Why does the stimulus money increase the amount I owe on my federal return (Tax Year 2020)

[Jewells60]

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.

[TommyLee1]

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!  🙂

[Jewells60]

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.

[fanfare]

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.

[Gram2022]

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."

[Gram2022]

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."

[VolvoGirl]

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.

[Gram2022]

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.  

[VolvoGirl]

Before filing,  You can preview the 1040 or print the whole return

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

[Fran4011]

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

[MayaD]

In TurboTax you should have entered the amount of third stimulus check that you already received in 2021. TurboTax start by giving you the maximum amount. When you enter the actual amount received, it adjusts your refund to account for that.

When you file your return, the IRS compare that amount with their records. 

If you already received the third payment they will reduce your refund by that amount.

[toddk911]

I did not get the 3rd stimulus check and entered that in my return but then got a notice from IRS that my refund would be decreased because I received $2,800 3rd stimulus even though I did not get it.  How do I fix this?

I've  called 4 different 800# for IRS as instructed but you're either on hold forever or the say to call back tomorrow and then hangs up.

??????

[DoninGA]

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@toddk911 wrote:

I did not get the 3rd stimulus check and entered that in my return but then got a notice from IRS that my refund would be decreased because I received $2,800 3rd stimulus even though I did not get it.  How do I fix this?

I've  called 4 different 800# for IRS as instructed but you're either on hold forever or the say to call back tomorrow and then hangs up.

??????

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Go to this IRS website for your tax account to see if the 3rd stimulus payment is entered - https://www.irs.gov/payments/your-online-account
If you are Married Filing Jointly also check your spouse's tax account.

If you checked your bank account in the March - May 2021 timeframe and there is not a $2,800 EIP3 payment from the IRS then go to this IRS website for how to start a trace on the payment - https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[VolvoGirl]

Double check your bank statements and Check your IRS account (both accounts if married)

Your Online Account | Internal Revenue Service

If the IRS thinks they sent it to you but you didn't get it request a trace for a missing third Stimulus payment

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[toddk911]

I got the CP11 also and the letter 6475 saying that I got the 2,800 3rd stimulus check so they reduced my refund, however, i never got a 3rd check.