Recovery Rebate Credit - The amount was computed incorrectly (683D)

[PPECPA]

This past week a tax client received a notice from the IRS changing the 2020 tax return in the area of the Recovery Rebate Credit.  The notice did not specifically state a reason for the change, but instead stated the "error" was in one or more of the following areas:

• The SS number of one or more of the individuals claimed as a qualifying dependent was missing or incomplete.  No, the individual(s) claimed as a qualifying dependent and their SS number has not changed in 9 years and is correctly reported in the return.
• The last name of one or more individuals claimed as a qualifying dependent was missing or incomplete.   No, the last names of the individual(s) claimed as a qualifying dependent has not changed in 9 years and is correctly reported in the return.
• One or more individuals claimed as a qualifying dependent exceeds the age limit.   No, age of the qualifying dependent 9 years and is correctly reflected in the return and correctly included in the Recovery Rebate Worksheet.
• The amount was computed incorrectly (683D).  By process of elimination, this must be the change made by the IRS for the amount claimed as the Recovery Rebate Credit on the 2020 tax return.  But I do not understand why?  The client received $1,065.97 for the 1st Economic Impact Payment and $515.97 for the Additional Economic Impact payment.  Both amounts are correctly included in the Recovery Rebate Worksheet and were ACTUAL AMOUNTS RECEIVED, not estimated amounts.  In addition the AGI for 2019 was $165,361 and the AGI for 2020 was $161,811.  The AGI in 2020 actually decreased from 2019.   What am I missing here?  It appears that either the Lacerte tax program is wrong, or the IRS is wrong.  If I am wrong, please point out to me where I am wrong based on this information. 

Any assistance would be greatly appreciated.

Much thanks!

Paul 

[joshuabarksatlcs]

The client received $1,065.97 for the 1st Economic Impact Payment and $515.97 for the Additional Economic Impact payment. 

Double check the actual amounts received.  Could it be that the amounts provided to you were off?   That combination seemed to be at odds per my preliminary computation. 

There is a way to check the IRS' records of EIP amounts.  You may want to verify the accuracy of those amounts if you want to get to the bottom of it.

[BobKamman]

What was the refund/balance due on the original return, and what is the amount as adjusted by IRS?

[garman22]

I agree with both above. I would have client double check the stimulus amounts deposited (although they seem to jive re: the cents of both). Could be the IRS is wrong (which is where I'd bet). I have had one too and in this case it was client who was off. 

As far as @BobKamman advice, I would look at difference and see if its EVEN worth going after. I had a single mom whose was adjusted and she waited 14'ish weeks and it was less than a $100. She said "Oh, hell no!!".....depends on client. 

[sjrcpa]

What was the RRC you showed on the return?

How much did IRS adjust?

[joshuabarksatlcs]

My wild guess:

Client's 2018 AGI: 180,357

RRC claimed $1,519

RRC as adjusted by IRS: $1,386

Difference: $133

The above was done last night after my nightly regimen of bourbon.   

[garman22]

"The above was done last night after my nightly regimen of bourbon."

🥃 indeed!!

[PPECPA]

Hi Joshua

Thanks for getting back to me.  To answer your question, both amounts were tied to a website/app that my client screen shot and sent to me via e-mail.  The site is as follows:  sa.www4.irs.gov

Additionally my client then tied the same amounts to her bank account to confirm the deposits matched the amounts shown on the website.  The amounts are rock solid.

[PPECPA]

Hey Bob,

Thanks for the reply.  Not sure I understand the question so I'll tell you what I know.  The return was e-filed with an amount due to the IRS of $8,566.  This was shown on the return and was paid on or before the May 17th deadline.  The IRS notice confirmed this payment.  All good. 

The amount adjusted by the IRS notice is $1,591.97 which I believe was adjusted for a  disallowed Recovery rebate credit plus or minus interest and other credits as follows:

Rebate Tax Credit (1040 line 30)      $1,936.00

Less other Credits (IRS calculated)   $   355.02

Interest (IRS Calculated)                     $     10.99

Amount due to IRS                              $1,591.97

What I don't understand is why the Rebate Tax Credit was disallowed?

