So your 22-year-old graduated college last year and is on his or her own, earning money. You claimed your child as a dependent in 2019 but won’t do so for 2020. Can he or she get an economic stimulus payment?
Yes, he or she would be able to claim it in the form of a recovery rebate credit so long as he or she is not claimed as a dependent on someone else’s tax return.
It’s one of the most frequently asked questions The Sacramento Bee has heard as the 2021 tax season gets under way.
Trying to understand who is eligible for the Recovery Rebate Credit — the economic stimulus payment — on the 2020 tax return is one of the biggest sources of confusion so far this year, said Rhonda Collins, director of tax content and government relations at the National Association of Tax Professionals.
“There are so many different scenarios that taxpayers are asking about,” she said.
With the help of the Internal Revenue Service, here’s are some of the year’s most frequently asked questions:
Q. My daughter graduated college in May 2020. As parents we claimed her as a dependent on our 2019 tax return, so she didn’t qualify for a stimulus check in 2020.
After graduating college, she became employed and provides more than 50% of her own support, so she is no longer a dependent on the parent’s return. Does this mean she will get a Recovery Rebate Credit, or economic stimulus payment, on her 2020 tax return due to the change in dependency status?
A: Because she is not a dependent, she could be eligible to receive the stimulus payment through her 2020 individual tax return. She would have to meet the income level requirements and have a Social Security number valid for employment.
Q. What are the income limits?
A. To receive the full stimulus payments, she needs to show she earned less than $75,000 last year (unless married filing jointly, and then the limit is $150,000). The payment is phased out as incomes go higher.
Q. How does she get the payment?
A. When she files her 2020 federal tax return, go to Line 30 of Form 1040, the Recovery Rebate Credit. Use the IRS worksheet to determine how much she can receive.
Q. Who exactly qualifies as a dependent?
A. There are two types of dependents — either a qualifying child or a qualifying relative. Both types of dependents must be a U.S. citizen or U.S. resident and cannot be claimed as a dependent by someone else.
A qualifying child must also be related to the person claiming them as a dependent, meet the age requirement, live with the person claiming them as a dependent for more than half the year and cannot provide over half of their own support.
Q. Who is qualifying relative?
A. A qualifying relative must meet the residency requirement, made less than $4,300 in 2020, did not provide over half of their own support and cannot be claimed as a dependent by someone else.
Q. I’ve tried to call the IRS for help but can’t get through. What should I do?
A. IRS officials have said that because of the new 2020 laws, including the stimulus payments, it’s nearly impossible to reach anyone on their phone lines. Collins advises perhaps trying to call or email a tax preparer and see if they can answer your questions.
The National Association of Tax Professionals has 23,000 members who are experts and assist over 8 million taxpayers annually. Visit their website to find a tax preparer.
Q. Are there other options?
A. The IRS offers a Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. They will prepare your returns for free if you’re qualified. Don’t be shy about using them. As Rep. Bill Pascrell, D-New Jersey, put it as he chaired a congressional hearing on the services Thursday, “This year’s filing season will be even more complicated than usual.”
Q. Who qualifies?
A. For the VITA program, people who generally make $57,000 or less, people with disabilities and limited English speakers.
Q. And for the Counseling for the Elderly program?
A. People over 60.
Q. How do I find these programs?
A. Use the VITA/TCE locator: https://irs.treasury.gov/freetaxprep/ or get help from AARP at http://www.aarp.org/applications/VMISLocator/searchTaxAideLocations.action
Q. Is there a number to call?
A. 800-906-9887 (VITA Locator) or 888-227-7669 (AARP Locator)
