Tax stimulus for my parents - claiming on 2020 ret...
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awesome1
Returning Member

Tax stimulus for my parents - claiming on 2020 return

I have claimed my parents as dependents on the 2019 returns since they lived with me in 2019. For this reason my parents did not receive the stimulus check in the amount of $2400 combined. On hindsight, if I did not claim them as a dependent they would have received the stimulus payment. Would it make sense to not claim them as a dependent on the 2020 return? My parents would file individual return even though they are living with me and they have no income or social security to report. I am assuming they should be able to claim the stimulus this way. Anything that I am missing? 

10 Replies
Mike9241
Level 6

Tax stimulus for my parents - claiming on 2020 return

you are missing the fact that they are your dependents (qualifying relative). as such they would have to indicate that on their return which disqualifies them from receiving the stimulus (too old). it does not matter whether you claim them or not. 

Qualifying Relative
1) they're related to you
2) gross income for 2020 less than $4,300
3) you provide over ½ his/her support

Critter-3
Level 15

Tax stimulus for my parents - claiming on 2020 return

This is going to be a real issue this year I fear ...where folks are not going to claim legal dependents so they can get the stimulus checks illegally.  

 

The law states that if you are legally a dependent then you are not legally eligible for the stimulus check even if they are not claimed as a dependent.  The TT program specifically asks  CAN you be claimed as a dependent and if you answer yes then it ask if you WILL be claimed.  The first question eliminates your ability to get the stimulus credit  and the second will allow you to get the non refundable portion of the education credit.  

 

 

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent 

 

 

NCperson
Level 15

Tax stimulus for my parents - claiming on 2020 return

@Critter-3 - totally agree with you and it may be exacerbated by the 2nd stimulus payment which is also to be based on 2020 information. 

 

I will re-emphasize your point for any one else who read this. (in fact the IRS FAQ specifically uses the example of parents that may be a dependent of their adult child)

 

if you MAY BE be claimed by someone else, you are not eligible for the stimulus.   it doesn't matter whether that someone else doesn't claim you.  

 

here is the IRS FAQ: 

 

 

A1. Generally, if you are a U.S. citizen or U.S. resident alien, you will receive an Economic Impact Payment of $1,200  ($2,400  for a joint return) if you (and your spouse if filing a joint return)  are not a dependent of another taxpayer and have a Social Security number valid for employment and your adjusted gross income (AGI) does not exceed:

  • $150,000  if married and filing a joint return
  • $112,500 if filing as  head of household or
  • $75,000  for eligible individuals using any other filing status
    Your payment will be reduced by 5% of  the amount by which your AGI exceeds the applicable threshold above.

You are not eligible for a payment if any of the following apply to you:

  • You may be claimed as a dependent on another taxpayer’s return (for example, a child or student who may be claimed on a parent’s return or a dependent parent who may be claimed on an adult child’s return).
  • You do not have a Social Security number that is valid for employment.
  • You are a nonresident alien.
    The following are also not eligible: a deceased individual or an estate or trust.
NCperson
Level 15

Tax stimulus for my parents - claiming on 2020 return

@Mike9241 - and the gross income test excludes social security....

awesome1
Returning Member

Tax stimulus for my parents - claiming on 2020 return

Thanks for the clarifications. The idea is not to do anything illegal but make use of the benefit as long as it is legally applicable. Also, my parents are not dependents due to a financial need. They are citizens of a foreign country and permanent residents of USA. We have only processed for their green cards recently and they are currently living with us. I wanted to make sure that we are not leaving any benefits that we should otherwise make use of. Does this situation make any difference or are my parents still considered my dependents from a tax standpoint?

xmasbaby0
Level 15

Tax stimulus for my parents - claiming on 2020 return

In an earlier reply you were given an IRS  tool to use to determine who can be your dependent--did you use it?

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Critter-3
Level 15

Tax stimulus for my parents - claiming on 2020 return

Here are the qualifying relative tests ... if they pass all of them you can claim them as dependents: 

 

Qualifying relative

• They don't have to be related to you (despite the name).

• They cannot be claimed as a dependent by someone else.

They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.

• They are not filing a joint return with their spouse.

• They lived with you the entire year.

They made less than $4300  (not counting Social Security)

You provided more than half of their financial support. More info

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them.

Mike9241
Level 6

Tax stimulus for my parents - claiming on 2020 return

I have claimed my parents as dependents on the 2019 returns since they lived with me in 2019. For this reason my parents did not receive the stimulus check in the amount of $2400 combined. On hindsight, if I did not claim them as a dependent they would have received the stimulus payment. Would it make sense to not claim them as a dependent on the 2020 return? My parents would file individual return even though they are living with me and they have no income or social security to report.

 

 

you say they have no income so who is supporting them?

they're related so you meet 1 of the tests.

they have no income so their AGI must be $0. this below the threshold of $4,300 so a 2nd test is met.

since if they're living with you, you are probably supporting them so a third test is met.

meeting all these tests means they are your dependent (qualifying relative)

 

we do not know what the IRS will do, if anything,  to taxpayers it catches who deliberately falsify their dependency status to get the stimulus. 

 

 

the IRS has said this

    The stimulus payment is intended to be an advance payment against an actual credit you will compute on your 2020 tax return. If your advance payment is LESS than what you’re owed when you compute your 2020 return, you’ll get the excess as a credit on that return. But if your advance credit is GREATER than what you’re actually owed come the filing of your 2020 return, there appears to be no mechanism to either 1) repay the excess payment, or 2) recognize the excess amount as income

 

so the IRS won't ask for the overpayment back but that doesn't mean they couldn't prosecute someone for filing a fraudulent return. nothing has been written about this possibility.     

 

awesome1
Returning Member

Tax stimulus for my parents - claiming on 2020 return

Thanks. Again, the idea is not to provide any false information, only to understand what can be legally claimed. Based on the links, they are my dependents, and hence not applicable for the stimulus.

NCperson
Level 15

Tax stimulus for my parents - claiming on 2020 return

@awesome1 - agreed - they are your dependents.   For others reading through this thread: the critical nuance is that if you CAN claim your parents, and decide not to claim them for whatever reason (which the IRS is okay with) , they are not eligible for the stimulus. 

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