Is there an error in the "Recovery rebate credit worksheet"?

The Recovery Rebate Credit is calculated based on your 2020 income, whereas the stimulus payments were based your 2019 tax return or last return filed. If a taxpayers' situation changes in 2020, they could get a partial or the full stimulus payments based on their 2020 income. 

Per the IRS, your Recovery Rebate Credit amount will be phased out if your adjusted gross income for 2020 exceeds $75,000 if you filing single. The credit phases out at a rate of 5% for your adjusted gross income over $75,000. 

Since you stated you are making around half of what you made in 2019, you now qualify for the the stimulus payments filing single with no dependents, with a slight phase out for making above $75,000. The credit is correct on your tax return. 

For additional information, please see the IRS website for the Recovery Rebate Credit. 

After reading this link, there are two different types of rebates, one based on 2019 AGI AND one based on 2020's.

Here's an excerpt from an IRS Recovery Rebate Worksheet as shown in the IRS Form 1040 instructions on page 59

Economic Impact Payments were based on your 2018 or 2019 tax year information. The Recovery Rebate Credit is similar except that the eligibility and the amount are based on 2020 information you include on your 2020 tax return.

You will need to know the amount of any Economic Impact Payments issued to you to claim the Recovery Rebate Credit. If you’re eligible for the Recovery Rebate Credit on your 2020 tax return, it will be reduced by any Economic Impact Payments we issued to you. Always be complete and accurate when you file a return.

I stand corrected. Now I wonder why I never received any of the Stimulus moneys.

The payments were always to be based on 2020 income. They were issued in 2020 based on 2019, with the understanding that if the person did not get the payment based on the 2019 income, they would get it on their 2020 tax return if eligible. 

It was also determined that although the payment would be based on 2020, if -when the payment was finally calculated on the 2020 income- that 2020 income made them now ineligible, the payment received in 2020 needn't be repaid. 

SO, people that didn't get one, have a second chance to get it now, and people that did get one, but shouldn't have based on the 2020 return, do not have to pay it back. 

I just dont understand why I was "told' by TurboTax that I would get a refund of $600 as per the Recovery Rebate, which THEY figured the amount, as I filled out the information as asked correctly.  IRS says I get 0 refund now.  I cant figure out how or why TT filled it out automatically for a refund which surprised me as I answered all questions honestly as they popped up.

An error in their software perhaps?  Lots of complaints I am reading about this issue.
Dan

Since the IRS changed your refund you will get a letter from them explaining the changes.  The letter will have instructions on your options.  Here is the latest on what to expect in your letter.  

My Recovery Rebate Credit was also reduced to $0 and I definitely should qualify for it. I moved after receiving the first stimulus check and never received the second. I live overseas and I'm hoping the notification letter from the IRS doesn't take too long to get here.

Turbo Tax applied a $1,286 Recovery Rebate Credit on my 1040 and now the IRS sent me a letter stating I owe this money back!  They computed this with their software.  

It depends if you entered the info correctly in the program.  Did the IRS show you the calculations or breakdown?  You can compare it with your worksheet. 

In the TurboTax Online program,  

• After sign in to your account, select Pick up where you left off
• At the right upper corner, under Search, type in "stimulus" and Enter
• Select Jump to stimulus
• Follow prompts to answer the questions and enter the amounts.

To learn more, click here:  Recovery Rebate Credit

@ronmac7609

I also just received the letter from the IRS indicating my Recovery Rebate Credit information is incorrect. Basically stating that I don't have a recovery credit as shown on line 30 of the 1040.  That being said, I think I may have found out why MY information is wrong. 

Using TT Recovery Credit Worksheet,

• Line 5 ask that you enter $1,200 or $2,400.  For the purpose of this exercise I entered $2,400 ($1,200x2)
• Line 19 ask that you enter the amount, if any, of EIP.  This amount was $1,200 ($600x2)
• Line 21 adds lines 17 and 20 which total is $1,200. Which is the difference between line 15 ($2,400), and line 16 ($1,200).

