New Client - In Midst of Divorce

[Yardley CPA]

New client going through a divorce that has not yet been finalized.  No returns were filed for 2019 or 2020 as the husband indicated "we're only going to owe, so why file".   

They lived apart in 2018 and 2019.  They have two children, both in school but both claimed themselves in 2020 on their respective returns.  One did not claim themselves in 2019 but made above the wage amount.  

They received  one stimulus payment in early 2020 of $2,900. They indicated that is $1,200 for the husband, wife and $500 for one child.  

I prepared the 2019 and 2020 returns, claiming MFS.  She had wages of $21K in 2019 and only withheld $26.  She owes over $1,200.  

For 2020, I indicated she received a stimulus of $1,200.  Based on that, the return is showing she is due $600 in additional stimulus.  

Questions:

- I don't think this is possible but would appreciate your input since maybe I missed something...can she file the 2019 return without any payment and have them net any stimulus against it?  

- For 2020, Is claiming $1,200 as the amount she received as stimulus the correct amount?

- Anything I'm missing?

Thanks for reviewing this. 

[Lee B]

Reading this post definitely reinforces my decision not to deal with divorced clients.

[Max W]

1 hour ago, cbslee said:

Reading this post definitely reinforces my decision not to deal with divorced clients.

Amen!

Even the IRS is frustrated by divorces.  I attended an IRS tax forum and sat in their presentation of OIC's.  After the hour was up, a little group gathered around the speaker to ask him questions.   One question concerned divorced couples.  The reply was, "We wish that people wouldn't get divorced"

[kathyc2]

Are you sure neither parent qualifies for HOH? Just because the kids "claimed" themselves, it doesn't mean that they should have.  If either kid is full time student under age 24 and did not provide over 1/2 of their own support, HOH, education credits and even EIC may come into play. 

[TexTaxToo]

15 hours ago, Yardley CPA said:

They received  one stimulus payment in early 2020 of $2,900. 

15 hours ago, Yardley CPA said:

For 2020, Is claiming $1,200 as the amount she received as stimulus the correct amount?

If stimulus payments are based on a joint return, the IRS considers each spouse to have received half the amount, so I think they would expect her to report receiving $1,450 on the RRC worksheet.  If she claims the incorrect amount of Recovery Rebate Credit as a result, they will consider it a math error and correct it, but this will delay the refund.