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Stimulus checks for dependents

ddaly
Level 1

MFJ couple has $200,000 AGI for 2020.  This would I think make them ineligible for a stimulus check.  They also have an adult college student under age 24 whom they could claim as a dependent.  If they claim him as a dependent, do they get a $500 child credit?  But if they don't claim him as a dependent, and the student files his own tax return, will the student qualify for a $1,400 stimulus check?  Is there any downside to taking the no dependent/student files own tax return route?  BTW, parents file California tax return.

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10 Replies 10
IRonMaN
Level 15

Live dangerously and enter/delete that info into the tax return and see what happens.

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
rbynaker
Level 11

That depends on whether or not the student commits fraud on his tax return by not checking the box "Someone can claim: [ ] You as a dependent"

ddaly
Level 1

Is this a situation where if the parents could claim college student as a dependent, then they have to claim him as a dependent?

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rbynaker
Level 11

@ddaly wrote:

Is this a situation where if the parents could claim college student as a dependent, then they have to claim him as a dependent?


No.  But if they could claim him, he cannot claim himself and needs to check the box on the return.

IRonMaN
Level 15

It kinda comes down to some of my clients' "do what ever is best"  comments.  You don't do what's best, you do what is correct.  Who is providing more than half of the kid's support?  Once you figure that out, the rest is easy.

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
ddaly
Level 1

OK, let's presume that the parents provide over half of the child's support in the form of a roof over the kid's head, and the college expenses.  What if the kid files a tax return and admits that he could be claimed as a dependent.  Doesn't that just limit his standard deduction to $1,100 as opposed to a standard deduction of $12,400? 

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IRonMaN
Level 15

It also kills getting a recovery rebate check for him

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
qbteachmt
Level 15

I don't understand: "What if the kid files a tax return and admits that he could be claimed as a dependent."

Why is that even a "What if" and "admits"? Why are you not using reality? There is no "admitting" or not admitting. There is the reality of the facts and circumstances that you will prepare and sign off on as the Professional.

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

had this exact question asked to me by friend in this exact situation.  I kept repeating myself" who pays more than 50% of childs support"  response was but wouldnt it be better for him to get the stimulus.  and i repeated myself....

lrhenry04
Level 3

This usually comes down to the Support Test.

Have your clients fill out the Dependency Support Worksheet. Keep it in your file.

A family of 8 living in a $30,000 house looks different than a family of 3 living in $500,000 house. Some families are way more extravagant than others.

 

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