My understanding was that the initial distribution of stimulus checks was based on 2018 filing status, or 2019 where available. But I saw somewhere that it was supposed to be ultimately based on 2020 status, and that there would be a true-up when people filed in 2020. Is this correct?
Context here is someone I know who is getting married in late December/early January. Both he and his fiancée are students with part time jobs, and not enough income to pay any taxes at all, so they would ordinarily be ambivalent as to whether their marriage was in 2020 or 2021. But if marrying in 2021 and filing as a couple for 2020 would get them some $1,200 each, then it would be worthwhile. (I’m not sure if they can file separately without getting married and still qualify for the same stimulus payments. Among other things, they’re living with their parents until the marriage.)
In any event, leaving aside the details of the above situation, I am interested in a GQ response to the question, regardless of the applicability to this person’s situation.
The benefits are a fully refundable tax credit on your 2020 income tax, payable in advance. Everyone who is eligible should have already received their payments. If, for some reason, they have not received their payments, they can claim them as a fully refundable tax credit when they file their 2020 income taxes in 2021.
The payment is $1200 for individuals or $2400 for a married couple filing jointly. Their marital status effectively has no impact on how much they would receive.
Here’s the IRS’s page on EIP eligibility.. If they’re students living with their parents, they may not be eligible. If their parents claim them as dependents on their 2020 income taxes, your friends aren’t eligible, married or single.
If your friends are over 16 (which I’m presuming they are) and their parents claim them as dependents, they would fall into the “donut hole.” Their parents wouldn’t be eligible for the $500 minor dependents payment, either.
My son graduated from college in May 2019. He was claimed as a dependent on my 2018 and 2019 tax returns, and so he did not receive a stimulus check.
However, he cannot (and will not) be claimed as a dependent on my or anyone else’s tax return in 2020, though. I believe I read that this means he will be able to get the stimulus payment retroactively when he files his 2020 taxes.
My understanding is that the stimulus payments will ultimately be based on a person’s 2020 filing status and income and whether they are claimed as a dependent in 2020. However, if someone was eligible based on 2018 or 2019 information, and something changes such that they would no longer be eligible based on 2020 info, the IRS is not going to ask for the money back.
I think the idea is if they get married then they file themselves and their parents don’t claim them as dependents. If they don’t get married, then they’re still living with their parents and they don’t file themselves and their parents do declare them as dependents.
So that’s the question. If they can’t get the stimulus benefit anyway, then they may as well not get married in 2020 and let their parents claim them as dependents. But if they can get $2,400, then they want to move out and create their own household in 2020, file jointly, and make $2,400 at the cost of only $1,000 to their respective parents.
[Your posts have been very helpful, BTW - thanks!]
Are they U.S. citizens or U.S. resident aliens? (I assume yes).
Is their joint income less than $150,000? (From what you’ve written, I’d have to presume yes)
Do they both have valid Social Security or Tax Payer ID numbers? (I assume yes)
Are they both alive? (…)
If they can answer “Yes” to all of those, they can file their own 2020 taxes as non-dependents and receive the EIP. Whether it’s ultimately better financially for them to claim the EIP by filing on their own or for their parents to claim them as dependents and get the standard $500 dependent tax credit is beyond my limited tax and financial planning knowledge (how much are they going to owe in FICA and income taxes if they file on their own rather than remaining dependents, for example?). But, looking purely at EIP vs. dependent tax credits, yes, they’d be better off by a collective net $1,400 if they file independently of their parents.