I have an adult dependent (child) that is not required to file taxes for 2020 but will in order to file for the COVID stimulus payments. While there is no tax deduction for me for this child (not disabled), can I still include this child as a dependent in order to positively impact my MAGI calculation for the Affordable Care Act credit in 2020? The child had only dividend income for 2020. If I can include the child would I need to include that include on my tax filing and would they also need to record that they were claimed by someone else?
It depends. You did not say how old your child was. Assuming your child is over age 18, of if a full-time student, over age 23, then you can claim him or her as your dependent if:
- Household Member or Relationship. The person must live with you for the whole year (excluding temporary absences) except for certain relatives. You may claim the following persons even if they did not live with you for the whole year: child, parent, brother/sister, stepparent, stepchild, step brother/sister, half-brother/half-sister, grandparent, grandchild, son-in-law/daughter-in-law, mother-in-law/father-in-law, and/or brother-in-law/sister-in-law (cousins do not meet the relationship test).
- Gross Income. Your relative made less than $4,300.
- Support. You must have provided more than half of your child’s support.
Youy child would not be eligible for a stimulus payment if you are claiming him or her.
The IRS says you are not eligible for the Recovery Rebate Credit if any of the following applies:
- You may be claimed as a dependent on another taxpayer’s 2020 return (for example, a child or student who may be claimed on a parent’s return or a dependent parent who may be claimed on an adult child’s return).
- You do not have a Social Security number that is valid for employment issued before the due date of your 2020 tax return (including extensions). Some exceptions apply for those who file married filing jointly where only one spouse must have a valid Social Security number to claim RRC.
- You are a nonresident alien.
- You are an estate or trust.
Apologies...I probably didn't do a very good job trying to ask for direction/interpretation. There are actually at least two questions/issues n my circumstance:
- I have an adult child currently living @ home. The child is 29 and out of work. And thus, I have been providing at least 50% of the child's support.
- In TurboTax, my tax history brought the child forward on import but due to age and no longer in school...did not qualify as a dependent as "child tax credit" but did qualify as "credit for other dependents" (in the DEPENDENTS section). I assumed that designation is related to the MAGI family calculation on any premiums to be returned on the ACA health insurance plan (that only I was on for 4 months in 2020) as well as EIC. If I change the child's status by stating that I did not provide more than 50% of support; all but a nominal amount of my ACA premium reimbursement and all of my EIC are eliminated from my return (I am retired with all income via SSA and other sources).
- The first question - Is it appropriate that the adult child can still count toward the family headcount credit on FORM 8962 and for the EIC while being too old for child tax credit?
- 2nd question - Assuming it is appropriate that the adult child's inclusion on my tax filing for those purposes, what is in play on the COVID stimulus payments for this adult child?
- This child had zero adjusted gross income for 2020 and has not received any stimulus payments for 2020 at this point.
- If it appropriate for this adult child to file the federal tax form, with zero taxable income in order to receive the appropriate stimulus amount, is it appropriate for this individual to be also included (with their tax id) on my federal tax form for credit as "credit for other dependents"?
If it is a question of one or the other, there is more benefit for receipt of the stimulus for the child rather than the small EIC and return of ACA premium payment via my tax filing.
Yes, you can count any child regardless of age in your household for form 8962 as long as they are a dependent on your tax return. However, he does not qualify as a dependent for the Earned Income Credit since he is not a qualifying child. He is not under 24 and a full-time student.
For stimulus payments the child cannot be a claimed on someone else's 2020 tax return and claim a stimulus payment.
Further, the question he will be asked on his tax return is "Can [he] be claimed on someone else's tax return?" Not "Will he be claimed...?
If he meets the qualifications to be claimed as a dependent, whether or not you actually claim him, he would mark the box appropriately and be disqualified from any stimulus payments.
Here is the criteria for a qualifying relative. It appears he meets all these tests.
The person can't be a qualifying child or the qualifying child of any other taxpayer.
The person is (a) related to you or (b) lives with you all year as a member of your household
The person's gross income for the year is less than $4,300.
You provide more than half of the person's total support for the year.
If he does not meet the above tests then he can file a 2020 tax return with zero income and indicate that he "Cannot be claimed as a dependent" and would be eligible for the stimulus payments in the form of a Recovery Rebate Credit on the tax return.
Here is a link with more information.
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