I appreciate your looking at his and hope this helps.

[PPECPA]

Hi Champ!

Just to be sure we are on the same page, I did verify with the client that both economic payments were received, tied to the IRS website and further tied to the checking account as deposits.  All amounts tie out to the penny.  So I feel rock solid about the payments being received. 

Also checked and rechecked the Recovery Rebate Credit Worksheet and both amounts are properly included in the worksheet (generated by lacerte).  So we are rock solid there. 

I think it is worth going after.  The $1,591.97 the IRS is claiming is owed to them is a lot of money for my client.  I've spent too much time on this already and will write off my time, but I need to be sure this isn't a lacerte issue as I have other clients that have also claimed the Recovery Rebate Credit.  I also need to explain this to the client (and others if they receive similar letters).  You feel me?

Let me know your thoughts and again thank you so much for your time.

[PPECPA]

what kind of bourbon?

[PPECPA]

Hey sjrcpa

See above post.  The amount adjusted by the IRS notice is $1,591.97 which I believe was adjusted for a  disallowed Recovery rebate credit plus or minus interest and other credits.  The BTC is below as follows:

Rebate Tax Credit (1040 line 30)      $1,936.00

Less other Credits (IRS calculated)   $   355.02

Interest (IRS Calculated)                     $     10.99

Amount due to IRS                              $1,591.97

What I don't understand is why the Rebate Tax Credit was disallowed?

[joshuabarksatlcs]

PPE:

I just wanted you to know that I didn't make light of your client's problem.

Though I declared it was my "wild guess", those numbers were deduced based on the limited info. 

I first deduced that Client has only one qualifying dependent.  If it's more than 1, Stimulus Check II would tend to be higher, as more likely than not the 2019 AGI was used. 

Based on only one dependent, I figured Check I was lower than expected using the 2019 AGI.  Thus, I deduced Payment I was based on the 2018 AGI.  Thus that amount.

My "wild guess" for the RRC was based on similar approach, with the (now seemingly wrong) presumption that the info on the amount received for Check II was wrong. 

Anyway, the bit about bourbon was just for the lighter side.  For a long time I declined to declare publicly my choice of ardent spirits, until I found out it was same as John Wick's.   If that was his favorite, it'd be fine by me. 

I disguised my help as my "wild guess" hoping that you would give us more clues, without which I shall digress.

BTW, Joshua was the name of my dog when I set up this account (thus "barks at LCS).  I lost him shortly after that....  Boo  hoo, time for my regimen for today....

NOT Joshua, CPA

[PPECPA]

LOL on the Bourbon!  And no way did I think you were making light of this issue.  I truly appreciate your help.

Ok if I haven't provided all the information you needed to help please please please let me know what I missed and I will get it to you post haste.

Here are the facts:

• One dependent was used as a qualifying dependent for the RRC.  Dependent is age 9, soc sec is number is accurate and correctly included on tax return
• All information of dependent (name, dob, soc sec number, full name) has not changed in 9 years and all information is carried over every year with lacerte)
• Said dependent was also used for the Child Tax Credit and has been for 9 years.
• Client does have another non-qualifying dependent which is an 81 year old mother.  Mom was not used for RRC nor the Child Tax Credit.

I'm a gin man myself and on occasion enjoy a dirty martini, shaken not stirred.

Here's where I am with this.  Given that the IRS did not specifically disclose why the RRC was disallowed, the amount of the Economic Impact Payments were accurate, properly included in the Recovery Rebate Credit worksheet (via lacerte) and that the qualifying dependent is properly included in the Recovery Rebate Credit worksheet, I have to believe that the IRS has made an error in their notice. 

I wanted to thoroughly vet this through the Lacerte tax discussion before preparing a letter for my client to sign and send to the IRS.  I feel I've done my due diligence on this and I am prepared to move forward.

