Advanced Child Tax Credit Married Filing Separate

[goofball]

Can I flip flop a kid from one married spouse to the other from last years return and recoup the advanced child tax credit a second time since this parent did not receive it.  We can do this if they are divorced, but I have seen nothing that says we can or cannot when they are married.  Additionally, if this is legal, clients that filed joint last year could file separate this year an only claim the half of advanced child tax credit they received.  

[Terry53029]

Can't answer to the question "flip flop" When my client has children I use IRS rules found in pub 972, and 

26 U.S. Code § 24 - Child tax credit

[goofball]

Then you did not answer anything.  

[IRonMaN]

It sucks when someone tells you where to research, but you really don't want to research.

[goofball]

I have already researched.  I have also spoken with a lot of other accountants who agree with my point of view.  What we are all looking for is any reason not to do what we are suggesting.  None of the reference material says we can't.  Here is the a perfect example.  I have a client that has 5 kids all over the age of 5.  They jointly received $7,000 in stimulus and $7,500 in advanced child tax credit.  If I file them separately with all kids on one parent, claiming that parent's half of the stimulus and advance child tax credit.  The parent claiming the kid receives the other half of the advanced child tax credit and stimulus for a total $7,250 even though their spouse already received it.  The other parents income is lowing enough that they pay nothing back.  So essentially this set of parents has double dipped.

Sorry, people coming on her with no answers but only lecturing others on reading pubs and instructions are not helping.  Those people apparently have spare time during tax season and like to look important.  What I am asking for is does anyone.know of a reason this can not be done.  The instructions and pubs do not say that.

[IRonMaN]

"Sorry, people coming on her with no answers but only lecturing others on reading pubs and instructions are not helping"

Looks like you first popped on here a year ago.  In the last year you have helped roughly zero people.  On the other hand, it appears Terry has helped just a tad more folks than you.  When you start helping other folks, then you can lecture us on how this place is supposed to work.  Until then, please leave the lecture for somewhere else.

[Terry53029]

Just wondering if you have researched, and spoke with other accountant's that agree with you, why are you looking for justification here. Go for it.

[goofball]

Then plain and simple answer the question.  Do you know of any reason not to be splitting all parents that will qualify and double dip both the stimulus and the advance child tax credit.  If you are responding to this without knowing the answer, you have too much time on your hands.  If you do not know, please do not waste time.  

[goofball]

another responder that does not know.  I will tell you what the other accountants have said.  We all agree but are holding these returns in the hope that their is some guidance.  The dollar figures are very large.  Losing out on $7,000 for a client or asking for $7,000 that gets challenged is not a position one should take lightly.  

Again this is a very simple question, does anyone know of a reason not to take this position.  

[IRonMaN]

Are you a risk taker?  Right now it looks like you can do it.  Does that mean that they might patch that loophole later and go after folks that went that route?  I'm not going there but there are others that are going to go there.  So again, are you a risk taker?

[goofball]

So again you do not know of a reason, but just have to respond anyway.  let me guess you do 50 returns and then just surf blogs.    

I am looking for someone that knows of a reason not to.  If you don't know of a reason, why would you respond.  

[goofball]

If you are actually telling me that you would not go there but would instead cost your client $7,000, then you had better hope your clients do not come back on you. 

I would rather let my clients returns sit until there is some solid guidance.  I would not be in business very long if I was willing to cost clients that much without doing everything possible to find the right answer first. 

[IRonMaN]

Have a nice life.  I'm done.

[goofball]

Since you do not know the answer why did you ever start?

[goofball]

by the way ironman try reading question E14 of IRS fact sheet 2022-09.  How can the IRS close something they have stated to do.  Yet, you won't go there.  You are losing your clients money.  You definitely have no business getting into a forum question about things you know nothing about.  

I would just like to know if anyone else has a reason I have overlooked for why not to do this.

[abctax55]

"...Those people apparently have spare time during tax season and like to look important."

Nope, not the case.  AND, if you've already asked "a lot of other accountants" , why do you care about the answers you get here.

Shooting the messenger is counter-productive. 

[abctax55]

their vs there....

[abctax55]

@goofball

Just 'cuz something is (temporarily) legal doesn't make it ethical. 

The IRS said they'll will to close this loophole to FREE money.  It could (and SHOULD) be retroactive.  Enabling clients to game the system might be the way you operate.  Not me, & not the majority of the folks (the ones with major credentials)  here that you keep attacking, despite your lack of constructive participation in this forum.

[goofball]

Game the sytem? Ethical?  Temporary?  Nothing is ethical, moral or right about how the government has thrown money around for the last two years, but because congress makes things legal that means it is legal.  Double dipping the stimulus was legal for 2020, and the fact sheets still state it is for 2020 and 2021.  Yes, fact sheets specifically state it is can be inaccurate; however, it also states a taxpayer who reasonably and in good faith relies on them will not be subject to a penalty.  Many returns were filed and refunded for 2020 already under those positions.  Yes, they were slowed down and looked at, but ultimately they were granted.  This is not temporary.  It is not the IRS's job to change the law, it is their job just like our job to follow congress's laws.

It is our job to get our clients the best tax result legally.  If something is legal, it is unethical not to instruct our clients on the issue and let them make the decision has to how to file.  I agree it is not right.  It is also not right in the situation of unmarried taxpayers, but no one argues about that.  Tax laws are not based on what you or I think.  They are based on laws passed by congress.

Constructive Participation?  Answering questions and getting involved in forum questions that individuals do not know anything about is not constructive.  It is counter productive.  That is why I have avoided this forum for years.  I simply ask the question, if anyone had any legitimate concern/reason not to pursue this course of action not only with the stimulus, but also the advanced child tax credit.  I am talking about legal reason or unintended consequences.  Telling me to read a pub that does not address the issue or saying that law should be changed is not a productive or helpful to any reader on this forum.  Answering at all, when you do not know the answer is not productive.  

