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

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?

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.

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.)

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

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?

@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.  

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

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?

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.

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.

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.

@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.

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?

"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.

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 

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

@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?

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.

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

@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?

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? 

@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.   

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?