Taxcaster inaccurate 2021?

[1Bunny01]

When I filed my 2020 income tax in April 2021, I checked with a rep from TURBO Tax regarding tax on the Federal stimulus. I was told that the stimulus was not taxed. I just received notification from NY State that regarding their tax that necessitates amending my return. It turns out that by amending the tax return both New York State and the Federal income tax is showing an enormous increase. I did not make any changes to the stimulus that is shown in the Turbo Tax tool. The original tax filing resulted in Federal refund: $3,223 and State: $155. The amended return is $1,770 and the State is $995. This makes no sense. Please send me your comment or any suggestion that I can try. I am aware that you are not a tax advisor, or preparer. I am responsible for filing my taxes and I will not hold you responsible for any help that you provide. That is strictly my responsibility. Thanks

[Angrockins]

I am seeing the same thing. I have entered all of my info. I received a $5600 stimulus in like April. It reduces my refund by that exact amount. I'm not talking about any advance child tax credit payments, just the stimulus. I don't understand.

[Angrockins]

Can you explain what you meant when you said taxcaster asks what you got in advance so you are not given credit on your return?

I didn't think the stimulus was an "advance". 

[VolvoGirl]

It's not an advance but you need to reconcile the amount in case you didn't get the full amount or added a dependent like had a new baby.

Turbo Tax starts out by giving you the full amount,  then you say you already got it so it removes it from your return.  Otherwise you would be claiming it again.

[nd1182]

I just started filing my return and it is not showing my new baby for the CTC and I cannot reconcile the earlier 2021 stimulus payment for them either. I have another child I received early payment ($1800) from and that is deducted from the total $3600 to leave me with only a CTC of $1800 but it should include another $3600 for the new child. Also it should reconcile that while I did receive a stimulus payment it is missing another eligible dependent for the additional $1400.

Why is this not being caught?

[xmasbaby0]

@nd1182 The software still  needs updates for the CTC and then it will be "caught."      And.....did you enter the information about your new baby correctly in order to get all of the child-related credits you are eligible to receive?

Make sure you have entered your child as a dependent in My Info, and that you have entered the child's Social Security number. If your child was born in 2021make sure you said he lived with you the whole year.  There is an oddly worded question that asks if the child paid over half their own support.  Say NO to that question.

You should watch line 28 of your Form 1040 for the child tax credit, and use the recovery rebate credit for the $1400 stimulus amount for the newborn.   That will show up on line 30 of your Form 1040.

In January you are going to receive two letters from the IRS.  One will show how much of the advance CTC was sent to you already and the other one will show how much you already received for the 3rd stimulus.   You will need to enter that information very carefully.   WAIT for those letters and wait for all of the software updates.   

You cannot e-file yet---you have plenty of time.    And the IRS will not be sending refunds with the CTC until the end of February at the very earliest---so  no reason to rush.

[Schroedes]

I don't feel the answers being given are reflecting what's happening.  First of all, I just used tax caster, been doing this for years with same basic income, etc etc.. I always get a refund of arou d $3000 federal.  But this year, even though the EIP supposedly isn't taxable, we're asked about it, and once you punch in the payment, my refund disappears.  So with the same income etc etc I'm apparently getting no return as soon as that number is punched in, the supposed untaxed EIP.  Something is fishy with the whole thing

[xmasbaby0]

You are misunderstanding the flow of information in the taxcaster tool----and lots of other people are also confused.

The tax caster tool starts out by putting the 3rd stimulus amount into the estimated “refund” you will get because not everyone received the 3rd stimulus in 2021—-some people will not get it until they file 2021 returns.   So when you enter that you actually already received the 3rd stimulus, the estimated “refund” is reduced because you cannot get that stimulus money twice.   You are not being taxed on the stimulus and you are not being cheated out of it.  

In January you are going to receive a letter from the IRS that shows how much stimulus you received in 2021.   You will enter that information carefully into your 2021 tax software.   If you are eligible to receive any additional stimulus money then it will appear on line 30 of your Form 1040.

[Schroedes]

I understand that, what I'm saying is that I went from my usual $3000 federal return, to nothing..  before any EIP ever existed, I was getting that, now nothing . Yet we're being told it isn't taxed etc etc, so somewhere our taxes increases in some form because people are not getting the same refund they usually get.  EIP should have no impact on this. I don't think it's the software, I think the fake government took us for fools and is recovering that money in some form

[xmasbaby0]

First you stated that you thought your EIP caused your refund to disappear.   Even after a careful explanation of why the imaginary refund you saw was reduced when you entered the fact that you already received the EIP payment ---which you cannot get twice---now you think there is a conspiracy to keep your refund lower than usual?

Since the estimating tool is confusing you, when you have entered ALL of your actual income and other data into the tax software, print out 2020 and 2021 and lay them side by side to compare them to see what is different.

No one in this user forum can see your tax return or your screen.  There were major tax law changes that began with the 2018 tax year that seem to continue to surprise some people.  Personal exemptions of over $4000 per person were removed beginning with 2018 returns.

 Was something different for 2021?  Did you have less income due to the pandemic?  Did you receive unemployment compensation?  If so, did you have tax withheld from it?

There are a lot of variables that affect your refund or tax due including how much you earned, how much tax you had withheld, your filing status, the number of dependents you claim, your deductions and credits, etc.  You may have lost Earned Income Credit or the Child Tax Credit— did a child turn 19?  If you received the EIC last year, remember that changes in the amount you earn have a big effect on the amount of EIC you can get. (Sometimes earning more money means less EIC)  Are you 65 or older ?  If so, your standard deduction is higher. Everyone has a higher standard deduction now so it is harder to use itemized deductions.

And of course, always check your own data entries, looking for errors such as misplaced decimals or extra zeros.

https://ttlc.intuit.com/questions/1901008-why-did-my-refund-go-down-compared-to-last-year-s

Print out 2020 and 2021 and compare them side by side to see what is different. 

[Schroedes]

Again, I understand the software applying the refund automatically, then taking it away,..not rocket science.. it seems that refunds are less in general and that the money is being recouped in some form.. I wouldnt call that a "conspiracy" which really has no definition... But more of a observation..  I as a taxpayer, accepted the " free" money handed out last March and now my usual refund is next to nothing, and it seems to be happening to alot of people regardless of the TurboTax software.. 

[Critter-3]

If you changed your W-4 in the last 2 years  then the new form is designed to get you as close to even as possible  so if you don't like the refund you are getting then you can change the W-4 to add an extra amount on line 4c.     https://www.irs.gov/forms-pubs/about-form-w-4

[Angrockins]

It's just very confusing to me. I compared 2020 and 2021. Income, withholding and deductions are all very close to the same. Refund amount is about the amount of the stimulus LESS than last years refund. 

[Critter-3]

Ok ... let me see if I can shed some light on this situation that many folks will find themselves in ... that advance was not  the best thing to happen. 

Last year the credit was $2000 of which only $1400 could be refunded after taxes were paid down.

This year the credit is $3000 (or $3600) of which you got 1/2 up front  leaving just $1500 (or $1800) for the credit on the return to pay down your tax bill.

So last year the credit on the return was $2000 and this year it is only $1500(or $1800) ... you are short $500 (or $200) on the return.   You are thinking the credit went up so my refund should be more but remember you got some in advance.  Review the 2020 & 2021 returns side by side to see this in action.  

[Schroedes]

That's what I'm referring too as well, these people on here keep thinking we're confused about the EIP being applied right away.. no... Smaller returns regardless is what I'm seeing on tax caster.