EIP Recovery

[SensibleandHourly]

Second question of the morning, 

New tax clients of mine, however former planning clients, have a 50-ish adult son who has never worked. Knowing the family, I've always thought the son likely would have been diagnosable on the spectrum if they had tested for such things back in the day. He has been pretty much off-the-grid up to this point, and therefore has never filed taxes, and didn't receive the stimulus $$. Are there any drawback to having him file this year simply to receive the last stimulus payment, and to put him 'on the books' for benefits going forward? 

Thank you! 

Dawn 

[BobKamman]

No one has been claiming him as a dependent?  

And of course he can still be diagnosed today. Many people don't learn of their condition until that age.  

[SensibleandHourly]

No, his parents have not been claiming him. The parents have two children - a daughter with spina bifida, and the son. The daughter, interestingly, works part time at a local library, so she files her own return. The son has never found a place in the world, so to speak. 

I agree about testing later in life, but the family is very old school, and they just think he marches to the beat of his own drummer. Which he does. 

I've long worried about both adult children when they face a future at some point without their parents. 

[BobKamman]

Isn't the EIP based on whether the person is eligible to be claimed as a dependent, not on whether actually claimed?  Maybe the parents haven't been claiming him because their income is so high that the exemption or credit is phased out.  

You hate to think about what happens if both parents are killed in a car accident tomorrow.  

[SensibleandHourly]

His parents gross between 80-100k each year. 

I found this resource from the IRS website, and haven't read it yet in its entirety, but it does seem that he wouldn't be disqualified from this perspective: 

"You were not eligible for a payment if any of the following apply:
• You could be claimed as a dependent on another taxpayer’s 2020 tax return
• You were a nonresident alien.
• You did not have a valid SSN issued to you by the due date of your tax return (including an extension to October
15 if you requested it)."

https://www.irs.gov/pub/taxpros/fs-2022-22.pdf

I just didn't want to miss anything obvious and even bring it up if it was a stupid idea. 😉

[BobKamman]

You were not eligible for a payment if any of the following apply:
• You could be claimed as a dependent on another taxpayer’s 2020 tax return

[SensibleandHourly]

Good afternoon, 

Smiling at those caps. 😉 

No, he has not nor has been nor can be claimed as a dependent on his parent's return. 

Simply an adult who has fallen through the cracks in the system. 

Hope it is sunny where you are, Spring has yet to occur here in the North. 💥

[BobKamman]

And why is he not eligible to be claimed as a dependent on his parents' return?

[SensibleandHourly]

Because he is 51, and is no longer a qualifying child? Is there another way that he can be claimed as a dependent that I am missing?

[SensibleandHourly]

Is this what I am missing? 

Dependent FAQ

Question: My 26-year-old is living with me. He works and made more than $4,300 in 2021. Can I claim him as a dependent?

Answer: No, because your child would not meet the age test, which says your “qualifying child” must be under age 19 or 24 if a full-time student for at least 5 months out of the year. To be considered a “qualifying relative”, his income must be less than $4,300 in 2021 ($4,300 in 2020 also).

[BobKamman · Accepted solution]

He's a qualifying relative because his income is less than $4,300.

[qbteachmt]

IRS Interactive Wizard:

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

[SensibleandHourly]

HI there, I just wanted to thank you for hanging in there with me on this one. I did a mock-up adding him as a qualifying relative to his parent's return, but it only changes their return approx $500 or so, so I'm thinking that I will just have him file to at least get EIP3. By the way, apparently at one point the parents tried to provide for this child by gifting him royalties which are now titled in his name, but now those royalties are just a few hundred dollars a year. 

[qbteachmt]

I have reviewed your topic and I believe some clarification is required.

You posted from the IRS: "You were not eligible for a payment if any of the following apply:
• You could be claimed as a dependent on another taxpayer’s 2020 tax return"

But that is why someone would not have gotten the advance Payment. That is based on the 2020 or 2019 tax return on hand, as a projection for 2021. The person you are considering needs to qualify for the Credit based on 2021. Nothing now is based on 2020.

There is the question of If you can be claimed as a dependent. Not Will You be claimed as a dependent. Your person does not seem to meet their own basic needs and seems to qualify as a dependent as a qualifying relative.

That means trying to file for him as independent will show he is not qualified for the EIP 3. The parents would have him on their 2021 return; or, at the least, his own return will have that boxed marked: Yes, someone can claim me as a dependent.

And "and to put him 'on the books' for benefits going forward?" refers to what benefits, going forward? And which "books?" They either want to be part of this or they don't. There is no work record, so no Social Security credits; no survivor benefits. This is sad, but it's their choice.

[SensibleandHourly]

Thank you! I very much appreciate the thoughtful response, and I concur. 

He definitely can/could be claimed on his parent's returns, regardless of whether or not he will be or has been. 

As far as the books/programs that I vaguely referenced, I didn't have anything specific in mind other than that I have long been aware that this individual is off the grid. Who knows what his older years will bring ? As you have noted, no work record, no participation. His parents are in their 80's and will leave assets but as we both know, that can be a blessing and/or a curse, especially if there isn't income. 

I hope he is wise enough to reach out when that time comes. 

[SensibleandHourly]

Good morning, Bob, 

Latest turn of events. After filing returns, claiming said client as a qualifying relative, I have now received an SSN reject, twice, for the dependent. I suspect these clients are going to need to paper file. Sigh. 😉 Thank you, again, for your feedback on this one. 

Cheers, Dawn.

[SensibleandHourly]

Good morning,

Latest turn of events. After filing returns, claiming said client as a qualifying relative, I have now received an SSN reject, twice, for the dependent. I suspect these clients are going to need to paper file. Sigh. 😉 Thank you, again, for your assessment of this situation. 

Cheers, Dawn.