From a formula perspective I understand the math that took place here.  But from a logic perspective why is LINE 5 being asked.  In reality, Line 21 should be ZERO ($0), thus moving $0 to Line 30 on the 1040.

This happened to us as well! 

Who is now going to pay for this? Turbo Tax is suppose to pay for any mistakes they make correct?

As you were going through your return, you should have gotten to a screen in which you were required you to enter the stimulus payments you received. If this was skipped over or not entered correctly, the credit would have been incorrect. The credit is calculated based on the information entered. This is not considered a mathematical error in the program. 

@sbhansen86

Sorry if you do not qualify for the Recovery Rebate Credit because of your 2020 tax situation then you will not be able to get the missed stimulus payment.

See IRS Topic B: Eligibility top 3 questions

https://www.irs.gov/newsroom/recovery-rebate-credit-topic-b-eligibility

The Recovery rebate credit is really based on your 2020 AGI, not 2019 or 2018.  See my posts on this one.  I found a couple IRS links that say if you don't qualify  for more based on 2020 and you don't have to pay it back if you got too much.

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/recovery-rebate-tax-credit/00/1764421/page/2

And see the employee expert answer here

https://ttlc.intuit.com/community/taxes/discussion/recovery-rebate-credit-stimulus-incorrect/00/1942655

She said......

If you do not qualify for the Recovery Rebate Credit because of your 2020 tax situation then you will not be able to get the missed stimulus payment.

Thanks for the info and you are correct in that the Recovery Rebate Credit is based on 2020 income even though the 2nd stimulus check was based on 2019 income. 

Too bad the TT and IRS customer service people couldn't answer this today and point me to the info in the IRS instructions. Between the two I spent over 4 hours on the phone trying to get this resolved.

But I guess it figures...the IRS is MUCH better at taking our money than fairly giving it back. They made a mistake by not sending us the second stimulus when we were qualified and should have received it and then changed the rules after the fact so we can't get it.  

Hi Lena- I accurately entered all of the info when I did my 2020 taxes, we had only gotten 1 payment of $1450.00, so TT calculated that our RecoveryRebateCredit was $4350.00

Side note - We've still not gotten a 2nd or 3rd payment, but the IRS has now sent us a letter saying that we owe back $1450.00 towards our 2020 tax return because the RRC wasn't calculated accurately.

I see you keep mentioning that it should calculate right if the info entered is right, and it was FOR SURE accurate on my end, as far as I accurately entered what we received. But it didn't calculate right on TT's end and thus on my 1040 return. 

So now what???

@jennyebean The calculation is fairly simple, so it is unlikely that TurboTax did not calculate it properly. However, since TurboTax guarantees the accuracy of their calculations, you can submit an accuracy guarantee claim to TurboTax and they will investigate and refund any interest or penalties you incur as a result of a bad calculation in TurboTax. Here is a link to submit a claim:

https://ttlc.intuit.com/community/charges-and-fees/help/how-do-i-submit-a-claim-under-the-turbotax-100-accurate-calculation-guarantee-or-100-accurate-expert/00/26065

agree with AZCams and sbhansen86, the turbotax logic isn't producing the same result as the IRS, which cause a 3 month delay in receiving my refund

jddanielson Please provide additional details about your issue.  

If you did not receive your first and/or second stimulus payment or if the amount received is not correct or if you did not receive the stimulus for a dependent child under age 17, you can claim it on your 2020 tax return as the Recovery Rebate Credit.

In TurboTax Online, to claim the Recovery Rebate credit please do the following:

1. Sign into your account and continue from where you left off
2. Click on Federal in the left-hand column, then on Federal Review on the top of the screen
3. On the next page titled Let's make sure you got the right stimulus amount, click on Continue
4. Follow the interview
5. TurboTax will determine whether you are entitled to any additional stimulus
6. Any stimulus amount remaining due to you will show as a credit on line 30 of your form 1040
7. The Recovery rebate credit worksheet will be attached to your e-filed return.

