I have a client whose daughter in 2020 filed her own return and received $1200 & $600 stumulus because she was working. In 2021 she received a $1400 check but was not working and was a dependant of her parents and they filed for her stimulus. The IRS sent a notice disallowing her stimulus on the parents return. She is age 22 and a full time student in 2021. Is this disallowance correct and if not ow do I go about correcting it?
She was a dependant in 2021 when she was a full time student. She worked in 2020 and wasn't technically a dependant. I agree it could be considered double dipping but where is that written. The tax software gave her that last stimulus with those facts and the IRS said no?
I didnt let any of my clients try and pull this with their kids in 2020...dep in 2019, not a dep in 2020 (when the free money was being doled out) then a dep again in 2021....looks kinda sus to me.
"The IRS gave 5 items that may have caused disallowance"
The payments are Advances based on the tax returns on file.
In the 2021 filing, "could be a dependent" is also one of the items. Just because you file your own return and have a filing requirement, you are still supposed to show if you could be claimed or not by another taxpayer.
If she got the advance payment and now the parents state she is their dependent, then she should not have gotten the payment, which was for 2021. The point being, one payment has been made in advance, so there is no further amount to be paid.
Did you want to fight to get a second payment?
If the family is mad, shouldn't they fight among themselves?
"Level Up" is a gaming function, not a real life function.
If she got the prepaid 1400 because of 2020 filing, then when her parents rightfully claimed in for 2021 they deserved the 1400 BUT SHE ALREADY GOT IT, then her parents don't deserve it, too.