Perhaps a complex and confusing situation here, but hoping someone can help out.
1. In 2020, my parents did not claim any dependents. The idea was to let their child (my sister) claim herself, to try and get the stimulus.
2, she did work but didn’t make much more than a few hundred. In 2020, My sister, claimed herself but never received the stimulus check.
3. In 2021, my sister who actually is a dependent of my parents is not filing (didn’t make any money), and my parents are claiming her as a qualifying dependent. They are also trying to receive the stimulus that my sister never received by using the rebate recovery credit, and so far the tax tool accepted all the input and filed away without issue.
The IRS accepted the return but has not yet approved the refund. I know the IRS is automatically making corrections to 2020 returns in some cases, but I am just not sure if what happened is going to check out or not. Does anyone know if this is an automatic correction or are both parties going to have to mail 1040x for 2020? My sister to unclaim
herself in 2020 and my parents to claim her as dependent in 2020?
If it is an automatic correction on my parents 2020 return, will my sister need to file a 1040x to unclaim
herself in 2020 to avoid any penalties?
Sorry for the confusion. I really do hope the IRS just approves the refund and moves on but my gut tells me it’s going to get rejected. At the end of the day we as a family are just trying to make sure that the $1,400 for my sister is getting to our family and not being completely missed due to filing issues.
For 2020, if your parents COULD claim your sister, even if they chose not to, your sister should have indicated that on her return and would not have received the stimulus.
If they can and do claim her on their 2021 return they will get the stimulus for her.