Same situation happened to me. I now owe the IRS. I have checked the calculations in TurboTax Recovery Rebate Credit Worksheet. and they are accurate. No doubt there is or was an error in the TurboTax software. I am disappointed TurboTax won't fess up to this error.   

Not necessarily true. I didn't receive a stimulus payment from the IRS. What then? 

Yes I had a similar error on my 2020 return. TT made an error and included $1200 on line 30 as Recovery Rebate. I did not qualify for it as my AGI exceeded the threshold limit. The same was the case if 2019 information had been used.

As a result of this error IRS billed me for a total of $ 1074.10.

I am now trying to figure out how to file a claim against TT as suggested by the TT CPA.

He admitted to the error, opoligized and promised to send a link that would allow me to file a claim. 

I'm keeping with the apparent lack of concern by TT for their clients, the CPA sent me the wrong link. 

Now, I am finding it almost impossible to contact any one in TT to help me to file the claim.

To make things worse for me, the CPA closed my case without resolving my issue.

Please let me know if you have any helpful tips for me in this situation.

Thanks 

mtiwis

My TurboTax refund was reduced after the IRS recalculated my Recovery Rebate Credit.  I received a notice (CP12) in the mail today for the tax year 2020.  Here is what the letter stated:

We believe there's a miscalculation on your 2020 Form 1040, which affects the following area of your return:

*Recovery Rebate Credit

We made changes to your return that correct this error.  As a result, you are due a refund of $X.00

Changes to your 2020 tax return

Information was changed because of the following:

We changed the amount claimed as Recovery Rebate Credit on your tax return.  The error was in one or more of the following:

- The Social Security number of one or more individuals claimed as a qualifying dependent was missing or incomplete.

-The last name of one or more individuals claimed as a qualifying dependent does not match our records.

-One or more individuals claimed as a qualifying dependent exceeds the age limit.

- Your adjusted gross income exceeds $75,000 ($150,000 if married filing jointly).

- The amount was computed incorrectly. (683D)

Under the section "What you need to do" - If you don't agree with the changes, the letter gives the phone number [phone number removed] to review your account.  It also states "We'll assume you agree with the information in this notice if we don't hear from you."

Was on hold for 30 minutes, and then spoke with someone.  Told them what was in the letter.  She then transferred me to another department who said they could not access specific information related to a SSN, just general questions.  I told her that we used TurboTax and that I had all of the correct information in front of me.  Children's SSN numbers are correct.  The spelling is correct.  I have the TurboTax form up showing all of the calculations.  She then said that she needed to transfer me to another IRS department that has access to my tax records.  Transferred me, and then a generic mailbox message said they had heavy call volumes and to try calling tomorrow.  Round and round we go.

I have everything in TurboTax including the PDF forms showing all of the information.  How can Intuit help?  What do I do now?  Who can I call, because the number listed in the IRS notification letter was not helpful.

@jez7  So what I ended up doing is finding our local-ish IRS office and going online/calling to set up an "in person" meeting. When I called the # for it, just to make an appt, it put me on the phone with someone and she ended up fixing my issue with this exact same thing - I got a letter about my kids and their ss#'s etc - and she was able to rectify it all over the phone with/for me. 

So maybe attempt that avenue - even if you actually have to set up an appt to see someone with a local-ish IRS office- they should be able to help. Obviously more than TurboTax is able to do, even tho we paid for them to help us and to ensure everything is correct................

The guarantee is BS. It only covers the $4 in penalties… not the $800 in unexpected tax hit, or the time and frustration dealing with this problem that you caused. And it requires additional time and energy on my end to justify the issue. Your software made a logical error that is impacting thousands of your customers. You are clearly aware of the issue, yet you make no attempt to alert us of the error or aid in the resolution. This is terrible service. 

I got the same letter the IRS decreased my return. How do we change our taxes so we don't have issues with 2021 taxes?  I don't want turbo tax to carry over the incorrect refund number for next year.