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Dependent Child - Stimulus payment

n2n
Level 1

Can a taxpayer claim a dependent child age 21 who was  a student for 2020, on their 2020 taxes if the child filed as independent for 2019 and received stimulus payment?

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10 Replies 10
George4Tacks
Level 15

If they otherwise meet all the requirements for being a dependent - YES.

The stimulus payment the child received is not a determining factor, other than possibly how it was spent and a "support" issue.

 


ex-AllStar
n2n
Level 1

what happens to the stimulus payment they received?  will it have to be repaid since they are a dependent in 2020? 

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sjrcpa
Level 15

The real question is - Should the child have claimed themself?

If child qualifies as a dependent parent should claim them. Their return will need to be paper filed since it will get rejected for efling. Then child needs to amend their return to say they could be claimed as a dependent.


ex-AllStar
n2n
Level 1

The child received the first and second EIP, can they be filed as a dependent on 2020 taxes of their parent? i am thinking that they cant since the EIP was an advance for 2020 taxes. 

also if the child amends their taxes will they have to repay the stimulus received? 

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sjrcpa
Level 15

The rules for being a dependent have nothing to do with the fact that someone received EIP 1 and 2 (even if they shouldn't have).


ex-AllStar
n2n
Level 1

I agree that the dependency rule stand. just wanted to know what are the tax implication for receiving the EIP based on 2019 taxes, when filed as a dependent in 2020. 

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qbteachmt
Level 15

Do you understand how the RRC/EIP eligibility works? Because this: "if the child filed as independent for 2019"

Has no bearing on this: "and received stimulus payment?" or on the reality of the 2020 filing. What is supposed to happen is that tax year filings are accurate and factual. If that 2019 filing meets those conditions, there is nothing wrong with 2019.

For the EIP/RRC, the tax filings on file at the time the payments were made, were used to project what the 2020 filing would be. That's why the person got funds. Projection is not reality.

When you work on their 2020 filing, you abide to accurate and factual data. It doesn't matter if they got something they are not actually entitled to based on a faulty 2020 projection. On the 2020 filings, you do what applies. If that also includes showing the person is eligible for RRC, then you need to enter how much they already got. That's all that matters for the RRC, for 2020.

Prepare their 2020 tax forms as applicable to their status in 2020.

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"Level Up" is a gaming function, not a real life function.
n2n
Level 1

what are the tax implication if the taxpayer received the stimulus based on the 2019 tax return?

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qbteachmt
Level 15

"what are the tax implication if the taxpayer received the stimulus based on the 2019 tax return?"

There are none. All there is, is this:

Fill in the 2020 tax form per what applies for that taxpayer. If there is eligibility for EIP/RRC, then also fill in what amount(s) they already got, so there is not a double-payout.

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


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