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Recovery Rebate if not a Dependent

I'm thinking that if married couple makes too much to get any Tuition Tax Credits for their college kid, is there any reason why I wouldn't just take the kid off their list of dependents? The college student would file his/her own tax return and be eligible for the $1800 of Stimulus Payments, right? The parents would only lose the $500 dependent credit.

Same goes for a couple with a disabled adult child getting Social Security. Why wouldn't I just file the child's return as not being a dependent of anyone else and make him/her eligible for the $1800. 

And... it absolutely makes sense for the student who graduated last spring. He is technically eligible to be his parents' dependent because he was still in college for 5 months... but he gets the $1800 if he's not... and they only lose $500.

I recognize that if we're talking about a 17-year old high school student, he/she can't possibly be considered eligible because his parents still provide over half his support and, even if they don't show him as a dependent, he probably wouldn't qualify for a Stimulus Payment.

 

Am I missing something here? 

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8 Replies 8
Level 10
Level 10

If they qualify to be a dependent even if they aren't claimed they are not eligible for the stimulus payment. 

Level 15

Tax law doesn't exactly say, whatever route is best just go ahead and take it.  You still have to determine whether or not the kid would qualify as a dependent on the parents' return.  If he qualifies, the parents can certainly not claim him, but he would be deemed a dependent and not qualify for the credits.

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Level 15

Being a dependent is not an option... you (as the professional tax preparer) need to evaluate if the kids are qualified as a dependent.   And you do that BEFORE looking at whether certain benefits are allowed/disallowed.

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Level 11
Level 11

It comes back to CAN they be claimed as a dependent?

 

Re: tuition, they can release dependent if their income exceeds threshold. But the child must still answer question as to whether can they be claimed as a dependent and 2nd question is if yes was taxpayer claimed as dependent.  

Level 15

Once again, we seem to be confusing Support and Dependent regulations.


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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Level 11

It's not a "choose the best option" choice. The law says "can" be a dependent, not "must be" or "shall be." Are they "able" to claim the person?

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Excellent replies by all. Thanks for reminding me that it's important to determine if someone "qualifies" as someone else's dependent rather than whether or not he/she is "claimed" as such. Of course, the support test is a very close call for some people (e.g. the recent college graduate who got a full-time job sometime during the year) 

Stay safe... John

Level 15

It seems like you want this to be equivalent to Dependent: "the support test is a very close call for some people" Claiming as a dependent, vs Support, vs, for instance Custody, are all different types of tests. Just like some qualifications use Earned Income and some use Taxable or Gross Income.

For instance, you might Support your parent, but that parent is not a qualifying dependent for purposes of EIP.

You have to read the regulations and follow what applies.

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