The primary and second stimulus checks offered a much-needed injection of money to tens of millions of Individuals. Nonetheless, round 13 million younger individuals aged 17 to 24 who’re listed as dependents on their dad and mom’ taxes weren’t eligible to obtain any stimulus cash from both spherical of funds, as a result of a tax code definition of “youngster dependent.” And even if you happen to do depend as a baby dependent, you continue to do not get your “personal” cash — as a substitute, your share of as much as $1,200 within the first examine and as much as $600 within the second examine was added on to your loved ones’s share.
However there could also be some excellent news on the horizon: The present model of President Joe Biden’s $1.9 trillion stimulus proposal adjustments the eligibility guidelines for a third examine, so that each one dependents — no matter age — could be eligible to get as much as $1,400 added on to their household’s whole fee. It additionally contains households of mixed-status citizenship, who have been excluded from the earlier rounds of funds. Nonetheless, your family’s whole fee could possibly be decided by whether or not or not the ultimate invoice is focused to households under a sure earnings stage.
All the guidelines can get sophisticated, and should go away you questioning when it is attainable to get a stimulus examine of your individual. Right here, we’ll clarify what occurs relying in your scenario, together with if you happen to’re a scholar, if you happen to dwell by yourself and are employed, if you happen to’re within the army, if you happen to obtain SSI or SSDI, if you happen to’re married or a mother or father, or if you happen to’re in a baby assist scenario. Some younger adults might retroactively get the unique stimulus fee of as much as $1,200, in addition to the second stimulus fee of as much as $600 — hold studying for extra data.
Does the IRS depend you as a dependent or an grownup?
The primary stimulus fee despatched out beneath the March CARES Act allotted as much as $1,200 for qualifying American adults, and $500 for the dependents listed on their 2019 tax returns — as long as they have been age 16 or youthful. The second stimulus fee, which the IRS completed sending out Jan. 15 beneath the $900 billion invoice, allocates as much as $600 per qualifying American grownup and $600 for the dependents listed on their 2019 tax returns who have been age 16 or youthful at the moment. Whereas the amount of cash modified from the primary examine to the second, the principles for who qualifies as a baby dependent didn’t.
To qualify to your personal second stimulus examine, you want to have filed your 2019 taxes independently, which suggests nobody else claimed you on their taxes as a dependent. You additionally needed to have an adjusted gross earnings (AGI) of beneath $75,000 to obtain the complete quantity. (The sum decreases as your AGI goes up, and this time round, if you happen to make over $87,000 as a single taxpayer, you are not eligible for a examine.)
There are two totally different units of guidelines for who counts as an grownup or a dependent beneath present tax regulation, in line with Janet Holtzblatt, a senior fellow on the City-Brookings Tax Coverage Heart.
One is the assist check. In the event you’re single, you do not declare kids as your individual dependents, your dad and mom give you monetary assist equal to or better than half of your annual earnings and also you made lower than $4,200 in 2019, then your dad and mom can nonetheless declare you as their dependent. One other is the residency check: In the event you’re a full-time scholar beneath the age of 24 who resides with an grownup taxpayer greater than half of the yr (until you are dwelling on a university campus), you may be claimed as a dependent, regardless of how a lot cash you make.
It isn’t clear but which tax return the IRS would use to find out eligibility for a possible third examine. It is attainable that, just like the CARES Act, it will use whichever it has most just lately on file, be that your 2020, 2019 or 2018 return.
Why were young adults excluded from the first and second stimulus bills?
People aged 17 through 24 were excluded from the CARES Act and the $900 billion bill because of a tax code definition of “child” that states a “qualifying child … has not attained age 17.” That means even 17- or 18-year-old high school students who clearly lived with a parent or guardian were excluded as dependents and weren’t counted for a $500 or $600 addition to the family check.
The reason for this age cutoff has to do with the child tax credit, established in 1997, which allows parents to receive up to a $2,000 tax refund for each child under the age of 17 each year they file. We can only speculate as to why this definition wasn’t expanded to include young adults, but the reason is probably the additional cost to the federal government of extending the credit to more people, Holtzer said.
This group was likely excluded from the second stimulus check to keep costs down. However, Biden’s proposal includes dependents of all ages in a third stimulus check.
What determines if 17- to 24-year-olds are eligible to receive a second stimulus payment?
It depends. If you became financially independent in 2020, and you file your 2020 tax return in spring 2021 independently, you’ll receive the first stimulus check of up to $1,200 and the second check of up to $600 sometime in 2021 on your tax refund, Holtzer said. All you have to do is file your tax return for 2020 and claim the money as Recovery Rebate Credit, so long as meet the regular eligibility criteria for a stimulus payment.
