Adult dependent got extra stimulus check

[Sagertarp]

This year I claimed my adult son (20 years old) as a dependent because he lived with me and did not work in 2020.   I provided all his living expenses.  I got $1400 extra in my stimulus payment for claiming him as a dependent but just yesterday he got a separate check for $1400 from the IRS.    He did work in 2019 and got the previous stimulus checks.  I did not claim him as a dependent  for the 2019 tax year.  Should he cash the check or send it back?  

[NCperson]

let's look at this closely

Why did you not claim him in 2019? That will determine how to approach this situation.

my critical question is in 2019 COULD YOU claim him and did you simply chose not to? that is your right, but your response will effect how I respond to how this situation occurred and whether the money should be returned.  it may legally belong to your son. 

[Sagertarp]

In 2019 he made more than the $4300 which would disqualify me from claiming him as an adult dependent.  His gross income must be less than the personal exemption amount for me to claim him according to what I read.  

[VolvoGirl]

How old was he Dec 31, 2019?  Was he a full time student?  Even if he made more than 4,200 he might still qualify as a dependent.

[NCperson · Accepted solution]

I will assume the reason your son was NOT a dependent in 2019 is that he worked and made more than $4250.  In 2020, I will assume he made less than $4300 so he could be claimed as a dependent again.  I further assume he was not in  school

if that is the case, the money sent is CORRECT and you and your son keep all monies .  Here is why: 

the conversation in March, 2020 between Congress and the IRS went something like this:

Congress: Send out $1200 to every taxpayer and base the calculation on the 2020 tax return

IRS:: but 2020 is not over yet, we don’t know what people will submit on their 2020 tax returns

Congress: then use their 2019 tax return (and if that is not available use 2018) to determine the stimulus payments

IRS: what happens if we send out this money and when we analyze the 2020 tax return we realize we sent too much?

Congress: not to worry we will write the law so that if anyone gets more money than their  2020 tax return says they are entitled to, they won’t have to return it! Line 30 cannot be negative! 

IRS: Brilliant and Yes Sir, we will send out the checks.

Then in December, 2020

Congress: do it again, same rules but use $600

• Congress sweeps its database and sees Son filed in 2019 so Son receives $1200 for the 1st stimulus and $600 for the 2nd as he was a taxpayer in 2019 (and not claimed by parents).   The IRS sent out the money (see the conversation above!) as Congress instructed!
• Then Son goes to file his 2020 tax return and it says he is not eligible for any money because on his 2020 tax return he is a dependent of Dad.  But he is not required to return the stimulus money because Congress passed the rule that way. 
• Dad receives $1200 and $600 for the 1st two stimulus checks and nothing for the Son because taxpayers do not get money for children over the age of 16.  Dad didn't get anything extra so things are good! 

Then we get to the 3rd Stimulus

Congress: we are going to do this again!  But this time we are changing the rules! Each taxpayer receives $1400 for himself and $1400 for each dependent; base it on the 2021 tax return!

IRS: But no one has filed their 2021 tax return, what do we do?

Congress: Estimate what they are due based on their 2020 tax return and if that is not available use 2019.  And we will do the same thing we did before, if the IRS sends out more money than the 2021 tax return indicates they are entitled to, no one has to return the extra money!!!

IRS: Brilliant again and Yes, sir! 

• Dad lists Son on his 2020 tax return as a dependent
• IRS sweeps its records to send out the 3rd stimulus and sees that Dad has listed Son in 2020 so it sends Dad $2800. 
• IRS doesn’t find a 2020 record for Son (because Son either does not need to file or filed after the data sweep occurred) , so it uses 2019 and send Son $1400. 
• That aligns to the instructions Congress gave the IRS!!

Next year when 2021 tax returns are completed and let’s say Son is working again and not a dependent of Dad, his tax return will show he is entitled to $1400, which he received already. Son and IRS are even.

Dad’s tax return will reflect he is only entitled to $1400 (because Son is not a dependent in 2021) , yet Dad received $2800 for Stimulus 3.  But Congress stated no one will be asked to return extra money, so it is Dad’s to keep!

There is nothing to return to the IRS (unless you do so voluntarily!)

CASH THE CHECK

does that make sense?

[agaran]

I'm in the same boat.  My son is an adult, and in 2019 I didn't claim him as a dependent because 1.  He is a adult, 2. he made more than $4,000 3.  He wasn't a full-time student.  This year filing  2020,  I claimed him as a dependant, 1. He was a full-time student 2.  I provided more than 50%.  3.  He only less than $4,000 for that year.   I did not file my taxes until the beginning of May since the deadline was extended to May 17.  In March my son received a $1400 and in March I received my $1400 plus my other dependants not including my son.  Once I filed, I received an additional $1400.  My assumption is that they went off my son and mine 2019 taxes and that's why we got our Third Stimulus Check because they didn't have my 2020 yet.  Now that I claimed him for 2020 as a dependent they sent me a $1400 stimulus check, even though one was already received by my son in March.  Since they sent it to me through direct deposit it been cashed.  Is this an Extra, and I need to wirte an IRS a check for $1400? if not, is there any IRS documentation stating this?

Thank You