Since my clients already received the third stimulus check but they have not received the second check, should I report that on their tax return. I noted if I don't report on the second stimulus check field, the calculation shows they should received $2,400 additional credit if I report, then the calculation shows they should receive $1,200. I am confused.
Ignore the third payout. You are reconciling the first two.
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:
One for each of the three EIP “stimulus” payments.
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