irs not allowing economic impact rebate recovery on filed returns

[Bill50]

I have a client that only received 832 for the first EIC payment because they used the 2018 return (we had not filed 2019 yet).  However, she only had 5800 AGI in 2020.  We put in for the other 368 using the Recovery Rebate Credit worksheet.  I filed the return; it was accepted.  But now when I open the return, it says the IRS made a change to the return after it was filed.  further viewing shows the 368 adjustment was denied.  Now what do I do (or what should the client do)?

[Just-Lisa-Now-]

Did the actual return change?  or are you just seeing the bug thats been happening since the 11th?

https://proconnect.intuit.com/community/proseries-tax-news-updates/discussion/proseries-2020-produce...

[Bill50]

I am sorry.  I am not aware of the bug.  Is this a Pro Series bug, or an IRS system bug?  Was there an alert sent out on this?

[PATAX]

Bill I would just wait a little bit and see what happens... Maybe it will work itself out....

[Just-Lisa-Now-]

I didnt see any alert in the program, but that article is in the News and Updates section of this message board.

[Bill50]

I have had three like this so far.  On one, the full amount of the requested refund came through even though the notice says it was changed.  Now I am wondering if the irs is going to pull it back since it was a direct deposit.  The other two, the refunds haven't come through yet.  I have told the clients I would hope the irs would send them a notice as to why the return was changed, if, in fact, it was changed.  

thanks for your response.

[Bill50]

Thanks, also, for your replies.  I will go look for the article.

[PATAX]

Bill, so far I have not had any issues with this... A lot of my clients got an additional recovery rebate credit because they did not have to take the required minimum distribution which lowered their AGI and they got an additional amount from the economic impact/recovery rebate credit... No one has called me yet to say they did not get the correct amount so I'm assuming that they did... But with my luck having now said this I will probably get a call tomorrow...

[qbteachmt]

"We put in for the other 368"

832 + 368 = 1200

That's only the First payment.

This person would also be entitled to the Second payment, the $600.

Perhaps it would help to review what is really happening for EIP “stimulus” funds: The funds were paid out as Advanced payment against a projection. The first two payouts were projected based on 2018 or 2019 tax returns, but the eligibility is part of tax year 2020 as Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.

If the person is not a dependent in 2020, then they would be eligible for consideration as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent." You must correctly address whether they Can be Claimed as a dependent on someone else’s tax return.

The third payout which started in Jan 2021, has different eligibility rules as to dependents and this payout is a projection, using 2019 or 2020 tax returns, then reconciled against Actuals on the 2021 tax return.

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal includes one for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

One for each of the three EIP “stimulus” payments.

[Bill50]

that is what's strange about it:  she received the 600 second payment and the 1400 third payment.

[dkh]

IRS does not change returns in ProSeries.  IT IS NOT POSSIBLE.   If IRS is going to make a change to a return the taxpayer receives a letter.    The change you are seeing is a program issue.

[qbteachmt · Accepted solution]

"But now when I open the return, it says the IRS made a change to the return after it was filed."

It tells you "a change" was made. Not by the IRS. Did you read the link provided by Lisa, to the announcement by Intuit, that is a False Error message?

[Bill50]

Thanks for your response.

[Bill50]

Thank you to everyone who responded to the issue.  Glad to find out it is a ProSeries bug and not something more drastic.  Happy Easter, everyone.