Forbes has published an article, “The $1,100 Per Child Tax Rebate Bonus For Divorced And Unmarried Parents,” which discusses the recovery rebate credit that divorced and unmarried parents with stimulus checks can claim in their 2020 tax returns. The article begins as follows:
Divorced and never married co-parents have the chance to pick up an extra $1,100 per dependent child when they file their 2020 returns. It requires trust, cooperation and running multiple versions of their 2020 returns. It is probably not what Congress intended when it put through the package, but remember Reilly’s First Law of Tax Planning – It is what it is. Deal with it.
The opportunity comes from the peculiar way in which Economic Impact Payments (i.e. stimulus checks) interact with the Recovery Rebate Credit. To make this discussion simpler I am going to assume that nobody has adjusted gross income (AGI) over $75,000 which is when the credit starts phasing out. To follow along I recommend that you go to the Recovery Rebate Credit Worksheet on Page 58 of the Form 1040 Instructions. Despite widespread availability of various sorts of software Reilly’ Seventh Law of Tax Planning – Read the instructions – is still valid.
To see the full article, click here: “The $1,100 Per Child Tax Rebate Bonus For Divorced And Unmarried Parents”
Posted by Elise Kim, Managing Associate Editor, Wealth Strategies Journal.