Recovery Rebate Credit

[singh]

My client, lets say A, filed as Single for 2019 tax. For 2020 tax she is filing Head of Household claiming her

grand daughter, B. 

For 2019 tax the child, B, was claimed by the mother, C, and the mother (C) received both $500 in 2020 and the $600 in January 2021 for the child (B).

What should I enter on the Rebate Recovery Worksheet Line 6 and on Line 9?

For Line 6 if I enter $500 and on Line 9 if I enter $600 then my client gets recovery of $1100 added to her refund. 

But if I enter '0' on both lines then my client does not get the additional $1100 which actually she should not get as the mother, (C) had already received $1100 for the child. But I am not sure if this will affect her being Head of Household.

Any help is appreciated.

I am wondering 

[singh]

Please disregard "I am wondering" it was put in by mistake.

[garman22]

If A claims B then A is entitled to RRC even though C received both stims. I would hope its not to game the system but....to me A is entitled. 

[singh]

Thank you for your input but I think if A gets the RRC that means one child would be getting the rebate

twice. I am still not definite on how to solve this issue.

[TaxGuyBill]

That is correct.

The ACTUAL credit is based on if a taxpayer claims the dependent or not.  So your client is entitled to the credit.

The ESTIMATED advance credit (EIP/stimulus payment) is just that ... an estimate.  It does not matter if somebody else received an advance credi/payment based on that child or not.  Your client gets the actual credit.

[BobKamman]

No child ever received a rebate.  An adult who claimed a child at least once in two years will get the credit.  If you want to overrule what Congress enacted, the next election is in 2022.  

[qbteachmt]

"would be getting the rebate twice"

You have two things here: Projections and Dependent.

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, and filing on their own, then they would be entitled to the payment/credit. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

The 2020 filing claim is the Creditable filing of the facts. Meanwhile, what a person got, is their own 2020 filing of facts. The two things do not need to Match.

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.

[singh]

I think it does not matter who received the payment. What the matter is "whether the money was dibursed from IRS due to the child being claimed." According to you a child's rebate can be claimed twice, one time when, for example, when mother claimed the child in 2019 return and then when grand mother claims the same child in her 2020 return by entering $500 on Line 6 and 600 on Line 9. If this is true the money is given out twice for the same child.

I am even more confused now. I call of the day.

[singh]

Thank you, qbteachmt, your answer makes a lot of sense. I will go to the suggested site and do more research. I just do not want my client get a letter later asking to pay back the payment.

Thank you.

[qbteachmt]

"I think it does not matter who received the payment."

Put it on their 2020 return. That's all you do, now. Ignore who got it, why they got it, or when they got it. None of that matters, now.

"What the matter is "whether the money was dibursed from IRS due to the child being claimed." "

Not really. It was a Projection. They used 2018 or 2019 tax returns. That's why this does not matter Now.

"According to you a child's rebate can be claimed twice, one time when, for example, when mother claimed the child in 2019 return"

That's correct; the Congress, the US Treasury and the IRS had a stupid concept that has proven flawed. You don't control this.

"and then when grand mother claims the same child in her 2020 return"

Yes, this is now 2020 tax return Reality, and that is your responsibility = to report the reality. For the grandmas as taxpayer, she claims the EIP as a credit because she did not get Funds in advance for this child.

If there is a dependent claimed in 2020 and that is a Qualifying dependent for purposes of the EIP (which is different than other qualifications in the tax code, such as EITC, CTC, support tests, etc), and the Tax payer claiming the dependent has not already gotten the funds or the right amount of funds for 2020, then the refundable Credit is allowed and applied for.

[BobKamman]

@qbteachmt "That's correct; the Congress, the US Treasury and the IRS had a stupid concept that has proven flawed. You don't control this."

Don't forget to give some credit to the President who signed it.  Twice.  

[qbteachmt]

"give some credit to the President who signed it"

But I doubt he got involved with how to distribute it. Because that required a 4-letter word:

plan