Recovery Rebate Credit

[taxguymike]

Client attained custody of her grandchild for all of 2020. 

Her stimulus payments were:

# 1 - $1200.00

#2 - $600.00

Now that the grandchild is her dependent ProSeries is calculating her stimulus payments should have been $1700.00 and $1200.00 giving her a recovery rebate of $1100.00 in her 2020 refund.

Is this calculation correct??

[IRonMaN]

Is there some reason why you don't feel it is correct?

[taxguymike]

Logically, it makes sense if you compare it to a taxpayer having a baby in 2020.

Since this RRC is something new I was looking for other opinions.

[IRonMaN]

It's been an interesting year with parents that alternate kids each year and all of that other fun stuff, but claiming the credit for a new kid isn't even close to being an issue.  As long as you enter the correct amounts received during the year for the clients, the software seems to be handling things just fine.

[qbteachmt]

"I was looking for other opinions."

It's not Opinions that matter.

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.

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.