If you feel there is anything I've left out, please advise.

Again thank you so much for your insight.

PPE 

[qbteachmt]

"I also need to explain this to the client (and others if they receive similar letters)."

I don't see where you told us MFS, MFJ, HOH, Widow(er), or ? Because in general, most of what you told us is moot. Nothing about 2018 or 2019 AGI applies for the EIP submission as Reconciliation on the 2020 return.

It's very simple: Use the 2020 info to see if they qualify or not, for how much, and then compare that to what they got. Remember to add $10k (which is for one child) to the phaseout limit which is based on the filing status. Then, adjust down by 5% from the limit start to AGI.

https://www.irs.gov/newsroom/calculating-the-economic-impact-payment

[joshuabarksatlcs]

Perhaps it isn't as simple.  For example, you didn't mention that non-resident aliens and all dual status aliens are not eligible for the RRC.  You also didn't mention other oddities that would make RRC not eligible.  The IRS has the records and holds the reasons for the adjustment.

2018 and 2019 AGI's affected the EIP which in turn affected the balance of RRC on the 2020 return.   As originally posted, the info served as usable clues for the puzzle and of course would not be moot in the puzzle solving process. 

Ultimately, only the IRS has the answer for the reason of the adjustment.  So far, the information ($3518 claimed RRC) tends to imply two adults with a child .  Perhaps there are reasons for not revealing all the details.  I just worked with whatever was given and used them as clues and tried to eliminate the obvious.  

I come here just for kudos and puzzle solving.  The rest is between the Clients/CPA and the IRS.       

[garman22]

I literally got a client today whose RRC was reduced $333. This is not a small amount (smaller than the $1500 with your client). 

My client states she did not receive a 2nd stimulus payment. So, I properly showed the correct amounts. My figures are as they should (ProSeries) be. It is either IRS error or IRS will state taxpayer received 2nd stimulus. 

My question is, does IRS provide copies of cancelled checks?

[garman22]

Most definitely it is worth going after. $1500 is not chump change. 

Has there been no follow up from IRS indicating the change? 

[BobKamman]

@garman22 "does IRS provide copies of cancelled checks?"

Next you're going to be wanting a copy of the MegaBank debit card.

(Or was it MetaBank? MagaBank?)

[joshuabarksatlcs]

You gave a couple more clues.  Forget my rambling about NRA.

Client claimed $1,936 of RRC on Line 30 of Form 1040.

IRS adjusted it to $355.  (Thus, Client was eligible to something.)

The difference was $1,581.

By shear coincidence, Client received a total EIP of $1,581  ($1,066 Payment I, $515 Payment II, per Gibraltar-solid info).

Just wondering (without know the IRS system): Was it possible that the EIP payments were entered twice into the IRS system?

A totally wild wondering, without bourbon.  

Joshua Naught, CPA

[garman22]

Would that be wrong? Lol

All BS aside, how else can we prove client did not receive?

[joshuabarksatlcs]

Here, in my geographic area, the second payments were sent in form of EIP debit cards.  

Many clients, including some family memberS  (plural), threw away their cards, thinking it was some kind of scam - it required registration by SSN etc.

I once thought the second EIP payments were all sent by debit cards, but one evening I sat (sipping bourbon) corrected.  Lost the bet to a client in Arizona.  Lucky for me, I didn't give odds.

There used to be an 800 number to call to report stolen EIP cards or to check the card status, and - at one point - it would give out the dollar amount on the card and whether it was cashed, once the caller was authenticated.  A few clients replaced their cards (or their aging parents') simply by calling the number.  The replacement cards arrived within  a few weeks. 

I prepared a quick reasonableness test on the Payment I and II amounts before finalizing clients' 2020 returns (because I have their 2018 and 2019 AGI info.  Very relevant.)  Spent too much time on that issue (especially showing how the aging clients how to get the replacement cards) though.  In all cases (based on a rather small sample population), the second payments (debit cards) were the culprit.

