Amending a 2021 return

[15740]

I have a new client, young couple.  They prepared their own 2021 return as MFJ, however, they weren't married in 2021. They got married January 1, 2022.  

The reason we started amending was both were dependents on their parents' returns for 2020 so they didn't receive their $1400 stimulus.  As I was talking and looking over their return, I discovered the MFJ.  The man has a W-2, no other income. The woman has no income at all. They received $735 EIC, which they won't qualify with the 1040X.

When amending, I need to split the EIC between them, don't I?  I know I do, but would like your views.  She didn't work, but it because of her that they received the EIC on original. 

Is this the way you would prepare the 1040X? Thank you for your time!  

[BobKamman]

Assuming they have no children, the EIC would have based just on his earnings and he should be the one paying it back.  Are you preparing two Forms 1040-X ?  And are you saying that they did not receive the $1,400 until they claimed it on the incorrect joint return?  Is that why her return needs to be amended?  

[15740]

Thank you, Mr. Kamman, for your reply.  I appreciate it.

I hope you won't be upset if I explain why I did 2 1040X?  The EIC was based on the taxpayer's income, however, his income was above the EIC limit.  So he didn't qualify for the EIC by himself.  It is only when MFJ that the EIC came into play.

I am preparing two Amended returns and splitting the EIC 50%.  His income earned it, but it took the spouse being on the return that made them eligible.  I am filing his Amended based on his income and paying back his half of the EIC. Her return shows no income, but that she needs to pay back her half of the EIC.

THEN, the Stimulus $1400.....both of them were claimed by their respective parents as dependents on the 2020 returns.  They are no longer dependents and IRS says if dependents in 2020 but not in 2021, they can claim the Recovery Rebate Credit. So taxpayer gets his $1400 and spouse gets her $1400!

Copied from IRS.gov website:  If you were claimed as a dependent on someone else’s tax return for 2020, you were not eligible for the third Economic Impact Payment. If no one can claim you as a dependent for 2021 and you are otherwise eligible, you can claim the 2021 Recovery Rebate Credit on your 2021 tax return.

Please let me know what you think.  I know my Grandson turned 18, got married and had a baby in 2021.......he was so grateful for that extra! 

Thank you to all who read my problem.....appreciate everyone of you!

[sewcpa]

Just a thought - would they be considered common law married for 2021 and normal marriage for 2022 into the future?    If they declared to someone they were married ...that someone could be the IRS!

Then no need to amend

[sjrcpa]

That's a big stretch

[BobKamman]

I would not expect IRS to understand the reasoning behind each of them paying back only half the EIC which should not have been claimed.  I would not be surprised if they charge both of them for the total amount, and take it out of the $1,400 for each.  I think I would file two original 1040's, mark both of them "amended" across the top, and attach an explanation cross-referencing each name and SSN, with a copy of the marriage certificate.  And then wait a year for the returns to be processed. If they want to make a side deal regarding who pays the EIC refund, hopefully they are still married by the time it needs to be worked out.  

[qbteachmt]

"If they declared to someone they were married ...that someone could be the IRS!

Then no need to amend"

That's exactly how it works in Montana.

"There three things that must be present for a Montana couple to be common law married. They are:

1. They must be competent to marry.
2. They must agree that they are married.
3. They must live together and present themselves as married."

If they file for purposes of the IRS as married, they essentially and factually declare themselves married.