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Michael128
Level 2

Recovery Rebate Credit TurboTax calculation error

There appears to be a calculation error in TurboTax regarding the Recovery Rebate Credit.  I'll cut right to it, I'm filing married filing jointly, and the totals of EIP1 and EIP2 received was $4769.08.  As married with two dependents, I was eligible for $3400 in the first-round (EIP1) and $2400 in the second-round (EIP2), for a total eligibility of $5800.  The Recovery Rebate Credit is reduced by 5% of the amount by which my AGI exceeds the married filing jointly threshold ($150,000).  According to TurboTax, my 2020 AGI was $169,412.  I exceeded the threshold by $19,412.  5% of $19,412 is $970.60.  So taking the $5800 total I was eligible for and subtracting $970.60 from it, I get $4829.40.  That's the total amount I should have received in total from EIP1 and EIP2.  Again the total we received for EIP1 and EIP2 was $4769.08.  Subtracting $4769.08 from $4829.40 is $60.32.  So I think I should be receiving a Recovery Rebate Credit of $60.32.  It's small but it's significant.  There is no way in the program to manually calculate the credit, so I'm stuck with what appears to be a wrong calculation.  So unless my understanding of the Credit is wrong, there is a bug in TurboTax potentially not giving taxpayers their full refund.

23 Replies
NCperson
Level 15

Recovery Rebate Credit TurboTax calculation error

suggest walking your math through the official IRS worksheet; please post back if you think it is still in error. 

 

The $970.60 gets substracted from the eligibility of each payment and the eligibility of the two payments is assessed separately; you appear to be combining everything.

 

see page 58 and then see lines 14 and 18

 

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Dave5550
Returning Member

Recovery Rebate Credit TurboTax calculation error

Turbotax says based on my AGI of $79,805 I'm eligible for the full $1200 first stimulus and the full $600 second stimulus.  I received $698.50 from the first stimulus already.  When I plug that in, it says I'm only due a $621 credit.  That doesn't add up to the expected $1,105.50.  What gives?

 

Further I don't understand where Turbotax is getting my AGI from.  It looks like it excluded $10,800 out of  $17,892 from my AGI.  But, didn't the IRS come out and say all unemployment is excluded from AGI for purposes of calculating stimulus payments?

Cynthiad66
Expert Alumni

Recovery Rebate Credit TurboTax calculation error

 

The IRS clarified on Tuesday that the unemployment benefits will not count toward adjusted gross income, the figure used to determine whether people are eligible for the $1,400 stimulus payment. That means more people will be eligible for the stimulus checks.

 

With the new stimulus bill, up to $10,200 in last year's unemployment payments can be exempt from taxes if your adjusted gross income (AGI) is less than $150,000, according to new exclusions from the IRS. If your AGI is higher, you can't exclude any unemployment compensation

 

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity. See the specific form or instructions for more information. If you file Form 1040-NR, you aren’t eligible for all of these deductions. See the Instructions for Form 1040-NR for details.

Dave5550
Returning Member

Recovery Rebate Credit TurboTax calculation error

Yeah, I read that exact language in the same news article, and that's where the confusion comes from. The question is whether ALL unemployment is excluded from determining whether you qualify for ANY of the stimulus checks, or whether just the first $10,200 is excluded. TurboTax seems to believe it is just the first $10,200. The author of that articled also emailed me back to say $10,200 and they should update their article. Can anyone definitively answer where ALL unemployment is excluded from determining eligibility for any of the three stimulus checks, or just the first $10,200. (Also, FYI, the question I posted only related to the first two stimulus checks.)
Cynthiad66
Expert Alumni

Recovery Rebate Credit TurboTax calculation error

The IRS clarified on Tuesday that the unemployment benefits will not count toward adjusted gross income, the figure used to determine whether people are eligible for stimulus payments. That means more people will be eligible for the stimulus checks.Mar 25, 2021

JPM20211
Returning Member

Recovery Rebate Credit TurboTax calculation error

On the "Let's double-check the amount you received" page, it reads "based on the info you entered and your combined adjusted gross income of $185,575, you and 'wife's name' are eligible for the following stimulus payments:".  Then it shows First-Round:  $2400 and Second-Round:  $1200.  I then checked that was NOT what we received and entered amount we received of $898.  Doing the math, we should receive a Recovery Rebate Credit of $2702.  However, this amount is not included on 1040 line 30 Recovery Rebate Credit.  Is there a problem with Turbotax CD?

