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Recovery Rebate credit

Mohamed
Level 3

Most clients who used to claim their parents as a dependant in their 2019 taxes wants to drop them to allow them to recover the EIP payments, I find this kind of fishy, what you guys think? 

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Just-Lisa-Now-
Level 15
Level 15

I had one client ask about this, I told them if they tell me they no longer support Dad, I can take him off their return, but I wont be putting him back on next year.  So they would lose the $500 ODC each year.

Dad can then go to the senior center or use IRS free file and file his own return, I wouldnt be the one to file it since I think that he CAN be claimed as a dependent, whether they want to claim him or not.

She said theyd discuss it as a family and let me know, so we'll see.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

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11 Replies 11
IRonMaN
Level 15

If they were dependents in the past, I'm guessing they are still dependents.  The smell of stimulus money shouldn't change anything.  But then again, maybe they really weren't dependents after all.  Kind of funny how that thinking changes when tax money enters the picture.

By the way, what time is that fish fry?

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
Just-Lisa-Now-
Level 15
Level 15

I had one client ask about this, I told them if they tell me they no longer support Dad, I can take him off their return, but I wont be putting him back on next year.  So they would lose the $500 ODC each year.

Dad can then go to the senior center or use IRS free file and file his own return, I wouldnt be the one to file it since I think that he CAN be claimed as a dependent, whether they want to claim him or not.

She said theyd discuss it as a family and let me know, so we'll see.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

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Accountant-Man
Level 11

Lots of people fishing to get the best benefit for dependents.

** I'm still a champion... of the world! Even without The Lounge.
Mohamed
Level 3

I was waiting for your reply

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Mohamed
Level 3

 Lisa, agree with you , this is the best plan

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imcarylabigail
Level 1

Hi! I have a question regarding Recovery Rebate Credit, too. I was claimed dependent by my dad on his 2019 tax return so I wasn’t eligible for the 1st and 2nd stimulus checks. I was unemployed at that time as well. However, I got a job and filed my own tax return for 2020, and my dad also did not claim me as his dependent anymore. I wanted to claim the 1st and 2nd stimulus checks as Recovery Rebate Credit since I’m eligible based on the website of IRS but my accountant said that I can’t because I’m not eligible? I’ confused. 

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qbteachmt
Level 15

@imcarylabigail 

You seem to be lost on the internet.

You’ve come to a Peer User community for Intuit Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte , and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

Thanks.

 

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"Level Up" is a gaming function, not a real life function.
Mohamed
Level 3

t looks like you are in the wrong place, However, to answer your question, as long as you will file your taxes separately from your parents, you will be getting the 2 payments, you will need to fill the recovery rebate sheet and enter -0- in both payment, thus it will be calculated in your returned refund. 

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qbteachmt
Level 15

This is not correct: "as long as you will file your taxes separately from your parents, you will be getting the 2 payments,"

When you file your own return, you have to answer the question whether you still qualify as able to be claimed by someone else, even if they are not claiming you.

That's why you use the resources already provided:

If the person is not a dependent in 2020, then they would be entitled to the payment/credit. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."


You might want to bookmark these links and read the IRS guidance.
Interactive wizards portal for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

One for each EIP.

 

You have to understand Dependency rules.

 

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"Level Up" is a gaming function, not a real life function.
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qbteachmt
Level 15

"wants to drop them to allow them to recover the EIP payments"

Perhaps it would help to review what is really happening:

The funds were paid out as Advanced payment against a projection. The projection used 2018 or 2019 tax returns. But 2020 is the 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 entitled to the payment/credit. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."


You might want to bookmark these links and read the IRS guidance.
Interactive wizards portal for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

One for each EIP.

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The_AntiTax_Man
Level 5

@qbteachmt  I agree. Each individual client has there own facts and circumstances. 

Educate yourself. Ask the questions. Get the answers. Make a determination. Document it all. Next.