Federal Review - 2020 Stimulus Payment

[ldamario]

In the Federal Review section of TurboTax 2020 Deluxe, it asks the question: How did you get your 2020 stimulus payment?" And then it asks you to enter the amount. Is this asking about the first Economic Impact Payment from April 2020 or the second $600 payment enacted into law at the end of 2020, or the combination of both? I imagine most eligible people will not see the second payment until some time in 2021.

[DoninGA]

Only the amount that you actually received in 2020.

[NCperson]

it is asking for the FIRST payment as the SECOND payment is not programmed in yet,

It will be important when the software is updated to report the two payments separately (and I am confident TT will ask for it that way) 

[ldamario]

But there will be many people (myself included) who will not receive the second payment until 2021. So I imagine the second payment will have to be reported on the 2021 tax return.

[NCperson · Accepted solution]

@ldamario - nope,. it is not considered income. It is considered an advance against 2020 taxes due.... so it will be reconciled on the 2020 tax return.   The way it works is as follows, and what your tax return looked like in 2018/ 2019 doesn't matter.....

The IRS will calculate how much you are due based on your 2020 filing status, income and qualified dependents under 17 years old.   

Then it will use the result and subtract both payments you have already received.  whatever is left becomes a credit on line 30 of your 1040 tax return.  If the result is negative, you don't owe the money back.

Currently, TT is only programmed for the 1st stimulus payment so only input the 1st payment when asked otherwise you may get the incorrect result.

make sense? 

[ldamario]

This is exactly what TurboTax does aftering entering the amount received (jointly) from the first stimulus program only. The end result on line 30 was a pleasant surprise.

[NCperson]

@ldamario - it should not have been THAT much of a surprise....

just so all the expectations are set correctly....

1) how much did you receive in the 1st payment? you should have plugged this number into TT at the END of the interview

2) what is your situation: single/ joint / children? ... TT will calculate the stimulus dollars you are owed. 

3) what ended up on Line 30?

just want to be sure something else didn't go sideways and then you don't get the money you are expecting.

[ldamario]

1) $54 (which the IRS based on high 2019 AGI)

2) Married filing jointly, with no children

(3) $2346 (based on 2020 AGI < $150,000)

$2346 +$54 = $2400 (the full amount for married filing jointly)

It all makes sense.

[NCperson]

actually, that DOES make sense....high income in 2019, so low stimulus payment BUT stimulus REALLY based on 2020 income so EIP gives it all back to you.  

[ldamario]

Correct.

At some point, TurboTax will have to put out an update to deal with the second stimulus payment.

[Farmer Chuck]

Question for the group and Turbo Tax:

My wife and I didn't receive any stimulus payments in 2020 because the IRS had not processed my 2019 Taxes. They used my 2018 taxes to determine we were not eligible.  If they had processed my 2019 taxes, we would both have received stimulus checks.  Now, our income went back up in 2020 so Turbo Tax is using our 2020 income to say we are again not eligible for the credit from not having received any stimulus payment. Shouldn't we receive a credit on our 2020 taxes for the amounts we were eligible for based on 2019 income?

[DoninGA]

---

@Farmer Chuck wrote:

Question for the group and Turbo Tax:

My wife and I didn't receive any stimulus payments in 2020 because the IRS had not processed my 2019 Taxes. They used my 2018 taxes to determine we were not eligible.  If they had processed my 2019 taxes, we would both have received stimulus checks.  Now, our income went back up in 2020 so Turbo Tax is using our 2020 income to say we are again not eligible for the credit from not having received any stimulus payment. Shouldn't we receive a credit on our 2020 taxes for the amounts we were eligible for based on 2019 income?

---

The Recovery Rebate Credit is only based on your 2020 federal tax return for your filing status and the 2020 AGI.

IRS website for the Recovery Rebate Credit - https://www.irs.gov/newsroom/recovery-rebate-credit

Economic Impact Payments were based on your 2018 or 2019 tax year information. The Recovery Rebate Credit is similar except that the eligibility and the amount are based on 2020 information you include on your 2020 tax return.

[ldamario]

I think this situation may be too complicated for TurboTax to handle. Have you tried calling the IRS? There may be a special form (not tax return) that you can submit if you believe you were incorrectly marked as ineligible.

[TNelson2177]

How do I apply for stimulus payment one and two

[Critter-3]

Just file a 2020 return even if you have no income and report the amount of stimulus you did get in advance when asked.