Hope this helps.  Perhaps your client could revive his/her/their $333 debit card.  If so, buy me a drink....   

[garman22]

Im in Illinois. None of my clients (to the best of my knowledge) received the debit cards. We did for UI, although some still got direct deposit checks. 

Her first stim was check in mail. 

I will ask her though to be 100% positive. 

If so, we'll be sippin on gin/juice!

[garman22]

scratch the gin. You are a bourbon man

[qbteachmt]

"2018 and 2019 AGI's affected the EIP which in turn affected the balance of RRC on the 2020 return."

That's not how to understand it. The most recent info on hand your filing, to the IRS, was used to Project the EIPs. EIP 1 came out early enough that many people had not yet filed their 2019 income tax form, so their 2018 values were used for projection of 2020. Then, the second EIP was enough later, that 2019 might have been filed and it got used for the projection of 2020. For any taxpayer, then, possibilities include that 2018 was all that was available; or, 2019 was all that was available; or, the EIP projections were split. Everything was paid out as a Projection for 2020 qualification.

Both 2018 and 2019 AGI data are meaningless for the 202 tax year. The only Actual value that is used, is the 2020. The payments are reconciled to what the taxpayer is qualified for, and the qualification is based on the 2020 tax form. That is the reconciliation of what they qualify for against what they already got.

Overpayment: There is no provision for Repayment to the IRS if your advanced payments ended up being more than you qualify for based on 2020 AGI.

Reduction: The first EIP can have been offset to cover back child support. That doesn't apply to EIP 2. The refunds, even if created by a refundable RRC (credit not prepaid already) are subject to offset the same as any other refund can be. The offset program states: "TOP will continue to collect all certified delinquent federal nontax and state debts through TOP from all eligible payments. For debts that remain active for collection in TOP, offsets will continue until a debt has been paid in full or until we have been directed by the federal agency or state to stop offsets."

"All BS aside, how else can we prove client did not receive?"

You can't prove the negative, but you can find out how much their were issued, if any. And you might be able to show they got it, and just forgot. By using the IRS access tools for either the taxpayer or the preparer to get the taxpayer's Account Transcript, which will show the amounts. Then, you would need to cross-reference to the taxpayer's banking, or submit to the IRS for a replacement of the lost payment card or to reissue the check. Start with their transcript, to know what you should be chasing or not chasing.

"(because I have their 2018 and 2019 AGI info. Very relevant.)"

Those AGI are moot, now. The payment amounts are relevant. Two completely different things. And for all you know, and we all could do the math, 2018 AGI might have been used for this taxpayer's EIP 1 but not EIP 2. We would still need that info and their filing status, as noted previously.

"Client claimed $1,936 of RRC on Line 30 of Form 1040.

IRS adjusted it to $355. (Thus, Client was eligible to something.)

The difference was $1,581.

By shear coincidence, Client received a total EIP of $1,581 ($1,066 Payment I, $515 Payment II, per Gibraltar-solid info)."

Not by sheer coincidence. It's the way the math works out.

But you seem to be locked into the IRS didn't allow the RRC and that's not how it seems when you present it. Without knowing filing status and AGI, it's impossible to confirm what they qualify for against what they got.

Line 30 was supposed to be any Remaining Credit to them, that was not already in the prepayment amounts. Not the full credit; just the difference if owed to them.

[PPECPA]

Thanks again for all the imput.  To summarize, the client did receive both economic impact payments.  Again, both payments were agreed to the IRS website and agreed to deposits in the clients checking account.  So rock solid on receipt of both payments.

Both payments were correctly shown on the Rebate Recovery Credit worksheet and lacerte input screens. 

That said, I could understand if the client said they did not receive a payment or two and the IRS adjusted the return to reflect.  That would make sense.  However the Client did receive both payments and both were included in the input screen and Rebate Recovery Credit worksheet.

Only one dependent was used as the qualifying dependent in the calculation of the credit.  Dependent is 9 years old, qualified for the Child Tax Credit, Soc Sec number is correct as is the last name (no changes in 9 years and information is carry over every year).

