Level 2

Question

IRS disallowed reduced Recovery Rebate Credit

Forum|Forum|4 years ago
August 4, 2021
4 replies
21 views

Has anyone had an issue with IRS reducing a refund by the Recovery Rebate Credit calculated by the program? It's on a client with a reduced credit as their income is over the limit.

Is the worksheet in the program wrong?

Lacerte Tax

This topic has been closed for replies.

sjrcpa

Level 15

Did the client receive an advance EIP payment, or two?

The more I know the more I don’t know.

IRonMaN

Level 15

I asked my clients that question when the came in for their 8:00 am appointments. They said they didn't know. Then I asked them what they had for breakfast. They said they didn't know. I can hardly wait until next year when I get to ask if they received any advance child tax credit payments. 😒

Slava Ukraini!

C

Connie Buskohl CPA

Level 2

I am having the same problem.

I have confirmed that the amount of the EIPs are accurate.

I have contacted Lacerte Tech Support and they said that they do not have any other reports of this being a problem.

sjrcpa

Level 15

How did you confirm the EIP?

The more I know the more I don’t know.

N

NCJ

Level 2

My client received a reduced amount for EIP1 & EIP2 initially. That reduced amount was part of the worksheet in Lacerte. Lacerte calculated the taxpayer was entitled to the Recovery Rebate credit for part of the EIP1 that was not received. The taxpayer just received an IRS notice stating they were not entitled to the Recovery Rebate credit and have to pay the credit back as it had initially reduced the balance due. Why doesn't the Lacerte calculation and IRS agree with the calculated Recovery Rebate credit?

Level 15

Have you done the math yourself?

"You should be able to look carefully at the Lacerte worksheet to determine if it is wrong. I really doubt it is."

Using the IRS information, do the math yourself.

"I have confirmed that the amount of the EIPs are accurate."

Use their 2020 info, including the amounts received, for EIP 1 and EIP 2. Don't use any 2019 or earlier info. Compare it to Lacerte and to the IRS response. Confirm Lacerte has the dependents correct, and that your taxpayers' qualify; EIP 1 and 2 have slightly different qualifications.

"I am having the same problem."

Narrow it down to the problem, because right now, there is no Same Problem.

Don't yell at us; we're volunteers

joshuabarksatlcs

Level 9

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/recovery-rebate-credit-the-amount-was-computed-incorrectly-683d/00/173349

A week or so ago, there was another thread along this line. PPECPA initiated the original message. In the end, PPECPA seemed to conclude the IRS made a mistake.

The computation for the Recover Rebate Credit is fairly simple.

2020 AGI

EIP1 received

EIP2 received

====> Balance of RRC on Line 30.

Lacerte use the 2020 AGI in the computation. I doubt the 2019 AGI was in the picture.

The messages from NCJ Connie and Laura seemed to indicate they did the work. Now I start to wonder if IRS errors are possible.

In the case of PPECPA, the adjustment made by the IRS was exactly the total of the two EIP amounts. At one point, I was wondering whether the info provides by the clients represented only half of the total EIP payments (husband got half and wife got half and the IRS records obtained from the IRS website showed 50% under the H's account (SSN) and the other half on the W's.)

PPECPA checked and said that was NOT the case. Based on the info, one possibility was that the IRS recorded the EIP amounts twice. I have NO idea how the info was processed by the IRS so I don't know if that was possible.

For what it's worth, NCJ, Connie and Laura, after verifying your math - and IF your math was correct - take a look at the adjustment by the IRS. Could you make some sense out of the adjustment? Did the IRS adjustment happen to be the same as the EIP received?

Just bantering here while nursing my daily bourbon regimen....

I come here for kudos and IRonMaN's jokes.

B

bandb2

Level 4

My client got a CP 11, stating the Recovery Rebate Credit was incorrect, yet the Worksheet appears to be inputted correctly. I do have a question about the worksheet. EIP # 1 phases out at $198,000. EIP # 2 phases out at $174,000. Yet, the factor in the worksheet for the excess over the $ 150,000 threshold is 5%. Since the phaseouts are different, shouldn't the reduction factor be 2 diffeten percentages? Client's AGI was within the phaseout rane for #1 but exceeded the phaseout range for #2.

sjrcpa

Level 15

???

EIP 1 and 2 were advance payments of the Recovery Rebate Credit for 2020.

The AGI that matters is that on the 2020 1040. The RRC is calculated on that, less EIP 1 and 2 received. If there is a balance they get a credit on the 1040.

The more I know the more I don’t know.

Sign up

Login with SSO

Let's get you signed in

Login with SSO