TurboTax for Desktop
A parent claimed a dependent in 2020, thus the March 2021 $1,400 stimulus payment for the dependent went to parent. The dependent is claiming themselves for 2021. The dependent has also earned enough money in 2021 that TurboTax Desktop insists that they had received the March 2021 $1,400 stimulus payment. When that payment is overridden with $0, because the parent received the money and not that dependent, then TurboTax still gives a $1,400 Recovery Rebate Credit to the dependent for 2021 filing and it does not seem to be able to be overridden with while using the Guide Me Though.
That doesn't seem correct, as the family has already received the $1,400; what is correct?
Believe it or not, if the child cannot be claimed as a dependent they can receive the $1400 even though the parent got it based on their 2020 return and the parent doesn’t have to pay it back. Note that if the child CAN be claimed as a dependent, even if the parent chose not to claim them, the child must declare that on their return and in that case would not be eligible to receive the stimulus.
Believe it or not, if the child cannot be claimed as a dependent they can receive the $1400 even though the parent got it based on their 2020 return and the parent doesn’t have to pay it back. Note that if the child CAN be claimed as a dependent, even if the parent chose not to claim them, the child must declare that on their return and in that case would not be eligible to receive the stimulus.
TurboTax is correct to give a stimulus payment to someone who was a dependent in 2020 but is not a dependent in 2021.
"You are eligible to claim the third recovery rebate for 2021 if you are no longer a dependent. If your parents claimed you as a dependent on their 2020 return, they received the payment from the IRS. If they are not claiming you this year, and you are claiming yourself, you can claim the recovery rebate.
You would answer no to the question about the third stimulus if you are not a dependent for 2021. You can claim yourself and take the credit since the payment did not go to you."
If you were a dependent on a 2020 return but filing independent for 2021 you can get it now and they don't have to pay it back. So say NO you did not get one because you didn't one, your parents got it.
The 3rd Stimulus payment is really based on 2021. The IRS just sent the checks out using 2020 to get them out fast.
See IRS Topic B first question