Hi, I would like everybody's input about this situation. I have a client that is single, lives with his mother and father and he always claims them as dependents in their tax return. It looks that he knows a little bit about taxes and he wants to claim only one parent, so he can keep using the Head of household filing status but he wants the mother to file alone so she could get the two stimulus checks which is more than the amount that she represents if he claims her as a dependent. Is that legal? It might look legal but how would you proceed in that situation? I am just asking for opinions.
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Either they are dependents or they aren't. You can't pick and choose what direction you want to go from one year to the next just because of the potential of some additional credits. He can't have the best of both worlds.
"which is more than the amount that she represents if he claims her as a dependent."
For purposes of the EIP, are you aware of the Age Qualifications?
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:
One for each EIP.
He lives with his mother and father? So who is really the head of household, here? That would apply only if they live with him.
Does he want to give her the $1,800, then forfeit the $1,400 that he would receive in EIP#3, which right now is written so it will be paid for every dependent?
Still wondering who pays more than half the household expenses here. But also, does either parent have more than $16,530 in Social Security? Because as MFS they would have to pay tax on 85% of anything above that amount. And, the other spouse might have to file MFS also. Even if it's less than that, how does the gross income test work in a situation like this? If Mom gets $6,000 Social Security and files MFS, doesn't that make her AGI $5,100?