Recovery Rebate Worksheet - New Dependent & Alternating Year Dependent

[ddortiz]

Happy 2020 Tax Season All,

I have encountered a unique situation with a client.  Taxpayer claims his son in odd years.  He also had a new child in 2020.  I have removed the dependent he does not claim in 2020 and added the new dependent.  The recovery rebate worksheet is calculating line 15 ($1,700) and line 18 ($1,200).  The recovery rebate form is not giving him the $1,100 which he is entitled to for his new dependent. 

Has anyone encountered this situation?

[qbteachmt · Accepted solution]

"Taxpayer claims his son in odd years. He also had a new child in 2020."

That makes it a wash. The advanced funds for a child not being claimed, really applies to the child being claimed.

Did he get all the funds, already? You don't get it for 2 children in 2020 unless you are claiming 2.

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 as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

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.

[sjrcpa]

FYI This is not a unique situation. In fact it has been discussed here.

[TaxGuyBill]

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@ddortiz  wrote:

The recovery rebate form is not giving him the $1,100 which he is entitled to for his new dependent.

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The Recovery Rebate is based on the number of people on the tax return, not specific individual people. 

So there is no credit "for his new dependent", there is just a credit for a dependent on his tax return, and he already received an amount equal to that credit.  So your taxpayer already received the full amount they are eligible for.

[ddortiz]

Thank you for that information and additional explanation.  Based on his 2020 situation he has received the full amounts he was entitled to (EIP #1 $1,700, EIP #2 $1,200). 

[ddortiz]

Thank you all.