When you begin entering your information into TurboTax, the program assumes that you haven't received stimulus payment, so it begins giving you the maximum amount.
When you enter the amount of stimulus you've actually received, it adjusts your refund to account for that.
The IRS requires you to report all relevant stimulus information when you’re filing your return.
That's not quite right. The stimulus payments were actually advances on the Recovery Rebate Credit, which is claimed on your tax return.
If you received the full amount of both stimulus payments -- aka Economic Impact Payments -- then you won’t receive any additional credit on your return this year, since you already received the full available amount of the credit as stimulus payments.
If you didn't receive the full amount for your first or second-round stimulus payments, you can claim the remaining portion as Recovery Rebate Credit when you file your taxes this year.
Please see the TurboTax Help article How do I claim the Recovery Rebate Credit? for additional information.
Thank you. And the other odd thing that was not clear in the TT return was the timing. We are to include both stimulus payments in the 2020 return even though I, and presumably many others, did not receive the second until 2021. Odd to say the least and, again, more direction from TT at the outset (input area) would provide comfort to many of us impacted by the counter-intuitive tax regulation.
You are correct, the stimulus payments are not taxable. However, by default the amount of the stimulus payments is added to your refund when you start your tax return in TurboTax, so when you enter how much you actually received already, the amount to be added to your refund is reduced by that amount.
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