instructions on page 59 - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=59
What was your 2020 AGI?
If you were filing as Married Filing Jointly the Recovery Rebate Credit will be reduced when your AGI is more than $150,000. The credit will be eliminated if the AGI is $197,990 or greater. If your AGI was at or above the phase out amount the question for receiving the stimulus payments would not have even been presented in the TurboTax interview.
The letter from the IRS probably is stating that you indicated on our 2020 federal tax return that you did NOT receive a stimulus payment and therefor the amount that you did not receive was entered on the Form 1040 Line 30 as a Recovery Rebate Credit.
However, the IRS removed the credit from your tax return because the IRS shows that the stimulus payment was sent to you. By removing the credit this reduces your federal tax refund or increases the taxes owed.
Go to the IRS website for your tax account to see what the IRS has sent to you for stimulus payments - https://www.irs.gov/payments/view-your-tax-account
If you never received the stimulus payment shown on your account then have the IRS put a trace on the payment. Go to this IRS website for how to start a trace - https://www.irs.gov/newsroom/questions-and-answers-about-the-first-economic-impact-payment-topic-f-p...
