High school student received $1200 stimulus payment

Hi Pros,

My clients' high school kids has a summer job in 2018 and filed their own tax returns. The reason to file tax return is to claim the federal income tax withheld by the employer. None of those kids' income is higher than $6,000.

They are dependents of their parents. Their parents do not qualify for the stimulus payment because their AGI.

Now those kids received $1,200.00 Stimulus payment check. Are they qualified to receive the $1,200? Should they deposit to the bank or return to IRS?

Thank you!!!

and filed their own tax returns.

Yup, that's probably what caused the issue...

Dependents shouldn't have received an EIP.

Were the "Someone can claim: You as a dependent" boxes checked on the face of the kids' 1040s?

If they were dependents, don't cash the checks, return them to the IRS.

I'd also scan the returns to make sure they were prepared correctly. It's possible the kids unchecked the dependent box because it gave them a better tax result, not knowing what they were doing... All the more reason to advise your clients to allow your firm to file tax returns for their dependents if applicable. They're not as simple as they seem.

Yes. Someone can claim you as dependent box was checked. But their is no change for the tax result since there is no exemption for tax return starting from 2018.

Some kids already deposited the check. Only one of them asked me first and I think maybe more are going to get it.

Those full time college student has the same situation. They got paid for their summer jobs and filed income tax returns for herself or himself. Their parents income are above the threshold for EIP.

I am going to ask my clients' kids to return the check. IRS website site said clearly, "If they are not a dependent of other taxpayer"

Q27. I claimed my child as a dependent on my 2019 tax return. She is graduating from school in 2020. Will she receive her own Payment?

A27. No, your child will not receive a Payment in 2020 because you claimed her as a dependent on your 2019 tax return. She will not receive a $1,200 credit in 2021 if you can claim her as a dependent on your 2020 tax return.

However, if your child can’t be claimed as a dependent by you or anyone else for 2020, she may be eligible to claim a $1,200 credit on the 2020 tax return she files next year.

Thank you for your help. Appreciated!

Be sure you check both 2018 and 2019 return .It is not clear from your post which year the error occurred. It certainly appears on the surface that the box wasn't checked .

Regarding the client's kids and returning the check keep in mind the kids are not your clients. You might want to check with the parents to get their input on how to approach this sensitive manner. The kids may not be of the same mindset to pay back IRS for the error.

Your client must have adjusted gross income exceeding $450,000 to not report the kids on the parent's return and receive the credit for other dependents . There is also the potential for an Opportunity Tax Credit for college expenses depending on a number of factors .

Be sure you check both 2018 and 2019 return .It is not clear from your post which year the error occurred. It certainly appears on the surface that the box wasn't checked .

Regarding the client's kids and returning the check keep in mind the kids are not your clients. You might want to check with the parents to get their input on how to approach this sensitive manner. The kids may not be of the same mindset to pay back IRS for the error.

Your client must have adjusted gross income exceeding $450,000 to not report the kids on the parent's return and receive the credit for other dependents . There is also the potential for an Opportunity Tax Credit for college expenses depending on a number of factors .

May not be a client error at all. I’ve had three dead clients receive stimulus checks. One died in February 2019 and it was by check, and paid to John Smith, DECD. The 2018 and 2019 returns were filed early each tax season.

Kids that receive SS benefits are also receiving $1,200 even if they did not file a return. That's another possibility.