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.
