Double Dipping on EP 3 and child tax credit

[fredr]

I heard a lot of married taxpayers are filing “Married filing  separate “ to get additional child credit and EP 3 , is this legal?

[rcooley25]

No its not legal and dont think the IRS is not going to catch this because they will.

[garman22]

Im not sure its not illegal. But thats why they issue separate letters to minimize that kind of nonsense. 

[PATAX · Accepted solution]

In my opinion it is unethical and improper. If any of my clients try to pull that crap, which I doubt, then they may become ex-clients.. I do what is right, and I do not need anyone's business, so if they do not want to conduct themselves like civilized honorable people, then they can go elsewhere...

[Just-Lisa-Now-]

many preparers are considering this to be tax planning, file MFS to maximize the double dipping of the credits.

[PATAX]

@Just-Lisa-Now- Lisa, I thought the IRS was directed, or was supposed to, issue rules to prevent double-dipping of EIP3 and the child tax credit...

[Just-Lisa-Now-]

lets say youre MFJ with 3 kids and you got the full EIP amounts (7000).
Filing MFS and one of them taking all 3 kids, their RRC would be 5600, but if you split that 7000 in half, thats only 3500, so that MFS person is still entitled to another 2100.

The other MFS half of the relationship, shows they got the 3500 (should have only been entitled to 1400 on the 2021 return), but there is no payback.

As a couple you just came out 2100 ahead.

[sjrcpa]

Maybe, but they didn't.

[rbynaker]

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."  --Judge Learned Hand

[Just-Lisa-Now-]

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@PATAX wrote:

@Just-Lisa-Now- Lisa, I thought the IRS was directed, or was supposed to, issue rules to prevent double-dipping of EIP3 and the child tax credit...

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I know I heard something about that, but it was never implemented.  

[fredr]

i think it comes down to tax preparers ethics. The stimulus payments and child tax credits should not be double dipped by married filing separate filing status.

[Just-Lisa-Now-]

"should not" according to whom? Following the rules IRS set forth, doesn't violate any ethics.

Im in a CP state, Im not futzing around with any MFS returns just for this, but many preparers are utilizing this as a very advantageous tax planning move for their clients.

[sjrcpa]

That judge was very wise. I love his name, too.

[PATAX]

@fredr @sjrcpa @Just-Lisa-Now- @rbynaker @garman22 @rcooley25 I think we can all agree to respect the diverse opinions of each other on this one. It will be up to the individual tax preparer to make his or her own decision

[garman22]

Oh, I cant agree more. On this one it is a person by person choice what we do. I do NOT like the idea of (what I believe) to be gaming the system. Its the taxpayers who end up paying for this nonsense. 

But I wont bang on the next preparer who feels otherwise.