why did Turbo Tax give me a recovery rebate credit and IRS disallowed it

[UserSteve]

not sure what is going on with the SW on this.  The help clearly says there should be no credit yet Turbo Tax added one in and caused a delay on my return after the IRS disallowed it

[xmasbaby0]

We cannot see your tax return so we do not know what you entered when you answered the questions about the recovery rebate credit.   If you said you did not receive the 1st and/or 2nd EIP payment then an amount went on line 30 of your Form 1040 for the recovery rebate credit and was added to your refund.  If the IRS thinks you already got the EIP payment(s) they recalculated and removed the credit.   

[fanfare]

TurboTax 2020 has a lot of bugs and other issues. That's just a fact.

Always print a copy of your completed tax return for your records, and review it carefully before e-Filing.
You will need it if you are audited by the IRS, or to amend if a TurboTax update changes your return or for any other reason,

If you got your stimulus payments, Form 1040 line 30 should have been a big ZERO.

For many such filers, it was not.

[UserSteve]

For more clarity, i did not qualify due to AGI limitations yet Turbotax said i qualified and added it to my refund.  IRS website said processing with no explanation for 3 months before finally disallowing the credit.

Still no idea why it was added in the first place!

[MDA4]

I just found out that turbo tax did in fact insert the full amount of the 3rd economic relief payment in my 1040 despite that I answered correctly that I had received it in full. Now IRS is telling me that not only am I not receiving a refund, but that I owe the difference. I am no longer using turbo tax since the IRS provides a FREE similar service. Not getting anymore of my money.

[pwhiteo]

I  received only 1 stimulus payment in March  2021 for the amount of $1400.  Turbo Tax filled in the Recovery Rebate Credit of $1400 for me, and the IRS disallowed it.  I met all of the qualifications.  My total income was under$72,079, and AGI was just over $65,079.  I am not a dependent on any other person's tax return. I am single, living alone, no children.  Why did the IRS disallow the credit?

[xmasbaby0]

If you received the $1400 in March, what makes you think you were supposed to get it again?   The 3rd EIP was $1400 per person.   You cannot get the credit twice.   If you answered incorrectly that you did NOT receive the payment, then you ended up with $1400 on line 30.   But the IRS knows if you received that $1400; if you already received it they take it away from the amount of your refund.

LOTS of people have made mistakes this year with the recovery rebate credit by "forgetting" that they received the $1400 per person stimulus checks last year.  They answered no to the questions for the  recovery recovery rebate credit and put the $1400 per person on line 30 of their returns.  But you cannot get it twice, so the IRS removes it when it is there by mistake.

Try checking your online account with the IRS

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

Does the IRS show that you received a $1400 stimulus or EIP check in 2021?   Did you receive it?   When you were asked on your tax return did you say no?   Was there $1400 on line 30 of your tax return?

If the IRS says you got $1400 last year but you did not receive it you can have it traced.

LOST THIRD STIMULUS CHECK

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-round-economic-impact-payment-top...

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.

[pwhiteo]

 did show on my tax return that I received one stimulus check. My understanding was that the first and second rebates came as checks, and the third one came as a tax credit.  I did not receive the first stimulus check, but I received the second one.  Then I thought I was also entitle to the 3rd stimulus benefit in t he form of the tax credit.  I did show on my tax return that I received one check.

[VolvoGirl]

No.  The one in March 2021 was for the third Stimulus payment.   Not the second one.  It came the same way as the first two.  So you are missing the first or second one or you missed seeing one in your bank account.

So you needed to enter the 1400 payment you got in March 2021.  And line 30 should be blank.  Line 30 is only if you didn't get the full amount or qualify for more. 

STIMULUS PAYMENTS

EIP1 The first Stimulus payment was 1,200 for each spouse and 500 for each dependent under 17.  Came out in spring of 2020.

EIP2 The second Stimulus was 600 per person and dependents under 17. The 2nd stimulus checks started going out at the very end of December 2020 and continued into January/Feb 2021.

The first 2 Stimulus payments went on your 2020 return even if you got the second one in Jan/Feb 2021.

EIP3 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.

[pwhiteo]

Thank you--that helps.  I have been working on this for about 7 hours!!  Now I think I get it!!  I had a tax credit in 2019, and I just have to go back and see if I got the third stimulus check or credit.  

[VolvoGirl]

You said you got the 1400 in March 2021.   That WAS the third Stimulus payment.

[xmasbaby0]

The first EIP --or stimulus check--- was issued in 2020  It was for $1200 for adults and $500 for a dependent under the age of 17.   The IRS used information from either your 2019 or 2020 tax return to issue those checks so they could send them out in a hurry.

The 2nd EIP or stimulus was issued in late 2020 or early 2021 and was $600 for adults and $600 for dependents under age 17.

If you did not receive the 1st and/or 2nd stimulus check you can get it by filing a 2020 tax return and using the recovery rebate credit in Federal Review.   It will end up on line 30 of a 2020 tax return and will be added to your refund (or reduce your tax due).

The 3rd EIP--or stimulus check-- was sent out in mid-March or later in 2021 and was for $1400 per person--adults and dependents no age limit.

If you did not get the 3rd EIP payment you can get it by filing a 2021 tax return and using the recovery rebate credit in Federal Review.   The credit will go on line 30 of your Form 1040 and will add to your refund (or reduce your tax due).

Try checking your online account with the IRS

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.

[SweetieJean]

Also see:

2021 Recovery Rebate Credit Questions and Answers | Internal Revenue Service (irs.gov)

[Sailing-Bob]

Just got the letter from IRS today saying I need to pay back the Recovery Rebate Credit of $1400. I answered the questions correctly using TurboTax so I'm quite surprised they could screw it up. Why would the program ask me how much I received and then enter a credit I have to pay back with penalty? Good reason not to use Turbox Tax next year.

[SweetieJean]

TT did not screw it up. The IRS believes it already sent you the Stimulus payment #3 in the Spring of 2021.  Are you sure you did not receive it?