You are not paying tax on them or losing your refund. But Turbo Tax started out by giving you credit for the whole amount so you refund was too high. Then when you entered what you already got the starting refund was reduced or the tax due increased. You don't get it twice.
Where does it say in the software info that it was already figured in by TuboTax? Also, this doesn't make sense because how do they know what I got on the stimulus until I entered it later and saw the refund disappear. I have several friends using the same software and they haven't seen this happen to them. If I'm not paying tax on it, why did it take the entire refund amount rather then the amount of EIP?
You are not paying tax on them. But Turbo Tax started out by assuming you didn't get it and giving you credit for the whole amount so your refund was too high to begin with. Then when you entered what you already got the starting refund was reduced or the tax due increased. Otherwise you would be getting the Stimulus amount on your tax return.
Look at your return. The Stimulus payments do not show up anywhere as taxable income so you are not being taxed on it.