third ecomomic impact payment

[ziehmerj]

So, my house deferred the third payment for the purpose of receiving it as a credit.  We were to receive $7,000.00.   According to Turbo Tax software, we can now only receive $560.00.  That makes little sense.  If the IRS is not seeking to collect on overpayments because the calculation was based on 2020 numbers, why is Turbo Tax assuming I received the payment and basing the amounts on 2021 numbers, despite the IRS already saying I am due the larger amount.  The only current way to claim the full amount is to discard Turbo Tax and file returns manually.  Seems like a glitch.  I enjoy Turbo Tax, but the error is far more than Turbo Tax is worth.  Wondering if anyone else had this issue.

[xmasbaby0]

The 3rd EIP payment is based ONLY on your 2021 income---not on 2020.    People who received those payments last year got them because Congress wanted those payments to go out in a hurry.   People who received the payments last year do not have to pay them back even if their 2021 income is higher.   BUT....if your 2021 income is higher and you are trying to get the recovery rebate credit now on your 2021 tax return, the IRS is not going to go backwards and look at your 2020 income.  The 3rd EIP payment was issued as an advance based on a 2021 return.    They will only use your 2021 income.  If your 2021 income is too high, then your credit might be phased out to a lower amount, or you might not get anything.

Who’s eligible for the third Economic Impact Payment? (updated  March 30, 2021)

Generally, if you’re a U.S. citizen or U.S. resident alien, you are eligible for $1,400 ($2,800  for a joint return), plus $1,400 for each qualifying dependent, if you (and your spouse if filing a joint return) aren’t a dependent of another taxpayer on a 2020 tax return, have a valid Social Security number (SSN) (see exception when married filing jointly and exception for qualified dependents) and your adjusted gross income (AGI) does not exceed:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.

Payments will be phased out – or reduced -- above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:

• $160,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $120,000 if filing as head of household or
• $80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

For example, a single person with no dependents and an AGI of $77,500 will normally get a $700 payment (half the full amount). A married couple with two dependents and an AGI of $155,000 will generally get a payment of $2,800 (again, half the full amount). Filers with AGI of at least $80,000 (single and married filing separately), $120,000 (head of household) and $160,000 (married filing joint and surviving spouse) will get no payment based on the law.

You aren’t eligible for a payment if any of the following apply:

• You could be claimed as a dependent on another taxpayer’s 2020 tax return
• You’re a nonresident alien.
• You don’t have a valid SSN issued to you by the due date of your tax return (including an extension to October 15 if you request it).

Also, payments will not be made to estates or trusts or for individuals who died before January 1, 2021. 

[DanaB27]

Please be aware that the Recovery Rebate Credit on your 2021 tax return for the third stimulus payment is based on your 2021 income. If you income increased in 2021 above the adjusted gross income limited then you will not qualify for the credit even if 2020 income would have qualified you. 

Yes, if you did received the third stimulus payment based on your 2020 income then you do not need to pay it back if your 2021 income disqualified you. 

To be eligible for the Recovery Rebate Credit you need to be a U.S. citizen or U.S. resident alien in 2021 and have a Social Security number that is valid for employment.

You cannot be claimed as a dependent by someone else to be eligible. 

Your credit amount will be reduced if your 2021 adjusted gross income (AGI) is more than: 

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 for eligible individuals filing as a single or as married filing separately.  

Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above. (IRS FAQ Recovery Rebate Credit )

[ziehmerj]

Thank you for your reply.  As someone who has practiced tax law for 10 years, I have never once seen a law that distinguished between an advanced payment and a credit for purposes of determining eligibility.  In other words, either someone is eligible or they are not.  Can you please provide a legal citation for your statement?  Absent some crazy statutory language that I have never witnessed, either the software is wrong and people are defrauding the government by using the software and not paying what is due, or people are being denied substantial amounts of money. 

[xmasbaby0]

You have been provided with the information directly from the IRS above.   Sorry if you misunderstood last year.   But...you cannot get the 3rd EIP now if your 2021 income is too high.   Congress wrote the law.   TurboTax's software is complying with the tax law.