So, why would the IRS disallow the RRC?????

A gin and tonic sounds good right about now....

[BobKamman]

Do we know yet what the filing status was?  There are some important needles in this haystack.

I think somewhere you said there are two kids, but one is not claimed as a dependent.  Is that one over 17 by any chance?  Are you sure that the SSN's for the two kids are not transposed?  That could go on for years until it made a difference to IRS.

Is there another parent who might be claiming the child also?  

[joshuabarksatlcs]

"2018 and 2019 AGI's affected the EIP which in turn affected the balance of RRC on the 2020 return."

That's not how to understand it. 

Perhaps we're talking about the same thing but in different angles.

We know RRC are computed based on 2020 AGI.  When I said "the balance of the RRC", this was what I meant:

Two families, same filing status, same 2020 AGI and same everything else that's relevant.  They both were eligible for the same amount of RRC - say $2,900 - based on their 2020 tax info.

Family 1 had much higher AGI's for both 2018 and 2019.  NO EIP's.  Family 1's "Balance of RRC" on Line 30 of the 2020 return would be $2,900.

Family 2's 2018 and 2019 AGI's were comparable to 2020.   The family got $2,900 from the two EIP's.  The family's "Balance of RRC" on Line 30 would be zero. 

That was how I approached it when I prepared the 2020 returns.  I made sure my clients' EIP info - the numbers they provided to me - were in line with their 2018 and 2019 AGI's. 

In most cases, the EIP's received by my clients were consistent with the approaches published by the IRS.  In some cases, clients told me zero 2nd EIP, but turned out they just mishandled the debit cards.  I was able to catch it.  I didn't take their words for it.

Enough said.  No need to clarify the rest of my points.  Chalked it all off as tomaito, tomahto.

Back to PPECPA, I gave it some more thoughts since my last post.

I doubt the IRS made a mistake in this regard.  As I pointed out, the disallowed amount  was $1,581, which happened to be the amount Client received in EIP.  Now that I've doubled up my daily regimen, I think I got it.

The discussion so far was based on the presumption that the return was correctly prepared. 

Now, I would be interested to know the amounts entered  on Lacerte screen  38.2 for that client. 

Economic impact payment 1

Economic impact payment 2

Were the entries for the taxpayer and spouse boxes:

A.  blank,

B.  -1's or

C.  such that the totals were $1,066 and $515, respectively?

If A,  someone had ignored the Lacerte diagnostic.

If B,  I'm speechless.

If C, I'm clueless in what else to say.

I don't need further info.  I just need another shot and digress from this topic. 

[PPECPA]

Hey Bob,

Thanks for getting back to me.  The return was a MFJ return

Two dependents, one is a qualifying child age 9, the other is the tax payers mother, age 82.  The qualifying child was used in the calculation for the Recovery Rebate Credit and NOT the mother.  The Child was also used for the Child Tax Credit. 

Does this help?

PPE

[joshuabarksatlcs]

Never mind.   PPE said:

Both payments were correctly shown on the Rebate Recovery Credit worksheet and lacerte input screens. 

That said, I could understand if the client said they did not receive a payment or two and the IRS adjusted the return to reflect.  That would make sense.  However the Client did receive both payments and both were included in the input screen and Rebate Recovery Credit worksheet.

This seemed to be a recap:

MFJ, 2020 AGI $161,811, with one qualifying dependent for RRC. 

The RRC for the family: $3,517.  

EIP's received: $1,066 + 515 =  $1,581

Line 30 as filed: $1,936 ($3,517 - 1,581)

Somehow IRS reduced it further by $1,581 to 355. 

The only question I could imagine:  Did each spouse receive the identical amounts in EIP's?  (MFS in 2018 and/or 2019, splitting the income and had the same AGI??)

In any case, I give up.  I did promise to digress.   Good luck and I look forward to the answer, and hope to hear it was an IRS mistake.

