Recovery rebate

[RP]

TP has ITIN and is undocumented ..his 2 year old child is a citizen of us and he claimed him on his 2020 return. He spoke with IRS and they said that the child has to file a claim for the credit... Any suggestion on how to do this without amending the return?

[BobKamman]

Someone answering the phones at IRS might have said that, so forgive them for their lack of training. This would be a good place to start, although much of the information is directed at married couples and your client seems to be single or HoH:

https://www.eitcoutreach.org/blog/what-to-know-about-the-third-stimulus-checks/

[qbteachmt]

Perhaps it would help to review what is really happening for EIP “stimulus” funds: The funds were paid out as Advanced payment against a projection. The first two payouts were projected based on 2018 or 2019 tax returns, but the eligibility is part of tax year 2020 as 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 eligible for consideration as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent." You must correctly address whether they Can be Claimed as a dependent on someone else’s tax return.

The third payout which started in Jan 2021, has different eligibility rules as to dependents and this payout is a projection, using 2019 or 2020 tax returns, then reconciled against Actuals on the 2021 tax return.

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal includes one 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

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

One for each of the three EIP “stimulus” payments.