Covid stimulus question during 2020 filing

[burtonbrown1]

the app/website asks the amount for each stimulus payment...

For the first one, all is well, we got the full amount, and the basis for this amount was based on our 2018 filing.

For the second one, we received the reduced amount just recently and it was based on our 2019 filing, and our AGI had pushed us over the limit to get the full amount.

Within the app/website, there is no place to distinguish this, and the app thinks we were shorted on the stimulus rebate and adds the missing amount to our expected refund.

My concern is, is this correct?   Did the IRS mess up, and mistakenly short us on the rebate, or does the website need an update to distinguish when the second stimulus was issued? If the IRS is correct and shorted us, then great...we will get more $$ refunded, but if TurboTax is wrong, I don't want to submit our returns in error.

Were both stimulus checks supposed to be based on the same year? In our case 2018.

[DanaB27]

No, the Recover Rebate Credit is based on your 2020 AGI. If you got less paid before because your AGI limited the amount then you might qualify for the rest if you AGI was lower in 2020.

For additional information please see Stimulus FAQ at the end of the TurboTax article.

[burtonbrown1]

Ok thanks..I think I get it...as much as I can "get" the IRS....the 2nd stimulus is/will be based on 2020 AGI.

Our 2020 return is not yet complete, so it seems your saying that it may go back down if our AGI changes for 2020 filing.

[Snomad]

my payments were based on 2019, yet turbotax used 2020 agi to review and say everything ok.  I was concerned did not get payment for my child who I am able only to take deduction every other year due to court order from divorce.  My income was a lot less in 2019 than 2020 but payment received does not appear to reflect the $500 for my daughter.

[DMarkM1]

The Recovery Rebate Credit on your 2020 tax return is based on information in your 2020 tax return.  If you claimed a qualifying dependent child age 16 or under on your 2020 tax return, that information will be used to determine the amount of stimulus payments you should receive.

Once that total eligibility amount is established based on your 2020 tax return, the credit is reduced by any amounts you actually received in stimulus rounds one and/or two.  Any remaining credit is added to you tax return.

The amount is added to your return on line 30, of your form 1040.  You can see the form using TurboTax online by following these steps.

1. Click "Tax Tools" in the left hand menu
2. Click "Tools"
3. Click "View Tax Summary"
4. Click "Preview My 1040" in the left hand menu

So if you claim your qualifying daughter on your 2020 tax return your eligibility amount would be:

Round one:  $1200 plus $500  total $1700

Round two:  $600 plus $600 total $1200

Total: $2900

If you received $1800 in stimulus payments because you did not claim your daughter in 2019, the remaining $1100 will be added to your return.

That Recovery Rebate Credit can only be reduced to zero.  So if one received more payments in rounds one and two than the eligibility amount based on the 2020 tax return there is no penalty.  The tax on the return is cannot be increased due to stimulus payments.

So if you do not claim your daughter in 2020 and received $2900 as she was on your 2019 return, your credit will be zero on your 2020 return.  

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

[Snomad]

DMarkM1

thank you for answer, However, I am still confused.  Even though my daughter was on my 2019 return I filed on 4/2 (per court order I claim her on odd years), I did not receive the $500 dollars for her in the June round of payments.  My payment was slightly reduced due to 2K income above the 75K.  Second round payment was correct including her.  TT tax on the rebate form says it appears all my payments are correct.  When I run the calculator I found on line, it says I was shorted the $500.  Because I am not claiming her on 2020 (even year) it appears TT does not address this issue.  Any way to correct?

Thank you

Snomad

[KathrynG3]

Check out this guidance from the IRS which addresses this situation when the child is claimed by parents in alternating years: Economic Impact Payment Information Center — Topic J: Reconciling on Your 2020 Tax Return. If you had received it, you could have kept it based on this guidance. 

Unless she is included in your return, the system may not recognize your eligibility for her portion of the first stimulus. To return to this area, 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.