Recovery Rebate Credit for EIP 3 for Dependent

[Steve Stark]

My wife and I are claiming my elderly Mother as a dependent for the first time on our 2021 filing. All is clear on the rules for that, but I don't know how to answer the question, late in the stop-by-step process, about letter 6475. My wife and I both received letters 6475 correctly stating we received our full EIP 3 ($1400+$1400=2800).

However, the program wants to file for a credit of $1400 for my Dependent Mother even though she received the actual EIP 3 payment last year. How do I account for this when the question asked is: does the letters 6475 for my wife and I match the $4200 amount  we are "eligible" for. The truthful answer is "No", but that does not properly account for the fact that our dependent received her own payment.

Anyone have a way to handle this?

Regards,

Steve

[JamesG1 · Accepted solution]

If you report, $4,200 and show a $0 Recovery Rebate Credit on line 30 of the Federal 1040 tax return, you likely will not receive the third stimulus payment.

The IRS intent seems to be for you to report only the letter 6475 information for you and your spouse.  This IRS FAQ states:

For example, parents of a child born in 2021 – or parents and guardians who added a new qualifying dependent to their family in 2021 – did not receive a third-round Economic Impact Payment for that dependent and may be eligible to receive up to $1,400 for the dependent by claiming the Recovery Rebate Credit.

If you report $2,800 and show a $1,400 Recovery Rebate Credit on line 30 of the Federal 1040 tax return, you may receive the third stimulus payment from the IRS.  This IRS FAQ states:

No, there is no provision in the law that would require individuals who qualified for, and received, a third-round Economic Impact Payment (including a plus-up payment) based on their 2020 or 2019 information, to pay back all or part of the payment if, based on the information reported on their 2021 tax returns, they would have qualified for a lesser amount.

The qualifications for the third stimulus payment are:

• you were a U.S. citizen or U.S. resident alien in 2021, 
• you were not a dependent of another taxpayer’s 2020 tax return, and 
• you have a Social Security number.

There are income limitations are if your adjusted gross income (AGI) is more than:

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 if filing as a single or as married filing separately. 

[Steve Stark]

Thank you, James...

-Steve

[JM1031]

@JamesG1 

Saw your answer on this for another person. Hope you can help me here.

1. Collge-going daughter (over 18 years of age) dependent on the joint return with my spouse for 2019 and 2020. 

2. When I filed 2020 return, I got a stimulus payment in my bank account which was equivalent to $1800 each for self and spouse for 2019 and $1400 each for self, spouse, and daughter for 2020. 

3. Is this correct? Please confirm. I read that dependent adult did not qualify in 2019 but did qualify for the 2020 payment. 

4. Did not receive letter 6475 or 1444c for any of us in 2019, 2020 or 2021. 

5. For 2021 filing, daughter is independent and filed on her own. Answered YES to the question in Turbotax on whether she received stimulus payment and if it was the same as what was stated on 6475 (1444c?) . Thought that was correct because, though technically she did not receive any payment in 2021, her portion was sent to my account.  Is this correct or does she need to claim EIP3?

6. Now I have a problem in filing for 2021 - Federal review (joint return with spouse - no dependent) -  Turbotax Federal review shows an error on Recovery Rebate Credit worksheet. 

    a. Line 12 shows 2800 (for the two of us). Line 13 is empty. Should I say it as 2800 as that is technically the portion for self and spouse?

b Or should I say 4200 and then ask my daughter to re-file 2021 saying she did not receive any stimulus?  Also, anything to be entered on Line 14?

Can you kindly answer questions 5 and 6? Thank you so much in advance. 

[DianeW777]

Regarding the third economic impact payment (3EIP) of $1,400 each here is an answer from the IRS website. Your daughter is eligible to enter on her return that she received nothing. And she is entitled to the $1,400 even though you received it for her last year. On your tax return you would enter what you actually received ($4,200).

• If you were claimed as a dependent on someone else’s tax return for 2020, you were not eligible for the third-round Economic Impact Payment. If no one can claim you as a dependent for 2021 and you are otherwise eligible, you can claim the 2021 Recovery Rebate Credit, and must file a 2021 tax return to claim the credit.
  • IRS FAQs 3EIP

You are not required to pay back the credit you received for your daughter.

• No, there is no provision in the law that would require individuals who qualified for, and received, a third-round Economic Impact Payment (including a plus-up payment) based on their 2020 or 2019 information, to pay back all or part of the payment if, based on the information reported on their 2021 tax returns, they would have qualified for a lesser amount.
  • IRS FAQs 3EIP Reconciling 2021

Reconcile both tax returns with the accurate information.  She did not receive the third stimulus and is entitled to it.  You received a payment for her because she was your dependent in 2020, and you do not have to pay it back..  It's a win-win!