[PPECPA]

No the tax payer only received two payments (both payments were for the MFJ couple), in other words each spouse did not receive a payment.  The couple (MFJ) received the paymement.

Make sense?

Thanks again Josha (woof woof)

[BobKamman]

I am always intrigued by the semantics of tax return preparation.  When I do a joint return, I think of it as one for "my clients," plural, which reminds me that I have a conflict of interest and usually can't work for either of them when they divorce.  When someone else mentions a return for a "client," I assume there is just one of them.  But then, some of "my clients" who are parents of the same offspring will talk about "my kid," as if the spouse has nothing to do with it.  

[PPECPA]

After hearing that....do you honestly expect me to sleep tonight?  I'll be up all night thinkin about this.....

[BobKamman]

If gin and tonic doesn't work, try melatonin.

[rbynaker]

Sorry, late to the party.  Our bourbon friend has already done most of the leg work on this one and you should give Joshua's owner credit for the solution.

The EIP amounts are split between the two taxpayers on an MFJ return.  When you look this up in IRS transcripts you have to look up EACH taxpayer and add the amounts together.

In this case, the first EIP amount was $2,131.95.  The second EIP amount was $1,031.95.  Only half of these amounts were entered into the software resulting in an incorrect RRC.  Your client gave you incorrect information and from that point on it was GIGO.

If we want to check the math, they filed their 2019 tax return early enough that it was available in the IRS system for EIP1 so we don't have to dig up 2018 data.  EIP1 would have been calculated as:  $1,200 + $1,200 + $500 = $2,900 base - $768.05 phase-out = $2,131.95.  The phase out is calculated as $165,361 - $150,000 = $15,361 x 5% = $768.05.

EIP2 would have been calculated as:  $600 + $600 + $600 = $1,800 base - $768.05 phase-out = $1,031.95.

$2,131.95 + $1,031.95 = $3,163.90.

The IRS thinks (and likely they're correct) that they issued $3,163.90 of EIP.  Your RRC calculation only included $1,582 of that.  They fixed it.  The client owes the difference.

Rick

[joshuabarksatlcs]

The golden retriever holds the bone in his mouth, running strong, tail wagging.  He passes the 50 yard line, then 40, thirty, twenty down to the ten-yard line, lateral to rbynaker, who runs two-legged, breaks for the end-zone....  Woof-down!!

In the fantasy boneball, who got the points for the woof-down??  I guess it'd be rbynaker.

(BTW, in boneball, a woof-down gets you 49 points....) 

[BobKamman]

I get the credit, of course, for securing the confession that "my client" was really two human beings each worthy of their own EIP's.  It was the dog that didn't bark, but sniffed out the red herring.  

[joshuabarksatlcs]

Hold the thought....

In three separate postings, PPE wrote::

Additionally my client then tied the same amounts to her bank account to confirm the deposits matched the amounts shown on the website.  The amounts are rock solid.

*************************************************

Just to be sure we are on the same page, I did verify with the client that both economic payments were received, tied to the IRS website and further tied to the checking account as deposits.  All amounts tie out to the penny.  So I feel rock solid about the payments being received. 

***************************************

 To summarize, the client did receive both economic impact payments.  Again, both payments were agreed to the IRS website and agreed to deposits in the clients checking account.  So rock solid on receipt of both payments.

****************************************

The IRS info could be misread, but NOT the bank deposits.  Now, given the IRS adjustment and the total EIP payments were of the same amount, the Woof-down is being reviewed, and so is Bob's credit.... 

I DID digress.  Just that the dog is again sniffing at the direction of an IRS error - EIP's (identical to the bank deposits) posted to EACH spouse - duplicated.  That is, IF rbynaker dashed into the end zone with the correct reading of the IRS info.

Again, good luck, PPE.

[qbteachmt]

"Additionally my client then tied the same amounts to her bank account to confirm the deposits matched the amounts shown on the website.  The amounts are rock solid."

