Recovery Rebate Credit ambiguity

[Pants]

Got an IRS CP12 that indicated they were cutting our 2021 refund by $4200, but the basis for this was vague to the point of useless (might have been my shoe-size, might have been a missing SSN, etc)

Going back to the TT Recovery Rebate Credit Worksheet, to see how or where I might have messed up, the qualifying questions are in some cases terribly phrased.  We added another child to our household in November 2021, so I take it that this means that indeed, "...a social security number...was issued on or before the due date of your 2021 return..." (thus qualifying us for this as a "yes").  But it sure isn't clear to me how to correctly answer (in #4, two questions later, seemingly redundantly)  "Does one of you have a social security number that was issued on or before the due date of your 2021 return?" (*ONE* of you?  Eg, my 6-month old boy?  well...yes, like I said above...) So I'm trying to edit these worksheets to see where I might have erred, and now questions 3 and 4 have turned my response X's RED, indicating I've...messed...up. 

Regardless of my above-described attempts to find and fix, the initial filing appears to have been correct.

Looking for help on this here, there seem to be at least a few posts in which people claim that the IRS has been messing up on this.  Before I have to MAIL IRS a hard-copy explanation, I want to be sure I'm on firm footing (I should explain that 2 hours 30 minutes on hold with them yesterday concluded with AutoHangup, and that's something I'm not willing to go through again). 

Please help...

Also - I've looked and looked and cant' find my way back to the step-by-step Q&A portion of the process that should cover this.  Any way to navigate back to that...please?  I'd like to at least see what questions I was asked that resulted in the forms being completed the way they were, whether there was a mistake or not.

Mahalo - Dave

[NCperson]

let me see if I can help

please post

1) how many indiviudals are listed on your 2021 tax return (you, spouse, children, other family members, etc.)

2) what is on line 30 of Form 1040.

3) how much stimulus did you receive last March - May, 2021?  If you have Letter 6475, it is on there, but if you are filing "joint" there were two letters, and they each much be added to together.  (this is where most make the mistake and get the adustment letter from the IRS) 

4) what did you enter into TT when prompted for how much you received for the 3rd stimulus? (it should match the answer in #3) Look in the software, don't just assume it's the same as your response to me in #3

Once you respond, I can explain what went wrong. 

[NCperson]

also,

look in the 'federal review' section to see how you answered the questions about the 3rd stimulus when you completed your tax return.

if you used TT, then this was all automated (except for asnwering how much you already received), so there is really no need to go through the Recovery Rebate worksheet.  That is why "messing up" has to do with what you told TT you already received - it was the only manual step. 

[Pants]

Many thanks for jumping into this, NCP:

"1) how many indiviudals are listed on your 2021 tax return (you, spouse, children, other family members, etc.)"

-- me, spouse, two small children

"2) what is on line 30 of Form 1040."

-- $5600

"3) how much stimulus did you receive last March - May, 2021?  If you have Letter 6475, it is on there, but if you are filing "joint" there were two letters, and they each much be added to together.  (this is where most make the mistake and get the adustment letter from the IRS) "

-- Joint filing, yes.  We've got two 6475 letters, each stating $2100 for "total 2021" EIP, dated 12 January 2022, so $4200 total for the two of us.

"4) what did you enter into TT when prompted for how much you received for the 3rd stimulus? (it should match the answer in #3) Look in the software, don't just assume it's the same as your response to me in #3"

-- I've been unable to FIND where this entry was made, and surely don't recall at this point - can you steer me there?  Is that a particular line in standard IRS form, or is it lost because it only comes up in the Q&A, maybe? (which I couldn't re-locate when looking, repeatedly).  It's possible I said I'd not received it, because I couldn't find any stimulus payment since (as I just discovered yesterday) I'd apparently chosen to have our EIPs deposited in my "old" checking account, not in our joint account for some reason - but that doesn't really make sense as an explanation, since I had the two 6475 letters in hand when completing my return, so I knew we'd gotten the payments.  

"also,

look in the 'federal review' section to see how you answered the questions about the 3rd stimulus when you completed your tax return.

if you used TT, then this was all automated (except for asnwering how much you already received), so there is really no need to go through the Recovery Rebate worksheet.  That is why "messing up" has to do with what you told TT you already received - it was the only manual step. "

--I think the smoking gun is actually here.  I still can't tell how I answered (can I?), but as found, that 'page' is headed with "Let's double-check the amount you received", and says wife and I are eligible for EIP of $5600.  It then asks if that matches the amount shown on 6475 (no, it doesn't, but it's also not clear whether we're talking about the total of the two letters, or mine, as filer, and questions about wife will come later, say).  So if I click "no," then fill in the box below with $4200, then TT concurs with the IRS' CP12 calculations.  OTOH, if I put ZERO in the box, I get the same refund number I filed with originally, so it's looking like that was my mistake.  

That still doesn't explain to me the difference between the $4200 total of our two 6475's and the $5600 that TT says we're eligible for, but I'm guessing there's a reason the $1400 difference isn't showing up as additional refund...or is there?

[VolvoGirl]

Sounds right.  You had 5600 on line 30.  (1400x4 people).  But you already got 4200.  Line 30 should be only the 1400 for the new baby.  You are still getting the extra 1400.  They only reduced line 30 by the 4200 you already got.  

Line 30 is included in the total refund on line 35a.

[NCperson · Accepted solution]

As @VolvoGirl also concurs, the adjustment is correct,

You are eligible for $5600 of either stimulus or Recovery Credits - but NOT both

And you state you received $4200 last year. 

therefore you are eligible for $1400 (I'll bet you had a new born in 2021 who obviously wasn't known to the IRS when they sent out the checks last year)

Had you responded when asked by TT that you had already received $4200, then only $1400 would have appeared on Line 30.  

But since you entered zero received, the entire $5600 shows on Line 30.  

The IRS knows what they sent you and since they know they sent you $4200 and you responded that nothing was sent to you, the IRS reduced Line 30 by $4200 so it matches their records.  That has the effect of reducing your refund by the same $4200.  

The remaining $1400 is part of your refund.  To prove it to yourself, print out a copy of Form 1040 and manually change Line 30 to $1400 and then complete the math down the rest of the page (it's not that hard).....you'll see that the refund that the IRS is sending to you includes the $1400: your manually re-written Form 1040 matches what the IRS is sending you..... and that included $1400 on Line 30,

does that make sense?

[Pants]

Yes, makes perfect sense, though I might skip the actual demonstration for myself (wife might demand it, however, so please be sure you're correct...)

I'm an aging engineer so I'm still somewhat able to do math, but the removal of context from IRS forms (and more so from the TT Q&A process, though I've come to rely on having my hand held this way) via dumbed-down IRS directions like, "if line 16a is larger than line 31, then..." tend to force me to backwards-translate the intent of those instructions, if I want to understand the flow.  I find myself less and less able/motivated to keep those translations aloft in my head when reviewing, even though they're all just credits, rebates, income, taxes owed (etc) when all is said and done.

So thanks for your patient assistance!