NCperson
Level 15

Recovery Rebate Credit TurboTax calculation error

@JPM20211 - TT is correct, but the wording is terrible. 

 

the Recovery Credit is dependent on a) your filing status, b) your dependents under the age of 17 and c) your income for 2020 LESS what you have received for the first two stimulus payments.  That statement in TT fails to recognize either the haircut for having an AGI greater than $150,000 or the EIPs received to date

 

Since your income exceeds $150,000, the amount due you is reduced by 5% for the amount over $150,000, or $1779 reduction in this case.  I assume you received $898 for the 1st payment and nothing for the 2nd payment

 

walk through the worksheet on page 59

 

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

 

from the $2400 you would subtract $1779 which is what you are eligible for LESS what you received ($898) and since the answer cannot be negative, you are eligible for $0 for EIP1

 

for the $1200 you would subtract $1779 and since the answer cannot be negative, you are eligible for $0 for EIP2

 

Note that you cannot be asked to return any money under this formula, even if the result is negative.  Line 30 can never be negative. 

 

hence Line 30 is zero and is correct.  

 

 

 

NCperson
Level 15

Recovery Rebate Credit TurboTax calculation error

Note that you should not receive the 3rd stimulus as your income exceeds $160,000, which was the new limit set by Congress. 

efhask99
Level 1

Recovery Rebate Credit TurboTax calculation error

TT showed a $3,600 Rebate Credit as my "Refund Due". But IRS web says we are due $0.00. TT advertising "guarantees accuracy" so when is TT going to send me the $3,600 mistake it made?

BillM223
Expert Alumni

Recovery Rebate Credit TurboTax calculation error

When TurboTax in the Review asked you if you received the first and second stimulus payment, how did you answer? Did you tell TurboTax that you had received these payments and told TurboTax how much for each one?

 

TurboTax is not liable for errors in input.

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kathya
New Member

Recovery Rebate Credit TurboTax calculation error

I haven't had a chance to figure out why, but my refund was cut in half from $1200 -$600 by the IRS with the message there was an error in calculations, no details given. Since u used TurboTax and have a pretty straight forward return I can only assume there is a glitch in TurboTax.

ssarfati
Level 2

Recovery Rebate Credit TurboTax calculation error

Like kathya, we filed with TT only to find that the glitch messed things up. So instead of a refund, we now owe.

Not very happy about this.

xmasbaby0
Level 15

Recovery Rebate Credit TurboTax calculation error

@ssarfati Lots of people gave incorrect answers when they went through the recovery rebate credit section of their tax returns, resulting in a bigger refund showing on the Form 1040 than they were really entitled to get.   The IRS cross checks the recovery rebate credit on line 30 and when it sees that you already got money you said you did not receive, they recalculate and reduce your refund.  They will send a detailed letter in several weeks.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
pfanneda
Level 1

Recovery Rebate Credit TurboTax calculation error

Bill, turbotax may not be liable for the input, but they are responsible for how they pose the questions. They are also responsible for how it handles the input. So I ran across this issue today. 6/7/2021 Turbotax presents: "Lets double-check the amount received" (in regards to stimulus). Then it presents the amounts for first and second round payments. It asks; "Is this what XXX received?" If one answers yes, then it processes that as you received no stimulus payments.  This may have been corrected now, but on 6/7/2021 that's how it processed (I screenshot it for documentation purposes) that input. That to me clearly indicates an issue with how it displayed data and incorrectly processed it. Does turbotax offer rebates/refunds for incorrectly processing input?

 

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