Why did my refund decrease after I entered stimulus check info?

[DawnC]

You do not have to pay it back; you get to keep it.  Since you qualified based on your lower 2019 income, it doesn't matter if you did well in 2020 and don't qualify now.  Congrats, you are a rare case in 2020, but the IRS has stated that payments do not have to be repaid.    You are not going to get the stimulus questions in TurboTax if you do not qualify based on your 2020 income.   Keep in mind, you are dealing with the IRS and that is what they have said.   I make no promises as to what they may say later, but I highly doubt they will backtrack on that.    @Whizkid151

If you want to return it, you can, but you are not required to.  What should I do to return an Economic Impact Payment (EIP) that was received as a direct deposit or...

[Whizkid151]

@DawnC  Thank you so much for the response. I've been grinding on this for about 10 days now. I wondered early on, if that might be the case. Then I got lost in a fog of so many different responses. Should have stuck with my original perspective, " If it was a thing, TT probably would have it covered ( or not if not needed )".

[Lori601]

If it isnt taxable, we shouldnt have to add it on taxes. their getting all their money back, so we werent given a thing. haha. doesnt take a brain to figure that out.

[JotikaT2]

It isn't taxable actually.  

The stimulus checks have no bearing on the income reported on your tax return.  However, it is used to calculate the Recovery Rebate Credit which is why it is needed when you prepare your income tax return.  

The Recovery Rebate credit is calculated on your 2020 income tax return and is dependent upon what was entered into the program. If you were eligible for both stimulus payments but did not receive them or received less than you were entitled to, you would have received the credit if you met all of the other requirements. 

The amount of this credit is used to offset any existing tax due.  If there is excess credit remaining after being applied to your tax due, you will be refunded for the excess amount.

Please see the attached link for more information on who can claim the credit.

Recovery Rebate Credit eligibility

@Lori601

[Elowe1941]

@Lori601   I know right! I really don't get this... If it is non-taxable or (we get to keep it) why did my refund drop exactly $1400? I typed in my annual earned income, my dependents etc. etc) and ended up with my estimated refund amount. Then entered my $1400 stimulus amount where prompted and !!POOF!! REFUND DROPS/LOSES $1400? 🤔 guess ima need those layman's terms.

[xmasbaby0]

@Elowe1941 You are not understanding the flow of the information in your tax software.   The software STARTS OUT by giving you the $1400 3rd stimulus payment.   So poof there is the $1400 in your refund from the beginning.   Then later when you enter the fact that you already received it last year, the software has to remove the credit because you cannot get the $1400 twice.

[Critter-3]

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 also for the EIC ... once you have qualifying dependents and income on the return you are then brought to the EIC questions and told you get the EIC but the refund meter doesn't change ... that is because the credit was already in the refund amount shown before you got to  the EIC section.  What could have happened at that point (after you answer some questions)  is the credit is removed if you no longer  qualify which is not a happy thing.  

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.

[Sdlewis1223]

Yup everyone I know who did there taxes and showed on screen what they were getting so far, and when they entered the 3rd stimulus amount it deducted it from there refund. Nothing is free for The American Citzens!

[JamesG1]

@Sdlewis1223

The computation of the Recovery Rebate Credit is a two-step process.  You are able to observe what is happening at each step on line 30 of your Federal 1040.

Early in the program, TurboTax software computes whether you qualify for the $1,400 third stimulus check and gives you immediate credit for the third stimulus check. 

You are able to view this Recovery Rebate Credit on line 30 of the Federal 1040 under Tax Tools / Tools / View Tax Summary / Preview my 1040.

You enter the third stimulus check actually received at the screen Let's double-check the amount you received. 

Then the Recovery Rebate Credit on line 30 becomes $0.  You may also view this under Tax Tools / Tools / View Tax Summary / Preview my 1040.

[keha1212]

Hi,  I am so so so upset, I have been crying all day. It says on my federal i should be getting 2400 back. Now with the  3rd stimulus check I got now, I am getting 400. I just dont understand. Every paycheck I had money taken out for my federal government and I count on that return at the end of the year. So basically the goverment gave me money when i needed it and now wants some back. If i had know they were going to take it out of my return I would of sent it back. I feel so hurt.  Why is this happening? 

Thank you

Kehaulani Batista

[xmasbaby0]

@keha1212 Sorry---but you are misinterpreting the calculations the software did.   You may not have realized it, but as soon as you started to work on your return, the "refund monitor" was putting the stimulus money up there as part of your refund----as if you had NOT yet received it.   But then you had to enter the amount that you received.   When you did that, the software had to re-calculate and reconcile the amount of refund you could get.   You did not "lose" the stimulus money.   You just cannot get it twice.

[Critter-3]

@keha1212 

If you recently filled in a new W-4 form in the last year or 2 then be aware that new form is designed to keep your refund as close to zero as possible ... so if you want to have more withheld just to get it back at the end of the year then complete a new W-4 form and have some extra withholding on line 4C.