EIP Payments related to other dependents ["OD's"] in college

[JABBO]

Tax client has 23-year old son who is in college.

Tax clients income is too high to qualify for any Education credits.

Tax client has claimed son on all previous tax returns and has received the "OD" credit.

This year, the OD credit is $500.

The son has nominal W-2 income of $300.

Can the son file his tax return, claiming himself, in order to get EIP3 of $1,400. Which is $900 better than his father getting the OD credit of $500.

Or, is the father obligated to claim his son on his tax return?

Thanks for your knowledge and guidance.

Jabbo

[jeffmcpa2010]

Check out the IRS information regarding "Is eligible to be claimed as a dependent".

Eligible is more definitive than actual.

[abctax55]

The son has nominal W-2 income of $300.

And that is more than 1/2 of his support  ????? 

I seriously doubt it, especially if Mommy & Daddy make so much their income is too high to get the EIP's.

[JABBO]

Thanks Jeff, I'll check it out.

[abctax55]

CFS Tax Tools software has a LOT of flowcharts that are very helpful in determining many of these things (dependent, qualifying child, qualifying relative, etc...)

[JABBO]

Thanks abctax55..........

Parents support son.

So maybe it comes down to the support test 😐

You are correct, parents don't qualify for any of the EIP's.

[qbteachmt]

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 as individual filers. 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

And:

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

One for each EIP.

[JABBO]

Hi qbteactmt,

Thanks for the detailed reply.

The son was a dependent in 2019 and 2020 as well, both years a college student with nominal income, both years qualifying as a dependent of his parents [under 24 years of age, FT student, etc.].

And thanks for the links, will check them out.

Jabbo

[qbteachmt]

The dependent doesn't qualify for 2020, but look at the link for 2021:

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

(and I will update my macro link)

"Qualifying dependents expanded. Unlike the first two payments, the third payment is not restricted to children under 17. Eligible individuals will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents."

[JABBO]

Thanks again........The hurdle for this tax client is their MFJ AGI, which is well above the $160k phaseout, so the expanded definition of who qualifies as a dependent for EIP3 purposes doesn't help in this case. Unless I'm missing something.

[qbteachmt]

It seems they don't need to be stimulated.

[BobKamman]

He turns 24 this year, right?

Problem solved.

I have a client with a college-student child and lots of relatives in law enforcement.

The child wouldn't think of walking into a Post Office and stealing $1,800 in stamps.  But tax fraud?  No problem.  

[abctax55]

But..but... Bob, it's *FREE* money.  /S   (edited to add the sarcasm *font*)

[PATAX]

Unbelievable...