I will assume the reason your son was NOT a dependent in 2019 is that he worked and made more than $4250. In 2020, I will assume he made less than $4300 so he could be claimed as a dependent again. I further assume he was not in school
if that is the case, the money sent is CORRECT and you and your son keep all monies . Here is why:
the conversation in March, 2020 between Congress and the IRS went something like this:
Congress: Send out $1200 to every taxpayer and base the calculation on the 2020 tax return
IRS:: but 2020 is not over yet, we don’t know what people will submit on their 2020 tax returns
Congress: then use their 2019 tax return (and if that is not available use 2018) to determine the stimulus payments
IRS: what happens if we send out this money and when we analyze the 2020 tax return we realize we sent too much?
Congress: not to worry we will write the law so that if anyone gets more money than their 2020 tax return says they are entitled to, they won’t have to return it! Line 30 cannot be negative!
IRS: Brilliant and Yes Sir, we will send out the checks.
Then in December, 2020
Congress: do it again, same rules but use $600
- Congress sweeps its database and sees Son filed in 2019 so Son receives $1200 for the 1st stimulus and $600 for the 2nd as he was a taxpayer in 2019 (and not claimed by parents). The IRS sent out the money (see the conversation above!) as Congress instructed!
- Then Son goes to file his 2020 tax return and it says he is not eligible for any money because on his 2020 tax return he is a dependent of Dad. But he is not required to return the stimulus money because Congress passed the rule that way.
- Dad receives $1200 and $600 for the 1st two stimulus checks and nothing for the Son because taxpayers do not get money for children over the age of 16. Dad didn't get anything extra so things are good!
Then we get to the 3rd Stimulus
Congress: we are going to do this again! But this time we are changing the rules! Each taxpayer receives $1400 for himself and $1400 for each dependent; base it on the 2021 tax return!
IRS: But no one has filed their 2021 tax return, what do we do?
Congress: Estimate what they are due based on their 2020 tax return and if that is not available use 2019. And we will do the same thing we did before, if the IRS sends out more money than the 2021 tax return indicates they are entitled to, no one has to return the extra money!!!
IRS: Brilliant again and Yes, sir!
- Dad lists Son on his 2020 tax return as a dependent
- IRS sweeps its records to send out the 3rd stimulus and sees that Dad has listed Son in 2020 so it sends Dad $2800.
- IRS doesn’t find a 2020 record for Son (because Son either does not need to file or filed after the data sweep occurred) , so it uses 2019 and send Son $1400.
- That aligns to the instructions Congress gave the IRS!!
Next year when 2021 tax returns are completed and let’s say Son is working again and not a dependent of Dad, his tax return will show he is entitled to $1400, which he received already. Son and IRS are even.
Dad’s tax return will reflect he is only entitled to $1400 (because Son is not a dependent in 2021) , yet Dad received $2800 for Stimulus 3. But Congress stated no one will be asked to return extra money, so it is Dad’s to keep!
There is nothing to return to the IRS (unless you do so voluntarily!)
CASH THE CHECK
does that make sense?
