Recovery rebate credit and newly adopted grandchildren

[taxesbydot]

My clients adopted their two grandchildren in 2020 and they do qualify as dependents. The grandparents assume their daughter or the children's fathers got the recovery rebate but don't really know. She and they are not available to find out the answer. How do I fill out the recovery rebate worksheet? Both adults (my clients) got both rebates..

[BobKamman · Accepted solution]

You can be 100% certain that no one else received the recovery rebate credit because that is only claimed on a 2020 return.  If you are referring to the advance payment based on dependents shown on 2018 or 2019 returns, that was just a best-guess effort to get some money out the door as quickly as possible.  Preparers of 2020 returns need only stick to 2020 facts.  

[taxesbydot]

Sorry I just reread that and it isn't clear. My clients got their own rebates. Not for the children.

[dkh]

Your clients should enter the EIPs they received.  The RRC worksheet will calculate what they are entitled to receive based on the 2020 tax return information less what they received in EIP#1 and EIP#2             So yes, your client may receive RRC for the grandchildren if they qualify based on 2020 tax return information.    

[qbteachmt]

"My clients got their own rebates. Not for the children."

They got Money. That isn't the same thing.

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 individually. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent." Your clients have new dependents. Only 2020 Tax Filing matters.

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

One for each EIP.