3rd Stimulus Payment

[lizzarr]

When I filed my 2019 taxes I claimed my 17 year old son as a dependent. I have not yet filed my 2020 taxes. I received $2800 a few weeks ago (1400 for me and 1400 for him). My son moved out in 2020 so when I file my taxes I will not be claiming him as a dependent. He has already filed his 2020 taxes and checked that he was not a dependent and received his refund a couple of weeks ago. Today he calls me to tell me he got the 3rd payment in the amount of $1400 direct deposited into his account. What is going to happen when I file my taxes? Will they take the money that they already gave me back? Or will they take it from him since he should not have gotten it? I have read some things that say they will not be recovering overpayments. However I have since spent the money they gave me for the 3rd payment. Should I have him hold onto it?

[MinhT1]

Your son received the third stimulus because he is eligible for it.

You received the third stimulus for him because the IRS based the amount on your 2019 tax return where he was your dependent.

In this case, you can both keep the stimulus payment and nobody has to repay it.

The IRS says in this document:

If a taxpayer's payment is less than the full amount and is based on their 2019 return, they may qualify for a supplemental payment after they file their 2020 return. The IRS will automatically reevaluate their eligibility. If the agency determines that they are entitled to a larger payment or the full payment, it will send them a supplemental payment covering the difference between what they originally received and the larger amount. If the re-evaluated amount is smaller, they won't need to pay back the difference. Aside from filing a 2020 tax return, no action is needed on their part.

[lizzarr]

So even when I complete my 2020 return I will not have to pay anything back? Or when I file 2021 will i be penalized? 

[LenaH]

No, you will not be penalized or be liable to pay it back. Per the IRS, there is no provision in the law that would require individuals who qualify for a Third Economic Impact Payment or an additional 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.

Questions and Answers about the Third Economic Impact Payment — Topic H: Reconciling on Your 2021 Ta...

@lizzarr