Divorce at end of year & EIP/ACTP

[ajp]

Client gets divorced at end of the year.  There is one child.  

Each person gets a letter stating they received $2100 EIP, and $750 ACTP.  If I list it "as is" the one parent will likely have to pay back the ACTP even though it isn't showing that on the tax return.  I assume it will come later.  Also, the claiming parent will get the money that was technically deposited into the formerly joint account. 

With the EIP, fortunately no one will be paying anything back, but it seems like a double dipping scenario for the parent who is claiming the kid this year. 

Are there directions for this scenario that I am not finding?  Right now, I expect to enter it all as the letters were written.  

Thanks

[qbteachmt]

"With the EIP, fortunately no one will be paying anything back, but it seems like a double dipping scenario for the parent who is claiming the kid this year."

$2,100 isn't the right amout for two or for three. I've been seeing three letters: MFJ, and the two separates. But the payouts were based on a projection, and if that isn't the reality for the 2021 return, well, that's a problem for Congree.

The repayment for ACTC is forgivable based on an income limit, which will be that tax return.

"Also, the claiming parent will get the money that was technically deposited into the formerly joint account."

Then there won't be any payment consideration.

[ajp]

Thanks for your response.  

I'm pretty sure that the $2,100 = $1,400 + $700 (half the EIP that was because of the dependent).  

Each parent got an EIP letter for $2,100. 

If they would have stayed married, that would have been the appropriate grand total. 

[qbteachmt]

I suspect you have Limited EIP, at $700 per person, because of Income limits?

[qbteachmt]

Here: "Generally, if you were a U.S. citizen or U.S. resident alien during 2021, you were eligible for $1,400 ($2,800 for a joint return), plus $1,400 for each qualifying dependent"

Of course, that prepayment was based on the projection year (2019 or 2020 tax return). That means the one person not claiming the child, and then based on AGI, is qualified for up to $1,400 (having got $700) and the other person claiming the child is qualified for up to $2,800 and got $1,400 (2 X $700).

Potentially.

[sabkosl13]

I also have a client with a wife and one child. Both received letters for $2,100. They got the deposit $4,200. They still are MFJ so no problem. However, if they chose MFS, the parent with the child would write that they got $2,800, the other $1,400. And everything is still correct. The letters are for general information only.

[dkh]

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@sabkosl13 wrote:

I also have a client with a wife and one child. Both received letters for $2,100. They got the deposit $4,200. They still are MFJ so no problem. However, if they chose MFS, the parent with the child would write that they got $2,800, the other $1,400. And everything is still correct. The letters are for general information only.

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I do not believe that is accurate.  The $$ split on the letters is for a purpose not general information only.

[qbteachmt]

"Both received letters for $2,100."

Yes, good clarification. The "both" vs "each" vs "they" can be confusing.

3 X $1,400 = $4,200

Yes, it would be split accordingly.