Covid Relief payments deducting from refund

[dsNeedHelp]

In reviewing "how are taxes effected by covid" , it states that these payments are not considered income and will not reduce your refund.

Why does my refund go down (get deducted) when the Covid relief amounts are entered?

It deducts the full amount of the relief payments received. In reading the article below it does not seem like this should be occurring.

Reference 

https://ttlc.intuit.com/community/tax-topics/help/how-are-my-taxes-affected-by-covid-19/00/1330402/m...

The Economic Impact Payments (both the first and second) are not considered income, and therefore are not taxable. They won’t reduce your refund or increase what you owe when you file your taxes this year. They also won’t affect your eligibility for any federal government assistance or benefits.

[KrisD15 · Accepted solution]

The payments are not taxable income. If a Taxpayer hasn't received their stimulus payments, that amount is added to the Taxpayer's refund. 

If the TurboTax program was including the payments in your refund, when you told the program you already received the payment, your refund went down because your refund no longer includes that extra amount. 

It isn't making your refund less, it just isn't adding the stimulus in anymore. 

[dsNeedHelp]

I see, thanks

[Bobbo00]

Why would you record your Covid Relief payment on your tax return (and where did you record it), or am I missing something?

[JohnW152]

The stimulus payments you received were advances on the Recovery Rebate Credit that can be claimed on your return.  Recording them on your return assures that you received the correct amount of stimulus benefits.

On Line 16 of the Recovery Rebate Credit Worksheet, enter the amount of the first round of economic impact payments (EIP 1, sent out beginning in April 2020) you received.

On Line 19 of the Recovery Rebate Credit Worksheet, enter the amount of the second round of economic impact payments (EIP 2, sent out beginning in late December 2020) you received.  

Please see the TurboTax Help article How do I claim the Recovery Rebate Credit? for guidance.

[concretedad76]

if the software reduces the refund to reflect the stimulus being already sent, why did my refund only drop $600.00 instead of $2300.00. that doesn't make sense to me.

[AmyC]

@concretedad76  The stimulus is not part of your income, it is not taxed. If you did not receive the full stimulus, the missing amount will be added to your refund.  Your refund should not drop from adding stimulus, only go up or remain the same. It does not make sense. Please pull out last year's return and compare it to this year. See if you can find some other credit or change that happened. The stimulus is the first part of the review. Maybe another credit was getting refigured.

[byrd20]

We never received our covid payment relief check and were told we could account for that in our 2020 taxes.  

[VolvoGirl]

When you go through the federal review tab it will ask how much you got if any.  Enter 0 if you didn't get one.  Or to enter your stimulus payment in TurboTax, type "stimulus" (without the quotes) in the Search box, then click the link that says "Jump to stimulus."

After you have entered your tax information and are ready for the Federal Review, it will be the first question.

If you are trying to trigger it, you can go to Other Situations, answer any questions and click Done. The next automatic selection is Federal Review and it will ask about payments received.

The Recovery rebate credit is on 1040 line 30.  It either adds to your refund or reduced a tax due.

[JotikaT2]

In addition to what VolvoGirl mentioned, the amount of the Rebate Recovery Credit is based upon your actual 2020 income tax return you file.  Therefore, if you meet the criteria for the credit, you will receive it when you prepare your 2020 income tax return.

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

Recovery Rebate Credit eligibility

[jwgraeve]

When I answered question about Economic impact payment my tax refund shown went down some two thousand dollars???

[AmyC]

The meter goes down, not your actual refund. The meter starts with assumptions. As long as your actual tax return is correct, ignore the meter.  To view your return, 

• If you are using the online version:
  1. go to Tax Tools,
  2. then select Tools,
  3. select View Tax Summary,
  4. on the left side, select Preview My 1040.
• In the desktop program, switch to forms mode.

[VolvoGirl]

Your 2021 return starts out by assuming you didn't get any Stimulus payments so it gives you credit for the full amount and your refund was too high.  Then near the end you enter how much you actually got so it only gives you the difference if any.  So you don't get it again.