@Anonymous_ @VolvoGirl I have this itching feeling I missed something. Please check me on the below. Thanks.
@guill a few things really are not that well clarified in your post. I'm assuming a lot, and chances are one of those assumptions are flat out wrong. So it needs to be clarified. Here's how I understand things.
I am helping a friend with her taxes and last year she claimed her sister
I assume that as of Dec 31 2020 (twenty twenty) that your friend's sister was younger than your friend, and was under the age of 19 on that date.
she was supporting her and had her minor sister living with her in 2020
I assume "she" is your friend and "her minor sister" is the same person referred to above.
She is now planning on filing her own taxes for 2021
II assume "she" is the younger sister of your friend.
and my friend wanted to claim only her daughter,
Who's daughter? The daughter of your friend? Or the newborn daughter of your friend's sister? I assume the newborn.
although she did not receive the stimulus for her daughter nor any of the CTC payments.
Again, I assume we're talking about the sister who is the mother of the newborn, and that the mother of the newborn is the younger sister of your friend you are helping. (my head hurts!)
She received the IRS documents showing what she did receive, although it was for her sister and not her daughter.
Who is "her" in the phrase "her daughter"? I assume the younger sister of your friend you are helping. Nobody would have received anything yet, for the newborn since they were born in 2021 and the IRS does not know the newborn exists until the newborn has a social security number and a tax return is filed that shows the newborn as a dependent.
Now lets look at the possibilities, assuming that all of my assumptions above are correct. (I bet at least one of my assumptions is wrong.)
Since the mother of the newborn was under the age of 19 on Dec 31 of the tax year, the earnings of the new mother do not matter. But was does matter is support.
-If the mother of the newborn provided *more than* 50% of her own support for the entire 2021 tax year, then nobody qualifies to claim her as a dependent on their tax return.
- If the mother was legally married on or before Dec 31 of the tax year, then nobody qualifies to claim her as a dependent on their tax return. (Special exceptions apply, but none of those exceptions apply that I see based on the scenario provided as I understand it based on my assumptions above.)
For the mother "providing more than 50% of her own support" for the entire tax year, 3rd party income received by the mother does not count for this. For example, food stamps, welfare and WIC income are not counted for the mother providing her own support. But income earned by the mother, as well as unemployment paid to the mother does count.
If anyone can and does claim the mother as a dependent, then when the mother files her own tax return:
- The mother can not claim "any" dependents.
- The mother must select the option for "I can be claimed on someone else's tax return" when the mother is completing her own tax return.
Now for the newborn.
If mom files a tax return and is not being claimed as a dependent, then:
- Mom has first dibs on claiming the newborn over the older sister.It's not up for debate either, as that's the way it is is the IRS pubs.
The father of the child also has rights, and "may" qualify to claim the newborn as their dependent if certain conditions are met. So dad may have 2nd dibs on that.
- If mom is being claimed as a dependent, then the father of the child "may" have 1st dibs if certain conditions are met. If dad passes, doesn't qualify, or doesn't want to claim the child even though they may qualify, then the older sister can claim both the mother and the newborn as a dependent.
Any CTC due will be included in any 2021 tax refund received by the tax filer that qualifies to receive it.
