Switching MFJ to MFS and ACTC & 3rd stimulus allocation

[maymay800]

Past: I filed MFJ in 2020 with 2 kids (>16 yrs).

Current: 2021 will be MFS. The 2 kids will be on my tax return & husband w no kids on his RTN.

Regarding the ACTC:

Do I claim what is on IRS LTR 6419 for myself on my tax return or combine both my husband IRS LTR 6419 onto mine as well? That was what I initially did, it makes sense to do so. I received 3k, so I put 3 k down since I am claiming my 2 kids on my return. Then on my husband tax return, I put $0 on his ACTC because I already put it on my return. 

BUT what if IRS wants the husband's RTN to show the ACTC because he received the IRS LTR 6419? 

SECOND option that I am puzzled on:

If I claimed according to what the IRS LTR 6419 says, this means, even though I (both husband and I) received 3k, I will only put $1500 on my return per the IRS LTR 6419 (this will result in a larger credit which to me looks incorrect)...and.....for my husband return with no kids, I would put down that he received $1500 even through he is not claiming any kids. This will make him owe more tax liability, which also looks odd. 

Regarding the 3rd stimulus:

Same issue here, MFS w 2 kids, I received 1400x3= $4200 in 3rd stimulus, but the IRS LTR says I received $2800 because it's half of what my 2020 filing status was MFJ with 2 kids. ($5600/2).

Do I put $2800 or $4200? 

What I don't want to see happening is that IF I'm filing correctly by claiming the correct amount received in ACTC of 3k and $4200 on my return and file $0 in ACTC and $1400 on my husband tax return, is I do not want to see the IRS adjust my husband tax return to show that he received $1500 in ACTC on his tax return which will increase his tax liability and no adjustment made on my tax return. 

Does this make sense to anyone? Can anyone answer this concern?

[MaryK4]

You must enter exactly the amount on your Letter 6419.  If you are filing separate returns, the IRS will calculate your Child Tax Credit based on the amount YOU received (or half in your case because you filed joint last year).  The balance of the credit is based on how many children you actually claim.

Once again because you are filing separately, on the other return, the IRS wants to know how much he received.  If he does not claim any children, he may have to pay back the advance he received. Separate returns are treated as separate returns.

Regardless, if you do not put the correct amount from Letter 6419 on your tax return, expect a delay in the processing of your tax refund.  

[maymay800]

Thank you for clarifying the CTC allocation. 

What about the Stimulus?

My family of 4 in 2020 received 3rd stimulus of $1400 each. 

since I am filing MFS with me and my 2 kids, should I also put $2800 as the IRS letter says? or leave it as $4200 to be on the safe side. My husband return has no dependent so it will show $1400 for himself using the recovery credit calculation statement. 

[AmyC]

Family of 4 x $1400 = $5600. So you each got $2,800. Put what your letters say. Be sure you don't have child care, rental losses, college, expenses or the other items that are lost when you file MFS, including income limitations. I suggest you finish your husband's return and compare it to yours along with a joint return. Here is a great article by Turbo Tax on MFJ vs MFS. Also, state taxes can really vary so be sure to include those changes in your thought process. 

[maymay800]

Thank you.

I think following what the letters says is fine but I'm skeptical that its the right way as well. 

If I file both returns per what the letters says, I will be getting credits that are not correct, like my return will have an extra $1400 stimulus I already received and by claiming half of the $1500 of the CTC, I am getting more CTC as well.

While my husband RTN will have a tax liability for owing CTC.  This just doesn't look right. 

it may look like a wash but the only thing is the husband return will not show that he owes back the stimulus. Do you see where I'm getting at?  

Any other response from anyone else? 

[AmyC]

That is correct, if you don't have kids but got the income, you may have to pay some or all of it back. The amounts are reduced at these income levels:

For single and MFS, $80,000

For HOH                   $100,000

For MFJ, QW            $120,000

The stimulus may not have to be paid back, depending on the income, different limits which you must meet.

I am sure there will be tax court cases to tighten up any loose ends Congress forgot, there always is.