Did you pull the tax account transcript for these people? What you see there is what the IRS issued. The IRS is not using your clients' Banking records.

I don't know if all of this helps, but I would point out there is not much use in reiterating the same statements over and over. What has been provided should be enough for you to what you first ask: Understand the payments, understand the qualification, put the two together, and do the due diligence for your clients as compared to the IRS info.

"The client owes the difference." Clients?

Just to further clarify: you stated the taxpayer owed for the 1040. That means the RRC on the form as filed is over-credited, and with the adjustment, there is more tax owed after all.

It isn't the RRC that is owed. It is the lack of more RRC that results in a tax payment needing to be made.

I also thank @rbynaker for doing that math. I will now close the Excel window I left open  🙂

[BobKamman]

Did no one else have clients last year with checks or direct deposits being sent to one spouse, and debit cards sent to the other?  Although it happened more often with EIP#2 than with the first.  It was also likely to happen if there were two bank accounts, one being used for payment of federal benefits and the other self-reported to IRS for tax-refund purposes.  

Turning the discussion to "what do we do now?", is this a "math error" with a 60-day clock ticking?  

[PPECPA]

Sorry everyone, but "that dog just don't hunt!"

MFJ.  Tax payer here.  The MFJ couple received only two Economic Impact Payments made out to both parties.  I.e., the payments were made out to Mr. & Mrs. Doe.  Two checks that BOTH Mr. & Mrs. Doe had to endorse, then deposit into their checking account.  Got it?

Mr. Doe did not receive a check independent of Mrs. Doe.  And Mrs. Doe did not receive a check independent of Mr. Doe.

Check #1 was made out to Mr. & Mrs. Doe

Check #2 was made out to Mr. & Mrs. Doe

Does this help to clarify matters?

Think we are beating a dead dog here...…..

[joshuabarksatlcs]

Dog's hunting is fine.  Just doggone it you didn't get the point. 

You insulted Dog ("that dog just don't hunt"...)  and I had to break my promise.

Okay, let me remind you I did the recap.  

You indicated the EIPs received totaled 1,581 = 1066 + 515.  I presumed these were the amounts entered on Screen 38.2.  I also presumed Line 30 on Does return was $1,936, rounded ( = full entitlement of $3,518  MINUS EIP received of $1,581).  IN other words, Line 30 was already NET of the EIP received.  Correct treatment there.

The IRS adjusted the reported RRC credit  (1,936) - practically Line 30 - by ANOTHER 1,581.

My recap was clear.  Dog's hunting is good. 

rbynaker seemed to conclude that you had misread the IRS  transcript/info - that the the numbers on the notices were amounts sent to each spouse.  In other words, he suggested the total EIP was 3,162.

From rbynaker:

In this case, the first EIP amount was $2,131.95.  The second EIP amount was $1,031.95.  Only half of these amounts were entered into the software resulting in an incorrect RRC.  Your client gave you incorrect information and from that point on it was GIGO.

I first thought he nailed it.  I thought he was correct that you reported only HALF of their total EIP, because (rbynaker's  supposition) you read the transcript for each spouse as the TOTAL.  So, instead of entering 2,132 and 1,032 on screen 38.2, you entered 1,066 and 515.

I even gave rbynaker kudos.    This is important because I, too, come here just for kudos.

This morning, the bourbon wore off.  I remembered you'd said something - not once but thrice - about you or the Doe's having checked the bank records. 

The bank records would show the actual amounts they'd received.  So, based on your prior posting, I figured that Mr. and Mrs. Doe had received ONLY 1,581, and NOT 3,162 as suggested by rbynaker.   (Again, rbynaker's suggestion was based on the scenario that the IRS reported half under Mr. and the other half under Mrs. Doe's transcripts.)

So, here's my final, final take, even if anyone Dogmouthed bad again:

IF in fact Mr and Mrs Doe had received ONLY $1,581, chalk rbynaker's suggestion off as a good try (my kudos shall stay).  The IRS adjustment is still outstanding and unreconciled. 

rbynaker, do correct me if I misinterpreted your point.   

