Stimulus issue

[Denne]

I just had the fifth call from a client regarding the dreaded stimulus issues! The first call was to find out that would happent to her payment since she had changed back accounts since her taxes were filed. The next issue was when to expect the check. The next call was to find out how much she shoud be getting. I figured it according to the taxes I prepared for her and felt she did not have a payment coming. She has called the IRS to complain that the taxpayers that need the payment are not getting it and was told that I prepared the taxes incorrectly. This TP is a single mother with two children that receive Survivor Benefits from SS. The IRS told her the children should not have been claimed by her and should have filed their own tax returns. Each of her children receive about $7200 a year in benefits. She was unemployed last hear and had only $4500 in income.

Was I really suppoeed to file 1040A forms for the kids with them claiming themselves?? Of course the TP is upset with me thinking I should have know about the filing for this year. This is the only TP I have that is in this situation and I am feeling so bad if ti messed up and cost her $600. I have been reading from the IRS webside and can not find anyplace that this is how these taxes should have been filed.

Please help...... Thanks!

[jainen]

>>Each of her children receive about $7200 a year in benefits. She was unemployed last hear and had only $4500 in income. <<

Social Security is considered to be support provided by the recipient, so it seems that the kids provided more than half of their own support (unless there was 3rd party support such as welfare or free housing). The IRS was right this time--they are not qualifying children or dependents.

Amend the mother's return to remove the children, then file them separately claiming their stimulus-qualifying Social Security. (No tax prep fees, of course!)

[Karen Lee]

OMG........I agree with jainen

The end is near!!

[JohnH]

Any possibility you may need to amend any prior years' returns for the same issue, or does this only affect 2007?

[jainen]

>>OMG........I agree with jainen<<

Don't feel bad--several people agreed with me today. One actually had to go back and change his or her post to avoid agreeing with me! And that doesn't even count everyone who agreed with me about the peppermints but were too embarrassed to admit it.

[Denne]

Thanks for your reqlies. I will have some work ahead of me. The mother usually is employed and this is a first for the kids to actually be supporting the family. Thanks again.