Recovery Rebate Credit Worksheet 2021 Tax return

[m86mu]

Using Turbo Tax deluxe to assist a relative with their taxes and got to the Recovery Rebate Credit.   The relative's spouse has a child.  In 2021, they have a legal document argeement that states her husband can claim the child in the odd tax years and the child's mother can claim the child in the even years. 

The mother claimed the child on her 2020 tax return and received the third stimulus payment for the child in 2021.

The relative and spouse are now filling out the information for  the 2021 tax return and entered the child to be claimed as a dependent.  When it gets to the Recovery Rebate question, turbotax asks for the amount they received for the third stimulus which was $2800.  Turbotax states they are eligible for $4200.  So Turbotax wants to add $1400 to their refund.   

In researching the information on the IRS website, based upon who filed the 2020 tax return to claim the child, the other parent (mother) claim the child and gets the $1400.   Why is turbotax not lookin at this situation?

[xmasbaby0]

It is a loophole in the way Congress wrote the law.   The 3rd EIP is really an advance on a credit for a 2021 tax return, but because they wanted those payments to go out in a hurry, they based many of them on 2020 returns.   If a parent who claimed the child in 2020 got the payment they do not have to pay it back.   But the person who can claim the child for 2021 can get the payment as a recovery rebate credit on their 2021 tax return.