Issue with Economic Impact Payment

[Lisa_55345]

I qualified for the lifetime learning credit for a total of $1328.  After the information for the economic impact payment was entered, my refund was reduced by $1400 (the amount I had received).  On the IRS website it says that this money should not be counted as income or effect the refund.  Why is it doing this to my refund???? It is putting the $1400 into the category "federal taxes you owe."

[ZoltanB45]

The refund was reduced by $1400 or you owe $1400?

If you had not received the $1400 in 2021, it would have been added to your refund or reduced a tax liability by that amount. Turbo tax assumed you were still owed the $1400 so that was part of the refund you thought you were getting, but when you entered the amount you already got, Turbo Tax then took that amount out of  your refund. The $1400 is not a taxable event.

[Lisa_55345]

I was not expecting to get the $1400 on my refund. I was given the correct amount from the stimulus checks. For some reason turbo tax is STILL deducting $1400 from my total refund. Total should have been around $1900 for federal. Then after I completed the section for the economic impact payment my refund decreased by $1400. If this doesn’t make sense. Please direct me to someone who I can call and talk to to get this fixed before I submit my taxes. 

[AliciaP1]

What @ZoltanB45 is saying is that TurboTax starts off assuming you did NOT receive the stimulus.  It shows the $1,400, in your case, as a refund from the start of your return.  When you enter your stimulus payment, it just zeroes out the amount.  It does NOT add additional tax nor does it incorrectly reduce your refund.

[Lisa_55345]

I understand that it “shouldn’t” reduce my refund. But there seems to be an error with the program because it did reduce my refund. 

[DMarkM1]

The refund you are entitled to is not reduced by Economic Impact Payments.  You should look at your form 1040 to see what is happening.  To see your form 1040 before filing:

1. "Tax Tools" in the left hand menu

2. "Tools"

3. "View Tax Summary" in the main screen

4. "Preview my 1040" in the left hand menu

Look at line 30 before you add the stimulus payment and then again after you add the stimulus payment.  Your return originally calculated your refund/tax owed as if you had not received any stimulus payment.  Once you put in the payment you already received  the Recovery Rebate Credit is removed. 

[Lisa_55345]

The recovery rebate form is correct. What is incorrect is that after this form was completed my refund was decreased by $1400. I don’t know how to explain it any other way to make anyone actually understand what is happening so I am resorting to a photo  

[KrisD15]

The TurboTax program starts by giving you that credit, in your case 1,400. 

When you reported that you already received that 1,400 the recovery credit is eliminated and your refund dropped. 

It is just a coincidence that your tax liability is also 1,400. 

[Lisa_55345]

I don’t understand how last year when I made almost $10,000 more that same line is only $362, and this year it is $1400

[AmyC]

$10,000 in wages vs self employed income is a big difference due to self-employment income. Are all of these wages from a w2 or some income from a 1099? Please keep in mind that 1099 income is subject to self-employment tax (calculated at 15.3% on 92.35% of your 1099 net income) and also subject to income tax calculated at your marginal tax rate.

Federal taxes due can (with limitations) also come from excess Advance Child Tax Credit or from an underpayment with the Affordable Care Act health insurance program. 

[Stardust818504]

I'm having the exact same issue. It's taking $1,400 away from my refund...

[AliciaP1]

As @KrisD15 noted, TurboTax does not automatically populate the amount you received for the 3rd stimulus payment.  Instead, it assumes your payment amount is $0 (since the box is empty until you populate it) and estimates the full amount included in your refund.  When you complete the box with the amount you already received, it is merely removing that amount from your refund to properly reflect that you already received.  It is not calculating it as taxable.

@Stardust818504