How to Enter $1,400 3rd Stimulus Payment on Unmarried Couple with Child

[Firehead]

I have an unmarried couple with one child as new clients. He is filing Head of Household and claiming the child. She is filing Single. The problem: The IRS sent him Letter 6475 stating he received $4,200 in stimulus payments for 2021. However, he filed HOH in 2020 (him + baby). Thus, he received the $1,400 for all three of them. She received nothing. How do I report this on the two returns? I'm afraid if I don't state the entire $4,200 as payments received on his return, it'll cause a red flag. Yet, it could also make him have to pay back $1,400. If I file that she received $0, then she'll get a stimulus credit in her refund. If the stimulus follows the taxpayer, then I report $2,800 on him and $1,200 on her. I know it is a wash, but they don't make much between them and he has been in the hospital for four months due to Covid-19 Delta. They can't afford to pay back anything. What is the correct way to report this? Is there a hardship of some kind so that he won't have to pay back $1,400? 

[jeffmcpa2010 · Accepted solution]

Have you actually seen their 2020 tax return? Is it possible that she was also claimed as a dependent of his in 2020?

Also - What did he ACTUALLY receive (ie. what got deposited to the bank if he had direct deposit)?

Another note. Even though the IRS was (I believe) authorized by Congress to put in place anti-abuse rules for the EIP3, noting so far indicates this is the case, and on my returns Pro-Series has not been computing a payback where the amount allowed per the 2021 return is less than received.

You CANNOT split his 6475 letter between two separate taxpayers. The EIP follows the actual recipient not the taxpayer.

[Firehead]

Hi JeffMCPA2010

Thank you for answering. They did not file joint, but he claimed her as a dependent in 2020 as she had no income for that year. He's still in the hospital, so I can't verify if he actually received the full $4,200. I appreciate your help!