What are the eligibility rules for the Recovery Rebate Credit wrong in Turbo Tax.

[Pherpich]

The eligibility requirements are incorrect in Turbo tax which cause an error after I filed and I now owe $300 plus interest instead of a $5000 rebate. This is from the IRS web site. Turbo tax says $150,000 for joint filers and review does not catch this. I waited until April 13th to file to get all the updates I could. 

Q H4. How do I know if I don’t qualify for the repayment protection for filers based on their income...

A4. You won’t qualify for any repayment protection if your modified adjusted gross income (AGI) is at or above the following amount based on the filing status on your 2021 tax return:

• $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
• $100,000 if you are filing as head of household; and
• $80,000 if you are a single filer or are married and filing a separate return.

For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit.

[NCperson]

something does not make sense. Is your issue the Recovery Rebate Credit or the Advance Child Tax Credit? (your question states the RRC but the FAQ is about the child tax credit, leaving me confused).

Both required you to enter how much you already received. if you did not enter the amounts already received, the refund would be inflated  

What is on line 30 of your tax return? 

What is on Line 28?

What is on Line 11?

if you received the 3rd stimulus (around March - May, 2021) and did not enter that into TT when prompted, it would cause Line 30 to be incorrect. 

If you received the advance child tax credit from July to December, 2021 and did not enter that into TT when promoted, it would cause Line 28 to be incorrect.

[SweetieJean]

You have posted the income limit for the Child Tax Credit, but your question is about the Recovery Rebate Credit. These are two different credits, with different income limits.  See here:

2021 Recovery Rebate Credit — Topic C: Eligibility for claiming a Recovery Rebate Credit on a 2021 t...

[SweetieJean]

Many taxpayers have been misunderstanding these credits.  As of April 7, the IRS had issued 9.4 million math error notices — and 8.3 million of these notices were related to the recovery rebate and the child tax credit.

Where's My Refund? IRS has some answers but others left clueless (freep.com)

[Pherpich]

The IRS denied my eligibility. Total AGI is 124,000 for 2021. So who is wrong? The IRS or Turbo tax?

[xmasbaby0]

@Pherpich You have not mentioned your filing status or which credit you are asking about.  The eligibility criteria for the recovery rebate credit  ("stimulus" check)   is not the same as the eligibility for the child tax credit.  TurboTax follows the IRS rules for both credits.   And....if your income is above the eligibility for the full amount, there are phase outs.

[NCperson]

@Pherpich 

questions:

1) did you previously receive the 3rd stimulus ? would have received around March - May , 2021.  If you did, then you are not elgiible for the Recovery Rebate so Line 30 should be zero.  But if you did not tell TT that you received the 3rd stimulus it would have inadvertantly placed multiples of $1400 on Line 30 and then the IRS would have denied it. 

2) did you file Single or Joint? if Single, you were not elgiible and Line 30 should have been zero.  Unlikely this is the issue (assuming SIngle filing) because TT would have been able to figure out you were not eligible,

[VolvoGirl]

Did you get a letter from the IRS saying they changed your return for the Recovery Rebate Credit?
Those are generic reasons why they adjusted the Recovery Rebate Credit on your return. A common adjustment is if you claimed the Recovery Rebate Credit on 1040 line 30 when you already got the 3rd Stimulus payment or reported the wrong amounts. Do you have an amount on line 30? The IRS knows they already sent it to you. Line 30 is only if you didn't get the full amount or qualify more.

Double check your bank statements and check your IRS account (both accounts if married) to see what they sent you.
https://www.irs.gov/payments/your-online-account

How many dependents do you have?  The 3rd Stimulus payment started going out in March 2021 and is for 1,400 for each person listed on your tax return, no age limit. The IRS used your 2020 (or 2019) return to send the checks out fast. If your 2021 return changes and you qualify for more you can claim the extra as the Recovery Rebate Credit on 1040 line 30. But line 30 is only if you didn't get the full amount or qualify for more. Not the amount you already got. The IRS also sent out letter 6475 to tell you how much they sent you . If you are married then each spouse should get a letter for half.

[Pherpich]

Checked full year bank statements. no $5600 deposit. and no $4200 deposits from IRS. The only possible change would be for my 24 yr old daughter who is still in school. But they removed the entire amount. I have a 12 year old dependent also. Now I have to call them which is going to take days to get through. 

[Pherpich]

Filed joint with 2 dependents. New wrinkle. After downloading from the IRS my transcript of the federal taxes they claim they processed a payment on 3/17/21 for $5600. This never entered my bank account. Now the fun begins. 

[VolvoGirl · Accepted solution]

If the IRS thinks they sent it to you but you didn't get it request a trace for a missing third Stimulus payment

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[NCperson]

@Pherpich - some additional hints..... the IRS would have used the same bank account info for direct deposit as you used for your 2019 Tax return (unlikely they had your 2020 bank account info in March 2021, but it is possible based on when you filed your 2020 tax return).  

Did you change banks during this time frame? if you changed banks, any chance you left the old bank account open? 

if the IRS was unable to direct deposit the money, they were supposed to mail it via US mail.