why does the stimulus money increase the amount I owe on my federal return. When I enter the amount of $1200 then the first stimulus check and $1200 for the second one, I have to pay example: $350 back to the feds. when I enter the correct amount of $2400 for the first stimulus check I have to pay $893 back to the Feds.
Before you enter the amount of the stimulus payments at the screen Did you get a stimulus payment?, you have been given the full Rebate Recovery Credit (the equivalent of the two stimulus payments). At this point, this is an 'incomplete' Rebate Recovery Credit.
You can see this on the screen Great news! You qualify for the stimulus credit. The amount is displayed in the center of the page. It is also listed on line 30 of the 2020 Federal 1040.
After you enter stimulus payment 1 and stimulus payment 2, the credit is offset by the stimulus payments and the 'incomplete' Rebate Recovery Credit is reduced or eliminated.
See this TurboTax Help.
When you start TurboTax 2020 it assumes that you did not receive any stimulus payments. It gives you the stimulus payments as a tax credit for 2020. That will result in a refund or in a decrease in the amount owed.
When you get to the screen where you report the stimulus payments that your received, then those amounts are deducted from the credit you had and your refund will go down or your amount owed will increase.
The results that you are seeing indicate that TurboTax s TurboTax is not agreeing that the second payment should be $2400. Was your AGI higher than $75,000 for filing single or $150,000 for married filing jointly?
Before you enter the amount of the stimulus payments at the screen Did you get a stimulus payment?, you have been given the full Rebate Recovery Credit (the equivalent of the two stimulus payments). At this point, this is an 'incomplete' Rebate Recovery Credit.
You can see this on the screen Great news! You qualify for the stimulus credit. The amount is displayed in the center of the page. It is also listed on line 30 of the 2020 Federal 1040.
After you enter stimulus payment 1 and stimulus payment 2, the credit is offset by the stimulus payments and the 'incomplete' Rebate Recovery Credit is reduced or eliminated.
See this TurboTax Help.
my AGI is 152,000 married filing joint. Do I have to pay the stimulus back that I received
thanks
@amoscara wrote:
my AGI is 152,000 married filing joint. Do I have to pay the stimulus back that I received
thanks
No you do not have pay back the stimulus payment.
I'm not completely following this explanation. Everything I'm reading online indicates that the stimulus check does and will not affect your taxes, even in the event of stimulus overpayment. I also have a very similar situation as described by the original post. TurboTax is showing a refund typical of what I see every year, but after entering the stimulus check amounts, I then owe the govn't double my expected refund. State is unaffected. Do you have a better, more detailed explanation of what's going on? Thanks!
When entering your return in TurboTax, the stimulus payment is included in your refund amount (assuming you didn't receive it). When you get to the stimulus payment questions and enter that you did receive them, the amount that was included in your refund for the stimulus payment is taken out.
Thank you for replying. Would you be able to include or show an example? I've read the explanation a few times but it's not making sense to some of your users. An example showing will go very far. Thanks!
Before you enter the amount of the stimulus payments at the screen Did you get a stimulus payment?, you have been given credit for the full Recovery Rebate Credit (the equivalent of the two stimulus payments). This can be found on line 30 of the 2020 Federal tax return. At this point, this is an 'incomplete' Recovery Rebate Credit.
You can see this on the screen Great news! You qualify for the stimulus credit. The amount is displayed in the center of the page.
After you enter stimulus payment 1 and stimulus payment 2, the credit is offset by the stimulus payments and the 'incomplete' Rebate Recovery Credit is reduced or eliminated.
That explanation makes no sense. Because this same program didn't act this way with my dad's tax return neither one ever got that pop up saying Great news! You qualify for the stimulus credit. So can't blame it on that. By putting in the correct amount received which was less that what we were suppose to get it raised my taxes owing by over 900.00 when it's not suppose to have any impact
The stimulus payments are not taxable. However, if you had not put in your stimulus payments before, your return was calculating the Recovery Rebate Credit and that was generating a higher refund.
The amount of the Rebate Recovery Credit is based upon your actual 2020 income tax return you file. Therefore, if you meet the criteria for the credit, you will receive it when you prepare your 2020 income tax return. The credit is intended to give those who should have received a stimulus payment but never did a tax credit on their tax returns. Any excess credit is then refunded to you if there is an overpayment on your tax return.
Please see the attached link for more information on who can claim the credit.
Recovery Rebate Credit eligibility
After you enter your stimulus payments received or not received, you should see a screen similar to the one below if you are entitled to the credit. If you are not entitled to the credit, you will not see anything related to the Recovery Rebate Credit as you already received your stimulus payments.
I did not get that message. First of all it said we should of received 2400 for first stimulus in which we only got 1440.80 second stimulus said we should of got 600 we got zero. it asks did I receive these amounts I said no and put the correct amounts which were less than what we received and it raised my taxes owed by 900.00. Makes no sense as first it's not suppose to do that second no credit was given for what we didn't receive. Please explain why this is happening
Thank you
You are correct that stimulus payments are definitely not taxable.
I suspect TurboTax initially calculated the return as if you had not received any stimulus payments. However, since payments were received, then that portion of the Recovery Rebate Credit must be removed. The Credit is only for reporting what you were entitled to but have not yet received. TurboTax will calculate this automatically.
Report what stimulus amounts were received. TurboTax will calculate if you are entitled to any additional amount and include it in the Recovery Rebate Credit.
To do this in TurboTax, follow these steps:
When watching the Refund Tracker, it would then appear as though you were being charged, even though the Refund Tracker was reduced for a different reason. The refund was reduced for removing a credit since you were not eligible, not for charging taxes.
The summary screen defaults to the maximums available before applying the income limits, but it would appear these maximums do not apply to your case.
