IRS Letter 6475

[JSP242]

6 pages of reading, and finally someone answers my remaining question.  I was looking for how to enter the 6475 letter, and wasn't able to find it in my software anywhere.  So many responses have that AGI caveat in there, but no one actually posted what those AGI amounts all were until you did here.

THANK YOU!

Out of curiosity, can you point me to where in the rules etc. those AGI amounts are spelled out?

[DoninGA]

@JSP242 They are on Line 10 of the Recovery Rebate Credit Worksheet.

Go to the IRS Form 1040 Instructions page 59 - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=59

[JoeDeveloper]

Here is my question. Why on earth would TT auto include the 3rd Stimulus as a Credit???!!! That's the only thing I can come up with, I get to the Letter 6475 screen and I have a $3,000 tax refund. I enter $9800 (Married filing jointly, 5 dependents) and I click continue, now it says I owe the IRS $6,309. What in the actual hell is going on?

Is TT assuming NO ONE got the third stimulus? This is a sick joke

[xmasbaby0]

@JoeDeveloper Well---Congress says that it is a credit and they wrote and passed the law.   Some people received the 3rd EIP payment in 2021 because Congress wanted those checks to go out in a hurry.   So they use information from previous tax returns and hustled those checks out starting in mid-March of 2021.   You should have received letter 6475 showing how much was sent to you.  If the tax return they used to send the money was a joint return then they divided up the amount sent and put half the amount on letters to each spouse---each spouse received a letter with half the amount for himself/herself and half the amount that was issued for the dependents.

What you may not have realized is that when you started to prepare your 2021 return, the software "gave" you the credit again because TT does not automatically know if you received that money last year.   So the "refund monitor" showed you a big refund.   Later when you entered letter 6475 the software had to reconcile that big refund with the amount you already received.  You were not taxed on the stimulus.   It was not taken away from you.   You just cannot get it twice.

The software handles the child tax credit in the same way.   It starts out showing you the full CTC, but when you enter the advance payments received between July and December, the amount you can get is reconciled with the half you already received.

So.....if you owe tax it is for some other reason.. ..like not having enough withheld from your paychecks.

[JoeDeveloper]

@xmasbaby0 I'm starting to understand this now, thanks for the detailed reply.

My beef is more from the user experience perspective, TT should start off NOT giving that credit and then when you enter the info from the 6475 letters add a credit if there is any credit.

TT is making the assumption that no one received the 3rd stimulus which is the more rare case as opposed to common. This presents an inaccurate picture of the refund calculator until you are literally at the last steps before filing.

Bad user experience

[JamesG1]

You are immediately given credit for the third stimulus payments when you and your dependents meet the qualifications for the credit.  The credit is reduced when the payment of the third stimulus payments is reported.

The computation of the Recovery Rebate Credit is a two-step process.  You are able to observe what is happening at each step on line 30 of your Federal 1040.

Early in the program, TurboTax software computes whether you qualify for the $1,400 third stimulus check and gives you immediate credit for the third stimulus check. 

You are able to view this Recovery Rebate Credit on line 30 of the Federal 1040 under Tax Tools / Tools / View Tax Summary / Preview my 1040.

You enter the third stimulus check actually received at the screen Let's double-check the amount you received. 

Then the Recovery Rebate Credit on line 30 becomes $0.  You may also view this under Tax Tools / Tools / View Tax Summary / Preview my 1040.

[JoeDeveloper]

I got live tax advice per the support rep, neither tax advisor knew this information, so I basically wasted the extra fee but whatever.

What I am saying is that TT should ask you for the Letter 6475 information when you start not during the last steps before filing in Federal Review. Since they assume you get the credit without knowing the letter 6475, it's just in the wrong spot in the process for user experience.