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MFJ vs MFS with Stimulus for the kids

Ernie
Level 9

I searched with the search button and browsed all the way back to January 1st and did not see the topic that was being discussed earlier.

Husband and Wife with 2 kids.  They received the full stimulus for both the first and the second stimulus for both the children.

Now, in filing 2020 tax return, if they file Married Filing Separate with one parent claiming both of the children what does each parent put down as money received for the children?  One half each or the one claiming the children claims the full stimulus for the 2 children?

When I read the information I can make an argument for both cases and I have not seen any guidance from the IRS.

Does anyone have any updates?

Thanks,

Dusty Ernie

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7 Replies 7
Just-Lisa-Now-
Level 15
Level 15
Guess it depends on if youre trying to "play" the system or not...Id split it in half.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
rbynaker
Level 11

I'm waiting to see if the IRS comes out with any regulations on the subject but 50/50 is my understanding from the law:

https://www.law.cornell.edu/uscode/text/26/6428

6428(e)(2) Joint returns
In the case of a refund or credit made or allowed under subsection (f) with respect to a joint return, half of such refund or credit shall be treated as having been made or allowed to each individual filing such return.

This appears to me to be another "big enough to drive a truck through" loophole that comes from poorly written legislation.  There's also the "every other year" dependents from divorced couples where one parent may have gotten the EIP money based on the 2019 return but the other parent gets the RRC in 2020.

itonewbie
Level 15

We also discussed this recently here: https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/eip-possible-benefit-to...

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Still an AllStar
TaxGuyBill
Level 14

That's my reading too (and is what the Instructions seem to indicate), but itonewbie pointed out that it could be interpreted as the "joint" credit ($2400 and $1200) is split 50/50 and the child's credit is separate.

But I am just DREADING that if the entire thing is split 50/50, that we will need to determine if MFS is better.  For parents who receive the full advance credits/stimulus, filing separately will result in an extra $550 per child for the credit (total of $1100 credit for the child, split 50/50).

 

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rbynaker
Level 11

As a U.S. Taxpayer I'm hoping the IRS plugs this hole with regulations (which they are entitled to write "as may be necessary to carry out the purposes of this section, including any such measures as are deemed appropriate to avoid allowing multiple credits or rebates to a taxpayer.")  But honestly at this point I don't know if anyone is minding the store.  They are so far behind on everything else that I doubt they'll be able to give this new code section the attention it deserves.

TaxGuyBill
Level 14

@rbynaker wrote:

As a U.S. Taxpayer I'm hoping the IRS plugs this hole with regulations


 

Me too ... as long as it is BEFORE February 12th.

itonewbie
Level 15

Unfortunately, looks like Congress has its mind somewhere else already.

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Still an AllStar
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