Recovery Rebate Credit TurboTax calculation error

[xmasbaby0]

"It asks; "Is this what XXX received?" If one answers yes, then it processes that as you received no stimulus payments."

When TurboTax asks if you received an amount of stimulus money and you answer "Yes" you are saying that you did receive the stimulus money.  So the software does NOT put it on line 30 again.

If you are asked if you received the money and you say "no"   then the software puts it on line 30 as a credit.

If you have a screenshoot that shows that a user can say "yes" to receiving the stimulus money and then having the software treat that "yes" answer as if the user did NOT receive the money, and putting it on line 30 please share that screen shot with us, since that would have to mean the software got it backwards.

[michaelhinton]

Why is turbo tax adding money to your refund that IRS is taking back. It ask if i got a third stimulus and the answer was no  so my refund went up. Then The IRS said that was an error.  Turbo tax need to change the way they ask that question.  Turbo tax is making mistakes we deserve some of refund 

[deskcomm]

How do I access the Recovery rebate credit worksheet on Turbo Tax 2021 to recalculate my $1400 credit?

[NCperson · Accepted solution]

@deskcomm - the calculation is quite simple:

you are eligible for the Recovery Rebate Credit or the 3rd stimulus - NOT both

1) Number of people listed on your tax return 

2) TIMES $1400

3) MINUS what you received for the 3rd stimulus last year (look at your bank account statements between March and May, 2021)

4) EQUALS Line 30, but not less than 0.

Most made the mistake on #3 - not entering what they actually received when prompted by TT.  Since the IRS knows what you received (since they sent it to you!), if this number does not match their records, they will reduce Line 30 by the difference, which has the effect of reducing your refund by the same amount.

does that help?

[kleinrl]

I agree, there is a calculation error with the Recovery Rebate Credit.  Unfortunately, I did not notice this until I got a letter from the IRS.   The letter basically stated there was a miscalculation, but they fixed it for me.  And, of course, reduced the refund amount to the correct value.  I guess I was lucky that they didn't decide to audit me on this.  But, they apparently knew about the TurboTax problem and just fixed it for me.

I went back into Turbotax and sure enough, it thinks that my combined adjusted gross income was $10,996...and that is not even close to what it really is.

And to make things worse, the Tax Summary even shows the wrong adjusted gross income value.

So, what the heck happened.  TurboTax is all messed up, and now I cannot trust it anymore.

Looks like I will be using a different Tax software starting next year.

[kleinrl]

Isn't this what the TurboTax software is supposed to do for us?  

[NCperson]

@kleinrl - I do agree with you, that the calculations are what TT is supposed to do for us.  if I may,let's define a "calculation" and it will explain how and why these errors are occuring.  

A 'calculation' is something that is added, multiplied, subtracted or divided.   In fact, if TT gets any of this incorrect and there are penalties and interest as a result of getting these calculations incorrect, they will reimburse you for the penalties and interest.

But there are "entries" that the user has to make.  If these are entered incorrectly, TT is not going to cover that in their warrentee.

So entries get calculated and a result appears.   if either the entries or the calculations are incorrect, the result is incorrect. 

On the Recovery Credit (line 30) and for that matter the Advance Child Tax Credit (line 28),  the result is dependent on the user entering how much they received for these benefits in 2021.  Turbo Tax simply would not know.  in EVERY SINGLE post on these two subjects I have read, the issue is the user entered the incorrect amount received - THAT is what causes the error.  Not the calculations, the entries!

Now, the IRS didn't do any favors on this issue either.  For a joint return, they were actually TWO letters mailed out for each benefit, with one letter addressed to each spouse with half the money listed on each letter. Other than the addressee, the letters were identical! Many filers did not realize when TT asked them to enter ALL the money they received, they needed to ADD TOGETHER both letters!

So, I do agree with you, that the calculations are what TT is supposed to do for us, but if the user doesn't enter the correct information, the result will be incorrect. 😟

does that help?

[ajanello]

Questions asked regards stimulus payments. My wife and I received two stimulus payments of $1400 each total for $2800 the two payments. We did not receive a third.  My return on line 30 states $2800 Recovery rebate Credit.  What was MY mistake? IRS says I did it wrong and now owe $2809.53

Can this/Should this be disputed? What is Turbo tx doing about this since there are multiple people with the same issue. Does there need to be another class action suit? 

[NCperson]

@ajanello - suggest going back and re-read the wording of the questions in the turbo tax interview section.

When everyone talks about the 1st two stimulus payments (EIP#1 and EIP#2), that refers to the payments received in the summer of 2020 and January of 2021 - those were reconciled on the 2020 tax return.

the 3rd stimulus payment (EIP3) refers to the payment received in March - May, 2021.  You state you received that one but that is not what you told turbo tax during the review process.  

