Turbo tax Not calculating stimulus correctly

[Kurt8]

Turbo Tax is not calculating the Recovery Tax Credit correctly.  I have confirmed this with two different returns.  One where AGI for 2019 exceeded $75K, but was below $75K in 2020.  Another where AGI qualified in 2019, but not in 2020.  When will this be corrected?  If necessary, can I override the amount in forms view?

[DoninGA]

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@Kurt8 wrote:

Turbo Tax is not calculating the Recovery Tax Credit correctly.  I have confirmed this with two different returns.  One where AGI for 2019 exceeded $75K, but was below $75K in 2020.  Another where AGI qualified in 2019, but not in 2020.  When will this be corrected?  If necessary, can I override the amount in forms view?

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TurboTax calculates the Recovery Rebate Credit using the IRS Recovery Rebate Credit Worksheet.  The credit is based on the 2020 federal tax return information and the 2020 AGI on the 2020 Form 1040 Line 11.  Any eligible credit is entered on Form 1040 Line 30.

Go to IRS Form 1040 (2020) Instructions page 59 for the Recovery Rebate Credit Worksheet - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=59

[Kurt8]

I have gone to the IRS worksheet.  It reinforces that Turbo Tax is calculating the credit incorrectly.  Y'all need to up your game.

[DoninGA]

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@Kurt8 wrote:

I have gone to the IRS worksheet.  It reinforces that Turbo Tax is calculating the credit incorrectly.  Y'all need to up your game.

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Where is it calculating the credit incorrectly?  Line number on the worksheet?

TurboTax has processed 100's of thousands 2020 federal tax returns without any systemic issues with the Recovery Rebate Credit.  Why do you think yours is incorrect since the same worksheet is in the TurboTax software as is shown on the IRS Form 1040 Instructions.

[Kurt8]

It is now calculating correctly.  The updates helped and on one return, the social security number was off by a digit.

[JeffP_MA]

This is my situation, too.  MFJ with 2019 AGI under threshold, never received either of the $1200 stimulus checks, DID receive the 2 @ $600 within a week or 2 of law passage.  Had to search for Recov Rebate Cr form, had to override everything and the form still has an un-deletable Note at the Bottom referring to our 2020 AGI (to high to qualify).  Overriding seems to work, but shouldn't need to.  I didn't use TurboTax in 2019 (used Drake), and spent literally over an hour with TT Support whose only ultimate advice was to wait until 2/12, when the "final" Turbotax update will come out and this should be fixed.  The $1200/2400 payments in the Spring of 202 are based on 2019 income, NOT 2020.  There is debate about what the payments of $600 are based on, and some reporting that if your 2020 income is disqualifying but 2019 was not, you should delay filing.  Right now, wondering if I should have stuck with Drake.

[DoninGA]

@JeffP_MA The stimulus payments are an advance tax credit based on the 2020 federal tax return.

The Recovery Rebate Credit Worksheet used by TurboTax and any other tax preparation software is the same worksheet as required by the IRS to calculate the tax credit.  The worksheet requires the use of the 2020 AGI from Form 1040 Line 11.

Go to IRS Form 1040 (2020) Instructions page 59 for the Recovery Rebate Credit Worksheet - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=59

[JeffP_MA]

@DoninGA Unfortunately, I think you are right.  😭

The reporting has been consistent that if your 2020 Income is over the threshold and your 2019 was under, you will not  be required to return any of the payment you received in 2020, but I never received the CARES Act credit in 2020 (and it is seemingly precluded from being paid or credited after 2020 by Code section 6428(g)(3)) so I am . .  SOL.  That'll teach me to rely on "reporting" in the popular press.

[rolph]

We're having a problem also but with a different twist on the credit calculation. We got the first stimulus payment before we filed our 2019 return and therefore it was based on our 2018 AGI  The second stimulus, of course, was based on my 2019 AGI.  For both tax years we were over 150K threshold but only in 2018 was the AGI low enough to require a proration of the stimulus amount. Apparently, TT is using 2018 AGI to calculate that a prorated amount should have been paid for the second stimulus. How do we get rid of the erroneous credit that TT is showing on our 2020 return?

[DMarkM1]

The Recovery Rebate Credit on your 2020 tax return is based only on the information in your 2020 tax return.  The AGI on your 2020 tax return is correctly being used for the calculations.  If your 2020 AGI is between $150,000 and $200,000, the stimulus amounts for both rounds one and two are using the same proration (2020 AGI).  That prorated amount is then reduced by any payments you actually received in rounds one and/or two to arrive at the credit due to you and added to your 2020 tax return. 

The prior year AGIs were only used for rounds one and two because those were the returns available; they were actually advances to the Recovery Rebate Credit.  The stimulus payments were always meant to be based on 2020 tax returns.  

Here is a link with more information on the Recovery Rebate Credit.

[kimberlyc3636]

You calculated both my adult children's incorrectly. They both got significantly reduced refunds stating the amount on line 30 was calculated incorrectly. We depend on your service to get it right so what happened?

[Anonymous]

@kimberlyc3636   If the IRS adjusted their refund after they filed because Line 30 was incorrect it means that the IRS records didn't match what was reported on the return to be the amount already received for that taxpayer.  

This happened a lot to early filers who indicated they didn't receive the $600 second payment, and then the payment was received after the return was filed.   The IRS then reduces the refund by this amount, because they show that they already sent it. 

If they didn't receive the payment (lost in the mail, etc., they should request a refund trace)  https://www.google.com/search?q=how+to+request+a+refund+trace+IRS&rlz=1C1CHBF_enUS906US906&oq=how+to...

The program doesn't have an issue with this calculation, but there is a lot of confusion about how it is supposed to work.  

[kimberlyc3636]

Thanks for your reply. They had received all of the stimulus payments they were supposed to before I filed and I did report this, so I'm not sure what happened. 

[JamesG1]

@kimberlyc3636

If a taxpayer received all the stimulus payments they were supposed to receive before filing, then the payment in the form of a Recovery Rebate Credit on line 30 of your 2020 Federal tax return should be $0.

The IRS reduced the refund by the amount over $0 because stimulus payment 1 and/or stimulus payment 2 had already been issued by the IRS and received by the taxpayer.

 If you didn’t get a first or second  payment or got less than the full amounts, you may qualify for the 2020 Recovery Rebate Credit and must file a 2020 tax return even if you do not normally file.

You may review the 2020 Federal 1040 tax return line 30 to see whether a Recovery Rebate Credit had been requested.

[Mnmpepper]

So technically we were supposed to put both payments in there even if the second stimulus was not received until 2021? 

I did not put my second stimulus in there thinking I would have to put it in when I file next year. The IRS said I had calculated incorrectly, amended my return by the credit the software added into my return and changed my refund amount. I am okay with this, but now I have not received the stimulus when my bank has already received their funds. So now, I guess I have been flagged by IRS and won’t receive the stimulus. 😕