Failing to follow laws that will benefit your clients or failing to even give them explain the option to take advantage of situations, now that would be unethical.

And you wonder why I do not spend time on this forum.  Opinions get you no where in an audit, IRS Bulletins, instructions, fact sheets, etc. do.  Legal is legal.  Short changing your clients because you disagree with a legal position, that is unethical, unprofessional and flat out wrong.  You can choose not to do it, but to fail to advise your client about the option is flat out wrong.

[abctax55]

 that individuals do not know anything about is not constructive

I'll stake my knowledge (and Jeff's)  against yours anytime you wish.

And you wonder why I do not spend time on this forum

Nope... I don't wonder.

[qbteachmt]

"Do you know of any reason not to be splitting all parents that will qualify and double dip both the stimulus and the advance child tax credit."

Stop using the word "know." You are not asking about something Known. You are asking about something provided for

"Opinions get you no where in an audit"

If you know the rules, and want to take a position on which action to take, you don't need to keep asking anyone on the internet. If you did the research, stop hammering on about the issue.

I am going to make a guess, that you are uncomfortable with the provision and want some assurance that this will not bounce back at you and/or your clients. You would need to ask the IRS about that part.

[FRANKR2]

You say it would be unethical but the IRS gives you no choice. They have specifically stated  the amounts from EIP letter 6475 and AdvCTC letter 6475 must reconcile with their records. In 2020 it was advantageous for a couple to file Married Seperately. The father claimed the only dependent son and received the EIP and AdvCTC payments. In 2021 it is advantageous for the mother to claim the dependent son. When the mother puts her info in, the software automatically gives her the $1400 EIP for the dependent because her EIP letter 6475 states $1400 and the full Child TaxCredit because she didnt receive any AdvCTC or a  AdvCTC letter 6475. There is no way for her to show the amounts the father received. If she adds them to her EIP letter 6475 or puts the amounts received on the fathers AdvCTC it will not reconcile with the IRS amounts and delay the returns. I also have a feeling the IRS may automatically correct the figures and add them to the refund. I know of people who forgot to take the EIC and when they got their refund the IRS had automatically added it in then sent them a letter a week later explaining what they did. You say it is gaming the system but there is no other choice.

[Nealham12]

Couples that are married filing separately receive a reduced credit that is equal to half of the typical credit amount. Currently, parents can receive up to $3,600 for every child under 6 and $3,000 for kids between 6 and 17. Married couples filing separately are only eligible for  $1,800 and $1,500, respectively. This is because when married filing separately, only one parent can claim the child tax credit, not both.

Why Can’t Both Parents Claim the Increased Child Tax Credit?

The law states that only one parent can get the credit for a shared dependent. The parent who claimed the child on their 2020 tax return will bethe one receiving the advance payments this year, as the credit given in 2021 is based on 2020 returns. 

If both parents claim the child tax credit, the IRS will only allow the claim for the parent that the child lived with the most during the year. While married couples who file jointly can claim dependents as a single entity, those filing separately must choose which parent will claim the dependent. 

[rbynaker]

---

@Nealham12 wrote:

Couples that are married filing separately receive a reduced credit that is equal to half of the typical credit amount. Currently, parents can receive up to $3,600 for every child under 6 and $3,000 for kids between 6 and 17. Married couples filing separately are only eligible for  $1,800 and $1,500, respectively. This is because when married filing separately, only one parent can claim the child tax credit, not both.

This is incorrect.  See instructions and the Line 5 Worksheet.

https://www.irs.gov/pub/irs-pdf/i1040s8.pdf

MFS will start to phase out at a lower AGI threshold but the math starts with $3,600/$3,000.

[qbteachmt]

While a child can only be claimed on one return per year, that has nothing to do with taxpayers getting the advance payment incorrectly, because they never provided a correct status at the CTC portal. Or, things changed for them. That always an issue with expecting taxpayers to follow some plan, and for trying to give out money in advance of finding out who really is eligible for it.

There is a provision to attempt to claw back CTC overpayments, but it's a very high bar. For this and the EIP, it appears the US taxpayer is out a lot of money that didn't go how Congress intended. It's not the first time and it won't be the last.

[FRANKR2]

"Married couples filing separately are only eligible for $1800 and $1500, respectfully."  That is not how the software treats it. I know a married couple that filed married seperate in 2020. The mother took 2 dependent children. The father took 0 dependents. The mother received $3000 in Advanced Child Credit in 2021 and $4200 in EIP payments. The father received $0 in Advanced Child Credit and $1400 in EIP payments. In 2021.  The IRS has stated that AdvCTC Letter 6419 MUST match what is reported by the tax payer. The mother received IRS letter 6419 with $3000 and 2 eligible dependents and a EIP letter showing $4200. The father received no AdvCTC letter 6419 because he had $0 Advanced Child Credit and a EIP letter reporting $1400. For the 2021 tax year the father is going to take the 2 dependent children. When he puts $0 amount in for Advanced Child Credit the software gives him a credit of $3000 and when he puts in $1400 reported for the EIP it gives him an EIP credit of $2800. For the 2021 tax year the mother is claiming 0 dependents. When she puts in $3000 for Advanced Child Credit from her AdvCTC letter 6419 the IRS  is only "clawing back" $1100 of the $3000 Advanced payment based on her wages. And she does not have to pay any EIP payments back. No where does it ask when your filing married seperate if your spouse received any Advanced Child Credit or EIP payments. No where in the IRS instructions does it say Married filing seperate couples are to add their payments together. It does say if Married filing joint to add their payments together.