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Correct, the stimulus payments are not included in taxable income. But before you entered the stimulus payments received the refund included the amount of Recovery Rebate Credits as if you didn't receive any stimulus payments. Once you enter the stimulus payments it calculates the correct Recovery Rebate Credit amount and shows the correct total refund amount.
If you received Notice 1444 in the mail but have not received your payment as mentioned in the notice, then you need to request a trace to be able to claim the Recovery Rebate Credit on your 2020 tax return. Please see How do I request a payment trace to track my first or second Economic Impact Payments?
To be eligible for the credit you need to be a U.S. citizen or U.S. resident alien in 2020 and have a Social Security number that is valid for employment.
You cannot be claimed as a dependent by someone else to be eligible.
Your credit amount will be reduced if your 2020 adjusted gross income (AGI) is more than:
Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above. (IRS FAQ Recovery Rebate Credit )
To claim the credit in TurboTax, please follow these steps:
Please see How will the third stimulus impact me? for additional information.
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