How to proceed with 3rd stimulus issue

[Magepker]

Hi everyone, hoping you can assist. We had a child in august 2021 so according to what I read we should be eligible for $1400 stimulus for her.

However, the issue is that in our 2021 taxes we are not claiming one of our children anymore(he moved out in early 2021).

It asks how much we received in stimulus which was $5600, 2 adults and 2 dependents at the time which matches what it should have been according to TurboTax. Since it matches it doesn’t let me claim the recovery rebate. It looks like its not taking into account the removal of a dependent and addition of a new dependent.

How do I navigate this to get the $1400 for my newborn?

[rjs · Accepted solution]

Sorry, but you don't get an additional $1,400 for the new baby. The stimulus payment that you received was an advance payment of the Recovery Rebate Credit on your 2021 tax return. But the stimulus payment was made in 2021, before you could have filed your 2021 tax return. So the IRS used your 2020 tax return as an estimate of what you would be entitled to on your 2021 tax return. In your case the estimate based on 2020 turned out to be on the mark. Based on your 2021 tax return you are entitled to $5,600, and that's exactly how much they paid you in advance. The fact that the estimate was based on different dependents doesn't matter. You're entitled to $5,600 for yourself, your spouse, and two dependents, and that's what you got. You don't get any more.

[Magepker]

Got it, thanks!

[DOHUM]

A new child IS eligible. I have yet to figure out how to fix this issue myself. TurboTax customer service has no idea. TurboTax needs to update their system!!!

[DOHUM]

This is wrong. Newborns from 2021 are eligible for the recovery rebate credit. You can check it out on irs.gov

[DOHUM]

TurboTax just doesn’t have a solution to the problem 😭

[cavanagheugene]

Our Economic Impact Payments were based on our return filed before Congress agreed to exclude unemployment from our originally filed return.  The refunds have been properly processed, however, the Economic Impact Payments are not reflected properly and we are due money.  There is a Recovery Rebate Credit Worksheet I have obtained from the IRS and unfortunately, TurboTax does not offer the ability to process the remaining money due to us.  Please help.

[KrisD15]

If you are referring to the Third Economic Payment, that is based on your 2021 return (which we are working on now) so your 2020 return would have no bearing on this year's credit. 

On the 2021 return, your credit is calculated on your 2021 information reported on the 2021 return, and the payments you received are subtracted.  If you are eligible for more than you already received, you will see that amount as the Recovery Rebate Credit. 

If you are referring to the First and/or Second Economic Payment(s), any portion still due needs to be claimed by filing an amended 2020 tax Year return. 

IRS information about economic payments

[rpmorn]

I am having this issue as well. If you have found a resolution please let me know.

[RobertB4444]

The IRS based their third Recovery Rebate (Stimulus) credit on your 2020 tax return because they didn't have the information from your 2021 return yet.  So they sent $1400 out to everyone who should have received it based on the 2020 information.  Now, when filing your 2021 tax return, the IRS will review the information that they receive and make sure that the payments went out as they should have and they will fix any mistakes. 

All taxpayers who received a payment should receive LETTER 6475 detailing the stimulus payments you received over the course of the year.  The amount on your tax return should match that - if it doesn't the IRS has said that it could lead to processing delays for your return.

If you had a new dependent during 2021 that wasn't on your 2020 return then congratulations!  You are entitled to an additional $1400 for your new dependent. 

In the case of folks who received a stimulus payment that they were not entitled to because they had a dependent that they claimed in 2020 that they did not claim in 2021 then they may have to pay that stimulus back. 

In the example above from @Magepker they received a stimulus payment that they were not entitled to for a dependent that they did not claim in 2021 but they also were entitled to another payment for their new dependent added in 2021.  They evened out and should enter the exact amount that they received on their tax return for 2021. Their dependent child (who is no longer their dependent) is entitled to claim their own stimulus on their own return since they did not receive one.

Here are the IRS FAQ on the 3rd Recovery Rebate Credit.

[snacho]

I am having the same issue.  It's clear that a newborn in 2021 qualifies for the 1400 stimulus payment if the AGI is below the threshold.  Turbo tax is not allowing me to enter on line 30 of m 1040 that I am due the extra money.  Is this a situation where I need to purchase the cd and do that entry manually or is there a way to enter numbers manually on the online version.  Thanks for any help.

[VolvoGirl]

@snacho   Be sure you said the new baby lived with you the WHOLE YEAR!  Go back and check that under My Info.  Maybe delete the baby and re add him

If you had a child born in 2021- Add them under My Info. You need to answer 2 questions…..

Did your child live with you for the whole year? Answer YES even if they were born late in the year (even on Dec 31).

Then was at least half of child's expenses paid by CHILD? Usually is NO.

If you qualify the 1,400 Recovery rebate credit will be on line 30 and either increase a refund or reduce a tax due.

You also should get the Child Tax Credit 3,600 for them on line 28.

Before filing,  You can preview the 1040 or print the whole return

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...