Lifestyle

HOW WRONGFULLY CLAIMED COLLEGE STUDENTS CAN RECEIVE STIMULUS AID BY USING A RECOVERY REBATE CREDIT ON THEIR TAX RETURN

Over 13 million college students and young adults aged 17 to 24 who are listed as dependents aren’t eligible to receive stimulus aid. This is due to a tax code definition of ‘child dependent’.

If you do count as a dependent, you won’t get your own money but a sum of $600 will be added on to your family’s share. This can get even more complicated and leave you wondering, when will you qualify your stimulus check?

However, some students and young adults could reactively get their stimulus payment. Keep reading to understand why college students are claimed as dependents and how one can overcome this situation to receive your stimulus payment.

WHY COLLEGE STUDENTS AREN’T ELIGIBLE FOR STIMULUS AID?

Only dependent individuals under 17 years old could qualify for stimulus payment to the taxpayer claiming them on their taxes, it means dependents who are 17 years or older such as college students won’t receive stimulus payments.

According to CBPP, a nonpartisan research and policy institute, “Over 15 million adult dependents were leftover in receiving stimulus aid under the CARE Act”. And a similar amount of young people will be overlooked in the next round.

These age requirements are estimated using the same strategy as the Child Tax Credit. According to a report from Tax Foundation, “A young adult or college student under the age of 17 years who qualify for 2019 tax year and hasn’t provided more than half of his/her expenses and living with a taxpayer and being claimed as a dependent for more than six months is eligible for a stimulus payment”. Besides, the CARE Act excluded the following groups from receiving the first stimulus check:

● 5 million 17 to 18 years old adults
● 4 million college students aged 19 to 23 years of age
● About 400,000 disabled adults aged 19 or older
● Over 5 million other lower income adults who are claimed as dependents
CBPP wrote in May, “There is no clear policy thinking for excluding these dependents”.

WHAT IF SOMEONE WRONGFULLY CLAIMED YOU AS A DEPENDENT?

You may not know that you’ve been claimed as a dependent. In this case, you’ll figure out when you file your income tax return. You will receive an error stating that you have been claimed on someone else’s tax return. You’ll receive a mailed notice from the IRS (Internal Revenue Service). When this error occurs, you won’t be able to e-file tax returns, in such a situation you’ll have to file a paper return.

However, if you already know someone else has wrongfully claimed you as a dependent, you don’t need to e-file your tax return. You’ll have to skip straight to filing a paper return, to begin with, the dispute process.

HOW TO FIX THE SITUATION?

If you know who falsely claimed you as a dependent, you can simply ask them to file an amended return to fix this issue. This process might take some time, though. And you still have to paper file your tax return to get in on proper time.

On the other hand, you may not know who wrongfully claimed you as a dependent. In this case, you’ll have to file your paper tax return, claiming your dependents.

Once your return is processed, which usually takes up to two months, you and those who claimed you will receive a letter. Now, the IRS will start the process to find out who is truly claiming your dependents, you or the former claimer?

SOME PROPOSALS DO INCLUDE THESE DEPENDENTS ADULTS AND STUDENTS

Many college students are confused about adult dependents, wondering why they aren’t receiving stimulus payments this time around. This is because some stimulus proposals might have made them eligible for this aid but weren’t signed into law. For example:

● The HEROES Act would have included full-time college students, who are under the age of 24 and dependent adults to be eligible for stimulus aid. After revisions, the bill even added up to a cost of $2.2 trillion.

● The CASH Act would have offered $2,000 stimulus money instead of $600 and include college students as well. However, Mitch McConnell (Senate Majority Leader) is against the bill and considers it as no realistic path to quickly pass the Senate.

HOW COLLEGE STUDENTS CAN CLAIM A STIMULUS CHECK BY USING RECOVERY REBATE CREDIT?

Students who are above the age threshold are eligible for a stimulus aid only if someone else doesn’t claim them as a dependent. Keep in mind, those who contribute more than half of their financial support are not eligible to be claimed as dependents on someone else’s taxes.

According to the IRS, “Taxpayers are eligible to claim the Recovery Rebate Credit from the CARES Act on their 2020 tax returns, using the form 1040 or 1040-SR”. Claiming Recovery Rebate Credit will increase the tax refund amount you’ll receive or decrease the amount of taxes you owe.

Besides, these forms can be used by students or adults who don’t usually file tax returns but are eligible for this credit. They are young adults or college students who work part-time during college but do not make enough money to be required to file taxes.