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papa281
Level 2

Why does the stimulus money increase the amount I owe on my federal return

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.
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JamesG1
Expert Alumni

Why does the stimulus money increase the amount I owe on my federal return

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.

 

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18 Replies
MaryM428
Level 6

Why does the stimulus money increase the amount I owe on my federal return

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?

papa281
Level 2

Why does the stimulus money increase the amount I owe on my federal return

My AGI was $127,000.00

JamesG1
Expert Alumni

Why does the stimulus money increase the amount I owe on my federal return

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.

 

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**Mark the post that answers your question by clicking on "Mark as Best Answer"

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amoscara
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

my AGI is 152,000 married filing joint.  Do I have to pay the stimulus back that I received

 

thanks

DoninGA
Level 15

Why does the stimulus money increase the amount I owe on my federal return


@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.

DTZ
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

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!

CatinaT1
Employee Tax Expert

Why does the stimulus money increase the amount I owe on my federal return

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.

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amoscara
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

It’s a terrible explanation which makes no sense at all.  

DTZ
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

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!

JamesG1
Expert Alumni

Why does the stimulus money increase the amount I owe on my federal return

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.

 

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Jewells60
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

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

JotikaT2
Employee Tax Expert

Why does the stimulus money increase the amount I owe on my federal return

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.

 

Recovery Rebate Credit

 

@Jewells60

 

 

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Jewells60
Returning Member

Why does the stimulus money increase the amount I owe on my federal return

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

KathrynG3
Employee Tax Expert

Why does the stimulus money increase the amount I owe on my federal return

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:

  1. Go to the search box and enter stimulus. Click the Jump to link.
  2. Answer Yes.
  3. At the next screen, Let's double-check the amount you received, answer No to edit the first-round and second-round amounts.
  4. If no stimulus amount was received, enter 0. An amount must be entered in each box. When finished, click Continue.

 

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-e.... 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

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