Problem with Stimulus Check/Tax Refund
Ok, so I bought TurboTax and prepared my taxes last night. I am single, no dependents. I have almost the exact same income as last year, almost exactly the same withholding. Everything else is virtually identical. I only have mortgage interest and a small amount of charitable contribution as my deductions.
Last year, my refund was about $1,500. This year, turbotax is telling me my refund is only $900. Incidentally, this is EXACTLY equal to the amount of the $600 stimulus check I received last May. I was so annoyed, I was up until 4AM last night reading forums with tons of other people reporting exactly the same thing.
It was explained by several people that Turbotax is programmed to figure that you DID NOT receive the stimulus last year, so that when you enter the amount you received, it reduces the refund amount by that much because otherwise, you would be getting the refund TWICE. But everything the IRS says and even Turbotax on their own screens in the program say the stimulus checks were "FREE" money, are not to be considered income and DO NOT affect your 2008 refund--they are supposedly NOT an advance on your 2008 rebate.
But it seems in practice, that is exactly what is happening. If I tell the program that I did not receive a stimulus check, it tells me my refund will be---$1,500-----almost EXACTLY my refund last year with virtually the exact same earnings and withholdings.
Is there a glitch in TurboTax? Aren't I supposed to get the $1,500 I usually do? I only earned about $1,000 more than last year (earned ~ 40K, so I know I didn't jump up a tax bracket). Why is this happening? I was really counting on that money!!! Should I try to figure them by hand and see what happens?
It seems that thousands are having this problem, and an IRS spokesman even said to enter $0 on the line where it asks how much you received as stimulus, but then the IRS will supposedly NOT accept the return when you try to E-file if you do this. I read several example where people who have gotten just about the same refund for, in some cases, upwards of 20 years, OWE money to the IRS for the first time---the amount they owe equal to their expected refund, LESS the amount of the stimulus check they received last year!
Please, what is going on? I have a BS in Accounting, so I understand basically how tax returns work. The stimulus is supposed to be an advance of a CREDIT. You should not have to reduce this year's usual refund by that amount, but Turbotax is doing this!!