So when TT asked in the interview did you receive that payment, you appear to have answered "no", when the correct answer was "yes".  there were warnings and statements on the page if what you entered didn't match the IRS records. 

Answering "no" placed $2800 on Line 30, increasing your refund.  But the IRS knows what they sent you, so they corrected your return.  No amendment necessary

Unfortunately, there is no error on TT's part (and I am not employed by TT) - go back and read the instructions that TT clearly stated in the federal review section..... this is not only a TT problem - millions of people, using other packages and doing it themselves did the same thing.  if you did not enter what you had already received, the result was wrong.

the turbo tax guarentee is that their software calcuations are correct, but if the input is incorrect (which is the case here), then their guarentee doesn't cover that situation.  Sorry about this, but if any consolation, you are in the same boat, as many, many others.   

[Cmacres]

I have a similar issue.  When I completed our 2020 return, I used all the calculations computed by TurboTax with the correct (I presumed) information from the Recovery Rebate Credit Worksheet.  IRS says I owe them back for claiming the $1200 EIP twice.  I've tried reasoning with the IRS (ha, that's been a laugh) but after taking my 2021 refund and applying it to the 2020 owed,  with interest, I still owe them $975.56.  Is TurboTax going to foot that bill because of an error on the form?  I've been dealing with them for over 2 years now and even hired an accountant to look at it (no big help there).  Since it was a software program error, where is TurboTax's liability?

[AmeliesUncle]

---

@Cmacres wrote:

 IRS says I owe them back for claiming the $1200 EIP twice. 

---

Did you receive the first stimulus (EIP) of $1200 from the IRS?  If so, you should have said that in TurboTax and it would not have added $1200 to your refund.  So it seems like the IRS is saying you received the check, PLUS you tried to claim it again on your tax return.

If you did not receive it, the IRS *THINKS* you did, and you would need to file Form 3911 to "trace" where that missing original payment went.

[xmasbaby0]

LOTS of people made mistakes with the recovery rebate credit, resulting in reduced refunds or even in owing tax due to the IRS.   You have to check your online account with the IRS to see what they show for the stimulus checks that were issued to you.   If you filed a joint return, check for both spouses.   If the IRS already sent the stimulus payment to you, then you could not put it on line 30 and get it again.   The IRS checks every return with an amount on line 30, and if their records show that you already got the stimulus money, they change your refund and send you a letter.

https://www.irs.gov/payments/your-online-account

Your eligibility for the stimulus money—-now available as the recovery rebate credit— will depend on your circumstances in 2020 and/or 2021.   If you could be claimed as someone else’s dependent in 2020 or 2021, you are not eligible for the recovery rebate credit now.

 The first stimulus checks were issued in 2020; the first one was for $1200 for adults and $500 for qualified children dependents under the age of 17.   The IRS was in a hurry to send out those checks so they sometimes used information from your 2019 return to send out the check.  Or sometimes they sent it after you filed your 2020 return.

The second stimulus was sent in late 2020 or early 2021; that one was $600 per adult and $600 for qualified children dependents under the age of 17.

The 3rd stimulus check was $1400 for adults and $1400 for any dependent you claimed, and was sent out in 2021.

If you did not receive the first or second stimulus check, you can get it by filing a 2020 return and use the recovery rebate credit in Federal Review.   The stimulus amount will show up on line 30 of the Form 1040.

If you did not receive the 3rd stimulus check, you can get it by filing a 2021 tax return and use the recovery rebate credit in Federal Review.    The stimulus amount will show up on line 30 of the Form 1040.

Check your own bank account for deposits of the stimulus checks, and check your online account with the IRS to see what the IRS shows they sent to you.

Try checking your online account with the IRS (and if you filed a joint return—check for BOTH of you)

https://www.irs.gov/payments/your-online-account

If you need to trace a payment that the IRS says has been issued to you, mail or fax a completed IRS Form 3911, Taxpayer Statement Regarding Refund.

[NCperson]

@Cmacres this is actually pretty simple.

1) did you originally receive the $1200 stimulus payment?  it would vave been in the summer of 2020

if yes, you would have answered that you recieved it in Turbo Tax  and  then Line 30 on Form 1040 would have been zero.

if no, you woukld have answered that you didn't receive it in Turbo tax and then Line 30 of Form 1040 would be $1200.

Yet, since the IRS were the ones who sent out the payment originally, they know who they sent it to.  From what you state, the IRS records are that it was sent to you, hence they adjusted Line 30 on your 2020 tax return back to zero. 

what do you think was the software bug?  and if there was one. literally millions and millions of taxpayers would have experienced the same bug. 

please answer question #1.  thx in advance