HOW could you have possibly entered the stimulus as income ? Where could you have done it ? What line of the 1040 or Sch 1 is it even listed ?
Now more likely this is what you are referring to ....
Let me explain how stupid the placement of the stimulus question in the interview flow is …
Your 2020 return starts out by assuming you didn't get any Stimulus payment so it gives you the full amount of the credit based on your entered income and that is reflected in the Refund-O-Meter. Then near the end of the interview you enter how much you actually got in advance and the floating refund is adjusted accordingly so you don't get the credit twice. For instance if you already got $1200 then the refund being shown is reduced by the same $1200... this doesn't mean the stimulus is being taxed.
Check line 30. The Recovery rebate credit is on 1040 line 30. It either adds to your refund or reduced a tax due.
It would be nice if they would have asked for that information in the beginning in the MY INFO section BEFORE you entered in the income BUT the programmers did not ASK us posters in this forum AND they did not listen to us earlier and did not change the interview flow so I have been posting this information A LOT this year.
