Recovery Rebate Credit

[debcon51]

Why did Turbo Tax calculate a Recovery Rebate Credit for me when my AGI does not meet the requirement?  I printed the RRC worksheet and cannot figure it out.  Additionally, Turbo Tax lumped the Recovery Rebate Credit with my tax refund so how do  I make that distinction on my 2021 taxes as federal tax refunds are taxable but the stimulus is not.

[KathrynG3 · Accepted solution]

First, be sure that you enter what you have received so far in the Recovery Rebate Credit section, including 0 if it was not applicable to your situation.

The link above shows how the stimulus payment will be reduced for Adjusted Gross Income above the initial limit:

There are also AGI limits to receive the full amount of the credit. Your adjusted gross income (AGI) must be below,

• $75,000 for individuals
• $112,500 for heads of household
• $150,000 for married, joint filers

For filers with income above those amounts, the credit amount is reduced by $5 for each $100 above the $75,000/$112,500/$150,000 thresholds. This means:

• An individual without children will not receive any credit if their AGI exceeds $87,000
• A couple without children will not receive any credit if their AGI exceeds $174,000
• A family of four will not receive any credit if their AGI exceeds $198,000

Secondly, only state tax refunds are taxable if you itemized in the prior year, not federal tax refunds. You will not be taxed on any stimulus payments.

If you need to adjust your entries, to return to the stimulus payment area in TurboTax, follow these steps:

1. Go to the search box and enter stimulus. Click the Jump to link.
2. Answer Yes.
3. At the next screen, Let's double-check the amount you received, answer No to edit the first-round and second-round amounts.
4. If no stimulus amount was received, enter 0. An amount should be entered in each box. When finished, click Continue.

[debcon51]

Thank you for clarifying the Recovery Rebate Credit question.  It was very helpful!