Miscalculation on Your 2020 Form 1040?


If you’ve recently received a letter from the IRS stating that they “found a miscalculation on your 2020 Form 1040” caused by the Recovery Rebate Credit, keep reading.

You’ve been waiting on a delayed 2020 refund for months and months and then you receive a letter saying there was a “miscalculation” and your refund has been decreased–or even worse–you now owe! Could there be anything more frustrating?

In almost every case I’ve seen so far, these letters are triggered by reporting incorrect stimulus amounts on your 2020 Form 1040, resulting in a Recovery Rebate Credit. This Recovery Rebate Credit was the government’s way of getting stimulus funds to people who didn’t receive the correct amount when they were initially sent out.

If you did receive the full amount owed to you for the first two 2020 stimulus payments, this letter is correct and there’s no further action you need to take. However, if you now owe a tax bill, go ahead and pay it.

If you did not receive the full amount owed to you, start by creating an IRS account here to check your tax account information. If you’re married, both spouses will need to create an account. It should show the stimulus payment amounts for each individual person, not the married couple as a whole.

You will also want to match up what that website says to what was deposited into your bank account by the IRS.

Send this documentation to your tax preparer if you did not receive the full stimulus payments for #1 and #2 of 2020. Your tax preparer can then assist in writing a response letter to dispute the changes.

IRS Code 414: Retirement Plans and Your Taxes

IRS Code 162: What Is an Ordinary and Necessary Business Expense?


Amy Northard, CPA

The Accountant for Creatives®
+ taxes + bookkeeping + consulting
+ Hang out with me over on Instagram!

Are things like taxes & bookkeeping getting in the way of your creative time? Let's Chat!
Bookkeeping & Tax Tips
Sign up for free tax tips and advice sent straight to your inbox!
By clicking on the submit button, you agree with our Privacy and Terms Policy.