2021 Tax Return Miscalculated

[overdrive31]

I recently used TurboTax 2021 Desktop software to paper file a family member’s return. The software calculated an EIC with a positive result, but in reality, the IRS said I owed $300. That is a significant miscalculation. I’m now concerned with just how many of your clients suffered from such a flaw.

I’d also like to make a suggestion to make your desktop software more useful by supporting previous years enabling eFile if an IPPIN is used. 

[xmasbaby0]

No one can see the return you prepared.   Tax year 2021 was a tricky one, and lots of people made mistakes.    Many mistakes were made with the recovery rebate credit for the 2021 stimulus check or with the advance child tax credit.    If you had amounts on lines 28 or 30 of the Form 1040, the IRS looked very closely to match the amounts you said you received with their own records of how much was sent.   There was also a "lookback" for earned income credit that confused people.  So it is not surprising that the IRS found a reason to reduce the refund that you were seeing on the return.   They will send a letter explaining what they changed.

[rjs]

Do-it-yourself tax software allows e-filing only for the current tax year. Even for tax professionals, the IRS allows e-filing only for the current year and two prior years. So only 2024, 2023, and 2022 can be e-filed now. The IRS no longer allows e-filing for 2021.

You have not said what was miscalculated on the 2021 tax return that you filed. What did the IRS say was wrong on the return?

[overdrive31]

I knew I had to paper file 2021. My suggestion is for TurboTax to enable the ability to use the desktop software to eFile if using an IPPIN like other online software such as OLT or FreeTaxUSA. People would appreciate the usability of such a versatile product with the capability to eFile previous years and the ability to even eFile an Amended Return. Wouldn’t you agree? The IRS should have just continued allowing people to eFile 2021 after the Nov 2024 eFile shutdown and the eventual eFile online date of January 27, 2025. It was ridiculous to force people to paper file for such a small window between November 30, 2024 and April 15, 2025. I know of several people who had an IPPIN which would facilitate an eFile of a previous year yet when told they must paper file, they decided to forfeit their last chance to claim their Recovery Rebate Credit. Crazy I know, but I have witnessed more than one paper file get lost in the mail..

[overdrive31]

What happened was the software knew their age but still calculated an EIC which the IRS said they didn’t qualify for because of age..I wouldn’t have included their 2019 Earned Income had the software not suggested I do. They were charged $121 plus $56 interest on the 2019 income alone..The tax software insisted they were qualified to receive an $66 refund when in fact it was a bill of $301

[rjs]

You refer to "they." Was this tax return for a married couple filing jointly, or are you using "they" as a gender-neutral pronoun for one person?

The age requirements for EIC were modified for 2021 only. Could the IRS have mistakenly overlooked the special age requirements for 2021? What were the taxpayers' ages as of December 31, 2021? For 2021, to qualify for EIC without a qualifying child the taxpayer only had to be 19 or older. There was no maximum age for 2021.

[overdrive31]

The person I helped with the taxes was 75 in 2021, and the IRS is saying that since they were over 65, they do not qualify for the EIC. But the funny thing is, if you claim a dependent, even if >65 you do qualify for a EIC. How stupid is that?

So the software isn’t to blame? The IRS made the mistake? Where can I find the rule to prove my case? I had more than one person get denied EIC that year because of age. Thanks

[rjs · Accepted solution]

IRS Publication 596, Earned Income Credit (EIC), 2021 edition, page 17:

"Chapter 3. Rules If You Do Not Have a Qualifying Child"

"Rule 11—You Must Meet the Age Requirements
For 2021, you no longer need to be younger than age 65 to claim the EIC."

American Rescue Plan Act of 2021
SEC. 9621(a) SPECIAL RULES FOR 2021.
"ELIMINATION OF MAXIMUM AGE FOR CREDIT.—Subsection (c)(1)(A)(ii)(II) shall be applied without regard to the phrase ‘but not attained age 65’."