All documentation indicates that stimulus payments will not be taxed or "affect your refund amount". However, any number entered into this field (Stimulus Amount 1; Amount 2) proportionally affects my refund in the exact amount as entered. Is this based on AGI? Is it correct? I feel like I'm being penalized for receiving these payments.
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Once you entered an amount in one of the stimulus boxes, your return was automatically updated to include the Recovery Rebate Credit based on the information in your return.
Any subsequent entries or changes in the stimulus boxes adjusts the Recovery Rebate Credit and therefore your refund accordingly.
You can test this out by entering that you received stimulus amounts above what you are eligible for. The reduction maximum will be only your credit maximum no matter how much stimulus you add on top of that.
To remind you here are the eligibility amounts:
Round one: $1200 (2400 if filed jointly) plus $500 per dependent child age 16 or younger
Round two: $600 (1200 if filed jointly) plus $600 per dependent child age 16 or younger
Here is a link with more information on the Recovery Rebate Credit.
I think you missed the point. And the name it's referred as: "Recovery Rebate Credit", has nothing to do with the end results.
I realize that the amount entered affects the refund. However, it has been widely stated and advised that stimulus checks will NOT affect your refund amount. But that's exactly what is happening. The stimulus entries are reducing my refund by exactly what the checks values were. With this, it's as if the checks I received came out of my pocket and NOT the governments.
Are we being scammed with this "Stimulus" disguised as a "Recovery Rebate Credit"? Or is TurboTax programming off?
Perhaps this wording from the IRS page that was linked, implies that the question posed by TurboTax should NOT be included, since answering it truthfully will result in negative penalties.
"Individuals who received the full amounts of both Economic Impact Payments do not need to complete any information about the Recovery Rebate Credit on their 2020 tax returns. They already received the full amount of the Recovery Rebate Credit as Economic Impact Payments."
The stimulus payments received in rounds one and/or two were advances on the Recovery Rebate Credit on your 2020 tax return. The credit is automatically added to your return and then reduced by whatever stimulus payments you already received. This eliminates getting the payments twice and also ensures everyone gets what they are eligible for.
Why does TurboTax reduce my refund by the amount of both stimulus checks?
Did you report the amount of the two stimulus payments on line 30 of your 2020 Federal 1040 tax return when you filed? Had you already received the first two stimulus payments? Please clarify.
If you had reported a Recovery Rebate Credit on line 30 of your 2020 Federal tax return for stimulus payments that you had already received, the IRS would have reduced your refund by the amount of the stimulus payments that you had already received.
did you enter the actual amount of stimulus payments you received in the Federal Review Section? then any additional stimulus you may be owed appears on Line 30 of Form 1040.
Because TT has the 'counter' that shows how much you owe/ refund every time you change anything, that counter assumes you are due the stimulus from the very beginning so it appears your refund is 'high'. But then at the very end, they ask what you have received to date and the counter then adjusts so that it appears your refund has been lowered.
I see your point and the programming would have been much better if the very first question asked at the beginning was about the stimulus, so the counter would be accurate from the beginning rather than the last thing that is entered.
does that make sense?
Let me explain how stupid the placement of the stimulus question in the interview flow is …
Your 2020 return starts out by assuming you didn't get any Stimulus payment so it gives you the full amount of the credit and that is reflected in the Refund-O-Meter. Then near the end of the interview you enter how much you actually got in advance and the floating refund is adjusted accordingly so you don't get the credit twice.
Check line 30. The Recovery rebate credit is on 1040 line 30. It either adds to your refund or reduced a tax due.
Before filing, You can preview the 1040 or print the whole return
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