Dear Moneyist,
I have three children in college, aged 20, 23 and 25. I support them as best I can. In 2018, claiming my oldest as a dependent made no difference in what either of us paid in taxes, so I did not claim her as a dependent. She filed as an independent. In 2019, tax-law changes once again made it advantageous for me to claim my oldest as a dependent.
I now regret doing that and, unfortunately, I have already filed. It appears that I do not get the $500 child-dependent stimulus for any of my three dependent children, but had I waited until after the stimulus checks had been issued to file my 2019 taxes and my daughter’s taxes, my oldest would have received the $1,200 stimulus check because she filed as an independent in 2018.
Is there anything I can do to remedy this situation?
Concerned Taxpayer
Dispatches from a pandemic:Letter from New York: ‘When I hear an ambulance, I wonder if there’s a coronavirus patient inside. Are there more 911 calls, or do I notice every distant siren? I love my adopted city, and I’m not going anywhere. I will ride this out’
Dear Concerned,
I understand your frustration. The stimulus checks can’t come soon enough for the nearly 17 million people who are out of work, and others worried about bills and rent due to the coronavirus pandemic. The good news for those who are receiving them: The government has already processed 80 million stimulus checks and they should arrive this week.
If you want to make changes to your previous tax return, you will have to file a 1040X form, enter the new — that is, correct — information and also explain your reasons for changing the filing. It seems unlikely that your check will arrive in this first round, given the backlog of work tax authorities are facing due to the pandemic and stimulus bill.
”You should not attempt to correct the situation by filing another original return using Form 1040,” Bill Bischoff, MarketWatch’s Tax Guy says. “That will just confuse the IRS and cause headaches for you. Instead, be sure to file a Form 1040X, even if you’re amending a 2018 return that you filed on Oct. 15, 2019 (the deadline for filing if you got an extension), which may seem like yesterday.”
The Internal Revenue Service has clear rules about who qualifies as a dependent: “To claim your child as your dependent, your child must meet either the qualifying child test or the qualifying relative test,” it says. “Your child must be younger than you and either younger than 19 years old or be a ‘student’ younger than 24 years old as of the end of the calendar year Dec 21, 2019.”
“If it turns out you actually qualify for a larger stimulus check then you received, you will get a credit on your 2020 tax return,” says Larry Pon, a CPA in Redwood City, Calif. “If you got too much, the Treasury will not ask for it back. In my 34 years as a tax profession, I’ve never seen this.” It’s worth a shot. If you or your daughter are above the threshold, however, you’re likely out of luck.
Those who have not filed 2019 returns need not worry either. “This legislation moved incredibly fast and the Treasury wanted to get money to the American public as quickly as possible,” Pon adds. “This means we had no opportunity for tax planning or to figure out strategies to maximize the stimulus checks. The Treasury will look to the 2018 tax data if there was no 2019 tax data.”
The Moneyist: ‘All they care about is making money.’ Can my supermarket manager force me to remove my face mask at work?
The Internal Revenue Service is sending $1,200 to individuals with annual adjusted gross income below $75,000 and $2,400 to married couples filing taxes jointly who earn under $150,000, plus $500 per qualifying child. It’s also frustrating for people who are just above those thresholds and will receive less or no money from the $2 trillion CARES Act.
There’s also growing concern among many Americans — especially those who are most in need of the checks and already have bills piling up — that debt collectors will garnish or swipe their checks before they can put the money toward rent, or utility and food bills. Millions of Americans have court judgments against them. But there are ways to avoid the checks being garnished.
In the meantime, consider all of your tax options. Pon recommends that you and/or your children consider IRS education credits. The American Opportunity Tax Credit or AOTC can be as high as $2,500 for each child in college — up to $1,500 for the nonrefundable credit and up to $1,000 for the refundable credit — and could actually be worth more than the stimulus payments, he says.
Coronavirus update: Worldwide, there were 2,049,888 million cases and 133,572 fatalities, and 510,486 people who had recovered. As of Wednesday, nearly 200,000 of the 634,975 confirmed cases in the U.S. were in New York State. The U.S has the most confirmed cases of any country in the world and, at 27,940, the most deaths, according to Johns Hopkins.
More than one-third of the U.S. confirmed fatalities were in New York City, and they rose by 752 over the last 24 hours. That figure does not include at least 3,778 people who died in New York City and were not tested for coronavirus, but whose death certificates suggested they likely died from an illness related to COVID-19, health authorities in the state said.
New York Gov. Andrew Cuomo on Wednesday ordered all New Yorkers to cover their faces in public when they can’t maintain a proper social distance. “You’re walking down the street alone? Great!You’re now at an intersection and there are people at the intersection, and you’re going to be in proximity to other people? Put the mask on. You don’t have the right to infect me.”
You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]
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