Deductions & credits

Starting from zero and assuming no tax return had been filed:

  1. You can claim your son as a dependent if he earned less than $4300 AND you provided more than half his support.  This is a $500 credit to you, but no stimulus rebate. 
  2. You can claim your grandson as a "qualifying relative dependent" if his income is less than $4300 and you provided more than half his support.  This is a $500 credit to you.  To claim him as a "qualifying child dependent", he would have to live in your home more than half the year. This would be a $2000 credit, plus possibly a stimulus rebate of $1000.  
  3. You can claim your daughter in law as a dependent only if she had less than $4300 of taxable income, AND you provided more than half her support, AND she lived in your home the entire year.  This would be a $500 credit and no rebate. 

Now, the fact that your son already filed a joint return bars you from claiming him or his wife as dependents, and the fact that he claimed your grandson bars you from claiming your grandson.  Before you could claim your son as a dependent, he would have to file an amended tax return to change from "married filing jointly" to "married filing separately" and to remove his son (because someone who is a dependent can't claim a dependent), and the deadline to do this is May 17, 2021.  Then, his wife would also file as "married filing separately" if she had income to report.

 

No one can tell how this would work out without testing your exact circumstances, but for 2020, the odds are that they get much more money filing the way they did.  As is, even with no income, they are eligible for $2900 in round 1 stimulus and $2300 in round 2 stimulus (or rebate, if they did not get stimulus checks) and $4200 in round 3 stimulus payments, plus possibly some earned income credit.   You would not get any round 1 or round 2 rebate by claiming the adults, because dependents over age 16 are excluded.  You would get the $1400 round 3 payment for each dependent you claimed, but they would not get the payments.  Plus, if you change things now, and there are extra or duplicate payments made because different tax returns are crossing in the system, the extra or duplicate payments would have to be repaid.  

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