Almost hate to post this question. It's almost certainly been posted and discussed (I searched the posts but didn't see it). Or maybe it's common tax prep knowledge that for some reason I've not caught on to yet. Either way, here it is... MFJ Client earned too much income in 2020 to qualify for 2020 stimulus payments. Client did not receive advanced payments in 2020 and cannot claim recovery credit on 2020 1040. Client has an 18 year old son who qualifies as a dependent. The dependent son worked a part-time job and earned $1,400 (zero FWH) in 2020. Client qualifies to claim the $500 Other Dependent Credit for the son. Although not required to file a 2020 1040, the son could conceivably file a 1040 and claim the recovery credit of $1,800. The Client would not claim the $500 credit. Net family household effect - $1,300. I'm sure this strategy is being employed by many tax preparers but I'm not finding any clarity as to whether or not this is permissible. It seems that if the child could qualify as a dependent on the parents' tax return, the stimulus would not be allowed if the child should file his own return even if claiming himself. So the question is, can the child file the 2020 1040, claim himself and legally claim the Recovery Credit?
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You have clarity. You answered your own question.
Originally posted by Client has an 18 year old son who qualifies as a dependent. Client qualifies to claim the $500 Other Dependent Credit for the son. I'm sure this strategy is being employed by many tax preparers but I'm not finding any clarity as to whether or not this is permissible. [B -
Originally posted by Hoosier View Post
Correct, if the child qualifies as a dependent, the stimulus is not allowed.
The child is NOT able to 'claim himself' if he is ABLE to be claimed as a dependent. Even if the parents don't actually claim him, he MUST say that he is ABLE to be claimed as a dependent.
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