Recovery Rebate Credit Problem

2 replies
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My client's ex-partner filed HOH with their 2 kids as dependents and claimed the Recovery Rebate Credit of $1,400 for each dependent in 2020. It's my client's turn to file with the kids in 2021. My challenge is do I indicate on the (Recovery Rebate Credit Worksheet) that the funds( $2,800) for the dependents have been received already on my client's returns, even though the funds were actually paid to her ex-partner on his 2020 returns?

ProSeries Basic

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T

TaxGuyBill

No.

Although the law directed the IRS to create guidance to avoid that type of double-dipping, as of today the IRS has not issued any such guidance. So as of now, your client can claim the full Recovery Rebate for the children.

BobKamman

Level 15

Your client doesn't have a tax problem. Conceivably, she has a family-court problem if the other parent wants reimbursement for the $2,800 that now reduces his refund. (Or does it? The ACTC might have to be paid back, but not the RRC, right?) I would focus on the client's tax return and not on someone else's tax return or on the shortcomings of federal government policy.

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