If you’re filing taxes independently, the amount of money you would get in a second stimulus payment would depend on your adjusted gross income, which you can also find on your taxes. Check out our story on how to calculate how much money you could get in a second check.
But if a parent or guardian claims you as a dependent on their taxes, you won’t get a check of your own. And if you’re in that 17-to-24 age range, you likely won’t get any money allocated toward your family’s payment, either.
What if you’re claimed as a dependent on someone’s taxes, but you work or go to college?
Even if you work or go to college full-time (or both), you still count as a dependent if you meet either the support test or the residency test mentioned above. Basically, if you rely on your parents or guardians for more than half of your financial support, if you made less than $4,200 in 2019 or you’re a full-time student under age 24 who resides with a parent or guardian while not in school, or both, you likely still meet the requirements to count as a dependent.
However, dependents still have to file tax returns, too. Income for dependents falls into two categories: earned income (money earned from working) and unearned income (money earned from investments like the stock market). Those requirements for filing are based on income, so if dependents are receiving either earned or unearned income, they or their parents will need to file a tax return for them.
What if you’re considered an emancipated minor?
If you’ve been emancipated from your parents by a court or through marriage (state laws apply in both cases), you likely wouldn’t count as anyone’s dependent (assuming you provide more than half of your own financial support and don’t live with your parent or guardian anymore), and would file taxes independently. So you’d be eligible for your own stimulus check if you met the requirements.
What if you’re currently enlisted in the US Armed Forces?
If you’re age 17 or older and have enlisted in the US Armed Forces, you’re considered emancipated from your parents or guardians and would file taxes independently. Therefore, you would be eligible for your own stimulus check if you met the requirements.
What if you’re under 24 but married or have a child?
If you’re under age 24 but are married or have a child of your own whom you claim as a dependent, you’re considered independent by the IRS. Therefore, you’d be eligible for your own stimulus check if you meet the requirements.
What if you pay or receive child support?
Typically, the custodial parent is the one who claims the child on their taxes, while the noncustodial parent pays child support. There are some cases where your stimulus check may have been garnished to help pay your child support. If you owe more than $150 in overdue child support (called arrears), your state may reserve the right to garnish some or all of your first stimulus check, based on how much you owe. If you’re owed child support, you may receive money garnished from your child’s other parent, though it may take a while to get to you after it is processed by the state.
For parents who have joint custody, it’s possible that both could get an extra $500 per child dependent as part of their check. It may be the case again with the $600 per-child payment. Find out everything you need to know about stimulus checks and child support here.
What if you’re an SSI or SSDI recipient?
If you’re a young person who is part of the Supplemental Security Income or Social Security Disability Insurance program, things can get complicated when it comes to stimulus payments. Here are three different circumstances people who receive these benefits may face, and how it might work for you, according to Holtzblatt:
Scenario 1: You are a full-time student and live with your parents for more than half the year (you’re considered to be living at home even if you live in a dorm part of the time). You could be claimed as a dependent by your parents, and therefore would not be eligible for a stimulus payment under the CARES Act. While you would be eligible under the current proposal for a second check, that money allotted to you would still be part of your parents’ payment.
Scenario 2: You are not a student, but receive more than half of your support/living expenses from your parents or others (like grandparents). If you meet certain other criteria, the person providing support could claim you as a dependent, and therefore you would not be eligible for a stimulus payment under the CARES Act. While you would be eligible under the current proposal for a second check, that money allotted to you would again be part of your parents’ payment.
Scenario 3: More than half of your support/living expenses are paid by your SSI or SSDI check. As long as you’re not a full-time student or living at home, you cannot be claimed as a dependent, and thus would be eligible for a stimulus payment under the CARES Act. If that was the case for you, you should have received your first check automatically. You would also likely be eligible for a second check that would come directly to you under the current proposal.
Another question we don’t have the answer to is, how extensive was the IRS’s verification process for eligibility? The agency knew who received Social Security benefits, at least as of a certain date. But we don’t know if the IRS was able to identify who among those people was a dependent of another taxpayer when the payments were distributed, Holtzblatt said.
Find out more about how SSDI and SSI impact stimulus payments here.
What if the IRS has made a mistake?
It happens. At this point, you’ll have to file a claim with the IRS during the upcoming tax season that runs from Feb. 12 through the typical April 15 cutoff. Here’s everything you need to know about the Recovery Rebate Credit you’ll need to claim on your taxes, and, for certain cases, reporting missing money or errors to the IRS.
For more information, find out how soon you could expect a third stimulus check, and how much money you and your family could be eligible for with a third check.