Recovery Rebate Credit Eligibility

[JudyB]

Client filed with her 24 yr old (DOB 6/11/96) as qualifying her for HOH.   I said I would check as he received a notice (Letter 6473) stating he may be eligible. 

Is he disqualified for the RRC. He is in essence not a dependent ( rather a qualifier that he lives at home, and meets all Qualifications for HOH).   If he is eligible what is the work around for this situation.

Thanks 

Judy

[TaxGuyBill]

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@JudyB wrote:

He is in essence not a dependent

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What does that mean?

If the child is eligible to be claimed as dependent, no, the child does not qualify for the Recovery Rebate.

If the child is NOT eligible to be claimed as a dependent, are you sure the client qualifies as Head of Household? The client would not qualify unless the child is disabled.

https://www.irs.gov/publications/p501#en_US_2020_publink1000220823

[qbteachmt]

Are you asking about RRC 1, RRC 2, or RRC 3? Have you read the IRS guidance for everything you asked (HOH, dependency, support, separate income, all three ERC payments) and have you confirmed if either of these people already got advanced payments of the funds (even if it turns out there is no eligibility)?

No one on the internet can answer all of these questions for you. You have to do the due diligence.

[JudyB]

I do not want you to think that I do not do due diligence. I am talking about RR3. With his being on his moms HOH status ( and yes, he qualifies), he still received a letter stating that he may be eligible. I am questioning if I have missed something by saying that he is NOT eligible because his mom claimed him.   I have read and re-read and obviously missed something

Thank you for your input Appreciate it 

Judy

[BobKamman]

Is he receiving Social Security or SSI?  Did he even file his own tax return?  Perhaps the letter was  generated for reasons unrelated to income tax.  

[JudyB]

Funny that did not come out the way I thought, possibly a spell check error. I will be more diligent in rereading before sending.

This Child qualifies as a Qualifying Person for HOH purposes.  There is reference to the qualification (Do you have a Qualifying child but NOT a dependent which qualifies you for HOH )

So I am going with the fact that this person is NOT a dependent from above explanation. Correct me if I am off base on this. Thanks 

Thank you for your reply and appreciate the input. 

Judy

[JudyB]

He is a qualifying person for HOH purposes.   States on return "Qual child bot NOT a dependent"

[qbteachmt]

"So I am going with the fact that this person is NOT a dependent from above explanation. Correct me if I am off base on this. Thanks"

The eligibility for #3 are different than the others. The letter would be triggered as a "might be able to" condition, based on whatever tax filing(s) existed for that name at the time the RRC was projected and sent.

Don't go from the above explanation. Work through the IRS wizards and eligibility.

The third Stimulus 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/irs-is-issuing-third-round-of-economic-impact-payments
https://www.irs.gov/coronavirus/third-economic-impact-payment
https://www.irs.gov/newsroom/more-economic-impact-payments-set-for-disbursement-in-coming-days-taxpa...
https://www.irs.gov/newsroom/more-details-about-the-third-round-of-economic-impact-payments

[TaxGuyBill]

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@JudyB wrote:

With his being on his moms HOH status ( and yes, he qualifies),

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Under which of the categories does he make his mom qualify (from the link I provided above)?

[TaxGuyBill]

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@JudyB wrote:

He is a qualifying person for HOH purposes.   States on return "Qual child bot NOT a dependent"

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Just because the tax return was prepared that way doesn't necessarily mean it is accurate.  What situation would that occur?  Why is the child NOT a dependent?

[HitEmTrue]

Someone could be a qualifying child, EXCEPT for the citizenship test, and still be a qualifying person for HOH purposes.   Unless he is disabled, I don't see how he could fall into this category.

That leaves the possibility of being a qualifying relative.  Taxpayer must be able to claim a qualifying relative as a dependent for that person to be a qualifying person for HOH purposes.

See Tables 4 and 5 of Pub 501.