I hope this clears Dog's name.       

And I digress, again.  

[BobKamman]

And you're sure the clients didn't take the checks to the bank, deposit half and take back the other half in cash?

[PPECPA]

Worthy Brothers and Sisters,

Joshua nailed it!

Yes we are in agreement.  Screen 38.2 shows two input boxes. 

In the Economic impact payment 1 I entered the amount of the first EIP of $1,066 (rounded)

In the Economic impact payment 2 I entered the amount of the second EIP of $516 (rounded)

These payments tied out to the IRS website/app for this client (Mr. and Mrs. Doe)

These payments were also tied out to the Does checking account.

Both EIPs were made out to Mr. & Mrs. Doe.  I just got off the phone with Mrs. Doe and she confirmed this.  Mrs. Doe also stated that she and Mr. Doe had to both endorse said payments before she could deposit as both Mr. & Mrs. Does names were on said checks.  She further stated that no other EIP were received for the tax year.

Please understand that I did not intend to insult anyone by saying "that dog just won't hunt".  What I intended to imply is the IRS's position on this doesn't hold water or rather the IRSs dog just won't hunt.

I'm starting to feel more and more confident that the IRS may have mad an error in this.  I'm thinking I should have the client contact the IRS and state the position that the Recovery Rebate Credit on the Return is accurate and correct. 

You all have been great and I can't thank you all enough.  Before I write a letter disagreeing with the IRS's findings, does anyone else have anything further to add?  Any thing I may have missed?  I can't think of anything.

PPE

[PPECPA]

Mr. & Mrs. Doe deposited the whole check, nothing but the check, so-help-me-dog.

Check was not cashed and then only deposited half.  Just confirmed with Mrs. Doe.

[PPECPA]

BTW, as mentioned before, the amount of the Economic Impact Payments provided by the IRS as shown on their website/app agreed with the deposits shown on the Doe's bank statements to the penny.  If the Doe's had cashed half the check and deposited the other half, these amounts would not tie out. This is rock solid.

[OverCat]

I'm in the same boat! Just received a CP11 (on 9/21/2021) with the very same claims made in the original post. Equally, everything stated earlier is also true about my case. My case is even a bit simpler. MFJ, both children are >17, received only one EIP, all personal data is correct and verified. Everything is rock solid. I cannot find any errors. It looks as if the only variable in the computation is the amount previously received for the EIPs. Mine also match the IRS records (website) and it matches my bank account as well. And no, like the Does, my wife and I did not receive individual payments. Sadly, I have not been able to reach the IRS at their stated phone # to discuss. Equally sad is that the only recourse if you disagree is to call the IRS (800) 829-8374 - no answers, just recordings that all agents are busy and that I need to call back on the next business day. So, my question is: Does Intuit have an appropriate or canned response that can be used as a template for responding in writing to the IRS? I am a self-preparer using TT. My dog was not involved, he wanted to be, but I made him "stay".

[PhoebeRoberts]

Hi there,

You’ve come to an Intuit site supporting tax professionals, and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

Cheers!

[OverCat]

Hmmm, same problem, seems like a great place to find an answer. Sorry if it offends anyone that a mere self-preparer attempts to partake in your discussions.

[qbteachmt]

"Sadly, I have not been able to reach the IRS at their stated phone # to discuss."

The IRS tells you to get your Tax Account transcript, which is from an online access account you create.

"seems like a great place to find an answer."

Yes, if you are using Lacerte to prepare your clients' tax returns, this Lacerte Peer User community can help you with an issue related to using that program.

This is not the place for Tax help. If you are using TurboTax, then Intuit provides TT resources in the TT Community, which is not This Community.

"Sorry if it offends anyone that a mere self-preparer attempts to partake in your discussions."

You are simply lost on the internet. You walked into a Country bar where people are repairing motorcycles, and want to discuss your child's ballet lessons. Not the right crowd.