Economic Stimulus

[Looney1966]

I never received my second stimulus ($600) and put on my return that I did not and I owe money on my 2020 taxes.  It appears that IRS is keeping that to offset my liability.  I thought they were not keeping the stimulus toward IRS debt?  Why is this happening?

[ReneeM7122]

The IRS can't take your first- or second-round stimulus check to offset your tax liability.  The best thing to do is look on the IRS website for the Get My Payment tool.

You can also use the stimulus calculator to see if you qualify for the second, and to keep up with information for a possible third stimulus payment.

[Looney1966]

That was not my questions. I owe on my 2020 taxes, when I completed them.  I noticed that they $600 that I never got from IRS is offsetting that balance.  I though they could not take the stimulus, but they clearly are to reduce the amount owed on my 2020 taxes.  Am I doing something wrong in TT?  Shouldn't I get the $600 as a refund?

[ReneeM7122]

Yes, if you owe on your taxes, because the Recovery Rebate credit is a credit and not a refund, the IRS can take it.  The stimulus payments that the IRS distributed by check were an advance payment on this credit.  Since you had not yet filed your tax return, you got the payment.  Unfortunately now that your tax return indicates that you owe on your taxes, the IRS uses that credit to offset the balance due.

The recovery rebate credit is a "refundable" credit, which means you'll get tax refund if the credit is larger than the tax that you would otherwise have to pay. ("Non-refundable" credits will only take your tax bill down to zero – they won't trigger a refund even if they're more than the amount you owe.)

Here is a TurboTax article about the difference between credits and refunds on a tax return.  

The recovery rebate credit is a "refundable" credit, which means you'll get tax refund if the credit is larger than the tax that you would otherwise have to pay. ("Non-refundable" credits will only take your tax bill down to zero – they won't trigger a refund even if they're more than the amount you owe.)

@Looney1966