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Another Double-Dipper?


Janitor Bob

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Part of the problem is that a lot of taxpayers got debit cards, which don't show up on bank statements.  I have one client who got the three stimulus payments all three ways--check, dir deposit, dr card.  Like posters here, most good tax pros prod clients and make them go hunting for those payments they claim they didn't get.  I wonder how much of the backlog of returns IRS is hand reviewing came from self-prepareds?  Our clients tell us they didn't get anything and we send them searching.  Tell Turbo Tax you got zero and move on to the next screen.

This gets me thinking about how accurate those DIY returns can be.  I estimate close to half of the returns I get are missing some doc or another.  A stray dividend, pension, IRA, HSA, 529 contribution, child care, you know.  Maybe the software prods for this info so users go find it.  I'm not trying to create more business; in fact, I don't like to waste my time doing one W-2 and maybe some interest returns.  I tell clients with not much going on that they are eligible for free VITA or AARP tax prep.  It's no wonder the IRS is calling tax pros partners again--we keep their number of notices and subsequent phone calls down.

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I can't believe people don't know if they got money or not.  Family of four, $5600 and they don't know that $5k was just dropped into their account (or even $1400).  Some of the stimulus letters are just now arriving.  I only got mine the other day.  Some clients who have brought their info to me already are calling saying they just received this letter.  Then there are two letters for both the stimulus and the advance CTC.  Some clients only bring in one letter thinking the other one is just a duplicate.  Watch for those receiving Social Security.  They may have received refunds by check in the past but IRS got their bank info from SocSec and made a direct deposit for the EIP3.

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On 2/17/2022 at 5:52 PM, Randall said:

So if the two parents aren't married but live together with one child, they can switch who claims the child in 2021.  The father claimed the child in 2020.  Received the EIP3 for the child.  In 2021, can the mother claim the child, receive the EIP3 for the child and the father does not have to pay it back?  Is this correct?  The father received half the child credit in advance, $1800.  The mother will receive the full $3600 in 2021 but the father will have to pay back the $1800 advance.  Is this correct?  But someone posted that the advance child credit would not have to be paid back if income is low enough.  I'm not seeing this on the 8812 and worksheets.

A little different situation.  Couple is married.  Been filing MFS because of wife's student loan payoff is according to her tax return and joint income would make payment higher.  She has been claiming the one child.  Received stimulus $2800 and advance CTC $1800 based on 2020 return.  If the above applies, can he claim the child, receive the extra $1400 stimulus and the CTC $3600 but she doesn't have to pay back the $1400 or the $1800 (assuming income is low enough).  There's also a 2nd child this year but I don't think that would be part of the double dipping since neither received anything for the 2nd child in advance.

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With respect to the EIP3 issue. After reviewing what the client was able to ascertain and ended up saying they received no payment or did not know if they had. I simply advise them I can file them for a refund OR they can wait for the letter coming from the Service with the clear understanding they can get a rejection notice since they did in fact receive the payment. Most are in a hurry to file and don't give a rip if they get the rejection notice. And a few are likely being less than honest and hope they get a second payment. 😈 Imagine that.

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4 hours ago, Randall said:

A little different situation.  Couple is married.  Been filing MFS because of wife's student loan payoff is according to her tax return and joint income would make payment higher.  She has been claiming the one child.  Received stimulus $2800 and advance CTC $1800 based on 2020 return.  If the above applies, can he claim the child, receive the extra $1400 stimulus and the CTC $3600 but she doesn't have to pay back the $1400 or the $1800 (assuming income is low enough).  There's also a 2nd child this year but I don't think that would be part of the double dipping since neither received anything for the 2nd child in advance.

In this case the husband will have to claim both children for the double dipping to occur.

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Hubby could claim one child and still get the credits, because he didn't claim the child last year. Obviously, claiming both children will get him more! If wife's income is high enough to have to pay back, try each with one child to see if the household as a whole does better.

We're spending more time on each client. I'm going to get some pushback on my fees this year!

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Let me assume that the wife makes less than $50K and that the old child is 7. If the mother claimed the old child, she will not have to return any of the $1,500 she got in advanced and the husband will get $6,600 as child tax credit. If they split the children, they will get $1,500 less child tax credit.

Regardless, don't forget that the new born will also get $1,400 stimulus.

 

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37 minutes ago, Pacun said:

Let me assume that the wife makes less than $50K and that the old child is 7. If the mother claimed the old child, she will not have to return any of the $1,500 she got in advanced and the husband will get $6,600 as child tax credit. If they split the children, they will get $1,500 less child tax credit.

Regardless, don't forget that the new born will also get $1,400 stimulus.

 

That's the way I'm thinking it too.

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Anyone have any feedback if these larger refunds in these returns are being held back for review?  Just wondering.  I have a couple where one spouse will have to pay a higher amount while the 2nd spouse is due a refund.  Normally the refund would come quickly and they could wait for the refund before paying the other.

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2 hours ago, Randall said:

Anyone have any feedback if these larger refunds in these returns are being held back for review?  Just wondering.  I have a couple where one spouse will have to pay a higher amount while the 2nd spouse is due a refund.  Normally the refund would come quickly and they could wait for the refund before paying the other.

Have a couple in same boat who we sent Monday.  The taxpayer receiving a refund, is pending with their bank already.  Pretty darn quick.

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On 2/18/2022 at 6:37 AM, Randall said:

Thanks.  I was overlooking line 30.  Once I entered number 1 there, it shows he does not have to pay it back.  Whoa!!!

You are my hero.  I spent 20 minutes trying to figure this out before I stumbled on this post.  Thank you, thank you.  I love this forum.  Reminds me to go make my annual donation!!

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