When income is over the threshold, the stimulus payments are reduced by $5 for every $100 above the threshold based on your filing status. These thresholds start at the same amount, but are eliminated at different amounts for each payment due to the laws that were passed.
For the First Stimulus Payment, see: How do I calculate my EIP (Economic Impact Payment? It is for $1,200 for taxpayers and $500 for dependents.
If income is above the following amounts, the payment will be reduced pro rata.
Individuals: $75,000
Heads of Household: $112,500
Married, filing jointly: $174,000
If income is above these amounts, there is no stimulus payment sent with no qualifying children (under 17 years old):
Individuals: $99,000
Heads of Household: $136,500
Married, filing jointly: $198,000
For the Second Stimulus Payment, see Questions and Answers about the Second Economic Impact Payment: Calculating the Payment. It was for $600 for each taxpayer and for each dependent.
If income is above the following amounts, the payment will be reduced pro rata.
Individuals: $75,000
Heads of Household: $112,500
Married, filing jointly: $150,000
If income is above these amounts, there is no stimulus payment sent with no qualifying children:
Individuals: $87,000
Heads of Household: $124,500
Married, filing jointly: $174,000
For the Third Stimulus Payment, see https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-b-eligibility-and-calculation-of-the-third-payment: How much will I receive for the third Economic Impact Payment? (March 26, 2021). It was for $1,400 for each taxpayer and for each qualifying dependent (under 19 years old).
If income is above the following amounts, the payment will be reduced pro rata.
Individuals: $75,000
Heads of Household: $112,500
Married, filing jointly: $150,000
If income is above these amounts, there is no stimulus payment sent with no qualifying children:
Individuals: $80,000
Heads of Household: $120,000
Married, filing jointly: $160,000
So in other words they are in a sense having us pay back for over paying us when they said we wouldn't have to pay back and not being taxable cause we did make a bit more on the first stimulus however never received a second stimulus but yet when I say no and put zero in the area where they thing we got 600 it raised taxes owed. When I put the 1440.80 in as actual received instead of the 2400 it raised it also for the first stimulus. So we are being penalized for these stimulus checks. However if I agree to the amounts they say we received in brings what's owed back down by almost 900.00. This just makes no sense.
Thanks. This explanation makes sense. I was really miffed when my return was adjusted after acknowledging we did receive the stimulus funds. It would have been helpful if Turbo Tax was a little more explanatory prior to that point. It sure felt like I was being taxed when my refund amount was debited $1200 instantly! Turned my small return amount into a larger amount owed!! But this makes sense. The program itself was not as easy to understand as this explanation points out. But I can sleep a little better now! 🙂
I understand all that but it's not suppose to impact a person's taxes and it is it's impacting ours, it's actually making us pay 900.00 more in taxes by putting the lesser amounts we received on the stimulus. Yet it raised my dad's refund. If indeed Turbo Tax was calculating from the beginning a refund it would of showed above as what we were getting as a refund prior to putting anything in at all. Either there is a glitch or the government is lying that this does indeed impact our taxes cause we are having to pay more cause of getting less on the stimulus so in a sense we do have to pay it back as taxes. This isn't right when we were told that it wouldn't. But if I just agree with the amount they said they sent then my taxes owing is 900 less, even tho we received less that what they say so that there makes no sense. One hand if I agree to the amount they say I got I owe 900 less if I put we got less than I owe 900 more, that is what I am having a hard time with understanding.
You can go ahead and file the return that shows a bigger refund.
IRS is going to double check all the tax returns and put it back the way TurboTax had it.
OK TurboTax could have been less confusing but COVID changes everything.
Those on this thread who still don't understand the explanation here probably won't understand the IRS explanation letter either.
Please update the TurboTax instructions for third stimulus payment, and TurboTax pre-calculations embedded in your system. If third payment does not affect either income nor tax credit, it should not change the amount of taxes/refund due.
IRS Q&A updated 25 Jan 2022 clearly states "you will not include the third payment in your taxable income ... nor pay income tax on the third payment. It will not reduce your refund nor increase the amount you owe."
Please update the TurboTax instructions for third stimulus payment, and TurboTax pre-calculations embedded in your system. If third payment does not affect either income nor tax credit, it should not change the amount of taxes/refund due. We did not receive the letter but did receive the $2,800 payment.
IRS Q&A updated 25 Jan 2022 clearly states "you will not include the third payment in your taxable income ... nor pay income tax on the third payment. It will not reduce your refund nor increase the amount you owe."
It is not taxable and you aren't paying it back. Your 2021 return starts out by assuming you didn't get any Stimulus payments so it gives you credit for the full amount and your refund was too high. Then near the end you enter how much you actually got so it only gives you the difference if any. So you don't get it again.
Look at your tax return. It is not added as income anywhere or subtracted anywhere. The Recovery rebate credit on line 30 is only if you didn't get the Stimulus payment or qualify for more.
TRY THIS.....
So do this to check. Put down 0 for the Stimulus payments like if you didn't get it. Then look at your return especially line 30 and see that Turbo Tax gives you the 1400 or 2800 credit on line 30. See what your refund is. Then go back and enter the amounts you already got and check your return. You don't get credit for it again on line 30 since you already got it.
Its not taking it away. It's just not giving it to you again.
Your explanation makes sense, but is difficult to follow because I don't see the actual tax form - a line 30 credit - until the return is completed. TT should not include a tax stimulus from the outset. At a minimum, it needs to provide better, expanded explanation in stimulus info instructions.
Before filing, You can preview the 1040 or print the whole return
I got CP11 note from IRS saying I got an error "Recovery Rebate Credit" ! After an hour on hold I was told that I entered the recovery amount incorrectly cost me $1830! Turbo Tax should reword the way it ask the question. IRS agent said she is getting a lot of these errors!
Peter