Stimulus check shake-up for dependents: Third payment could change everything - CNET

Who's considered a dependent for stimulus checks and taxes isn't always the same. Here's how it works.

Angela Lang/CNET

Lawmakers are currently working out the details of President Joe Biden's $1.9 trillion stimulus package proposal, with a goal of moving a final bill to the Senate before the end of the month. (The Senate is currently embroiled in former President Donald Trump's impeachment trial -- here's how to watch.) Right now, the latest stimulus proposal (PDF) includes a third stimulus check for up to $1,400, and an important change to the qualifications for dependents: extending eligibility to dependents of all ages, rather than excluding anyone over the age of 16 from counting toward the family total. 

Also up for debate is whether dependents should be eligible to receive the full $1,400 in stimulus check money as adults are. That would include dependents who are children, young adults or older adult relatives. Both of these potential rule changes could bring in far more money for families with dependents this time around, if a new stimulus payment is approved, which seems likely. The total your family could receive will also likely depend heavily on the outcome of a current debate to make the third check more "targeted."

We've got all of the new details to bring you up to speed on the stimulus check qualifications for your family, including how to receive missing stimulus money when you file your federal taxes this year and who the IRS counts as an adult for stimulus checks. This story is frequently updated.

Could a third stimulus payment change who counts as a qualified dependent? It's likely

For the first and second stimulus checks, qualified dependents were defined as anyone age 16 or under. Each dependent counted toward a flat rate in the family total, with no cap on the number of child dependents claimed. That was $500 for the first check, approved in March, and $600 for the second, which was approved and sent in December.

The latest proposal would earmark an additional $1,400 per child dependent, to be added onto the checks of their parents or guardians, according to a Washington Post report. For the first time, 17-year-olds and adult dependents (anyone 18 or older) would also be eligible for a payment as part of this plan, according to the Post. This group would include around 13.5 million college students, older adults and children of all ages with certain disabilities. 

The House of Representatives is expected to begin the process of bringing a third check to a vote in two weeks.

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One more way the third stimulus check could redefine the rules

In addition to opening up the definition of a dependent to all ages, Biden's $1,400 stimulus check proposal also seeks to include all mixed-status families. This could potentially mean that families with noncitizen parents but citizen children (who were born in the US, for example) would be eligible for stimulus money. 

The second check made it possible for families with one citizen parent to receive a payment, and the first stimulus check blocked all families with one noncitizen spouse if they filed jointly, even if they claimed a US citizen dependent. The same restriction applied to a noncitizen head of household who claimed a US citizen child as part of the previous tax return. Here's what to know about citizenship and stimulus checks.

Why an update to the Child Tax Credit could also bring your family more money

This week, House Democrats are preparing to announce legislation that would provide up to $3,600 per child to millions of American families as an expansion of the Child Tax Credit, and part of Biden's stimulus package (though technically not part of the stimulus checks themselves). The proposal would offer $3,600 per child under age 6, and $3,000 per child up to age 17 over the course of a year. Payments would begin phasing out for individuals who make more than $75,000 and married couples who make more than $150,000. If the expansion is approved, payments would start getting sent monthly in July, according to the Washington Post. 

How your dependents could change your family's total stimulus payment

Dependents don't receive their own stimulus checks, but they can add funds to the household's total. Children 16 years and younger who you claimed in your last tax filing added a flat rate of $600 to the household's second check. That's $100 more per dependent than in the first round of payments. The total amount of money allocated in any of the three stimulus payments would depend on your adjusted gross income, which you can also find on your taxes.

If the current proposal becomes law, a third stimulus check could add an extra $1,400 per dependent of any age to the household's total. It seems likely the new stimulus funds will be targeted to families with a certain income threshold. 

Under the current proposal, individuals with incomes up to $50,000 would get the full $1,400 payment. Heads of household earning up to $75,000 would also qualify. Married couples with earnings up to $100,000 would get a $2,800 payment, according to the Washington Post. As was the case in the first and second round of checks, the more you make above that threshold, the less stimulus money you would be eligible for, for yourself and your dependents. 

However, the way the stimulus check formula currently stands, the amount you get per dependent may not be as simple as adding up everyone in your household -- and that's because of that sliding scale just mentioned. Instead, dependents can actually bring some families a partial payment where they otherwise might not get any at all. Read more on that here and see for yourself with our $1,400 stimulus check calculator.

Stimulus check total could dramatically rise for some people, with the third payment.

Sarah Tew/CNET

What's the difference between who counts as a dependent for my taxes and for stimulus payments?

In terms of federal tax regulations, a dependent can fall into two categories: a qualifying child or a qualifying relative. They don't need to be children, or directly related to you, but they do have to meet certain requirements set out by the IRS. 

To be claimed as a dependent on your taxes, a qualifying child must be either younger than 19 years old, or a student younger than 24 years old at the end of the calendar year. If, however, your child is what the IRS calls "permanently and totally disabled," you can claim them as a dependent no matter their age. 

To claim a qualifying relative -- either a child or an adult -- as a dependent, they must meet other IRS criteria. This might include an elderly relative who relies on you for care. (Find out more about what older adults need to know about stimulus checks, including those who may be qualifying relative dependents.)

Even if a dependent was claimed on your tax return, only people who meet a specific definition of "child dependent" were eligible to count toward the household's money from the first round of stimulus checks due to the requirements of the CARES Act. The same was true for the second round under the December $900 billion law: The child dependent must be age 16 or under as of your 2019 tax return to qualify for any payment. 

However, as mentioned, the current proposal under consideration for a third check would make dependents of all ages, including young adults and older adults, eligible to add up to $1,400 each to the household's total. 

Where can I find my dependents listed on my federal tax return?

If you filed taxes in 2018 or later, you'll find your dependents listed on form 1040, US Individual Income Tax Return. In the middle of the first page, you'll see a box labeled Dependents. Dependents, along with their Social Security number, relationship to you and whether they qualify for a child tax credit or credit for other dependents, will be listed there. 

Find your dependent on your 2019 tax form 1040.

IRS

What happens if I gained more dependents since my last tax return?

If a child was born or adopted into your family in 2020 and therefore not listed on your 2019 tax return, you can claim your child on your 2020 tax return to get the $500 dependent stimulus payment from the CARES Act or the $600 payment from the new bill sometime in 2021. 

You can also find out if you can claim a child or another relative as your dependent on your taxes with this tool from the IRS. 

What if my spouse and I share custody of a dependent, but file taxes separately?

In this case, a child can still only be claimed as a dependent on one return in a tax year. To find out who should claim the child on their return, check out the IRS information on Qualifying Child of More Than One Person.

What if I'm divorced or legally separated and I split custody of a child?

Here's where things can get confusing. A child can only be claimed as a dependent by one taxpayer for a tax year. Typically, the child counts as the dependent of the custodial parent -- the parent who the child lived with for the longer period of time during the year, even if financial support came from the other parent. However, this isn't always the case. Find out more from the IRS here.

One case that has cropped up with the first check has been parents who aren't married and have joint custody and alternate years in which they claim each dependent child (or children) on their tax returns. In that case, both parents were eligible under the CARES Act to receive $500 per child (for a total of $1,000 per child between them both). 

Here's how that works: If you are a parent who didn't claim your child on your 2019 return, when you file your 2020 tax return, you may be able to claim up to an additional $500 per child on that return, if you qualify to claim the child as your qualifying dependent for 2020. 

Bottom line? A parent with 50/50 custody of one or more children who didn't receive a $500 payment per child as part of the stimulus package can get that money along with their tax refund after filing 2020 taxes (in 2021), regardless of whether or not the other parent received that payment for the same children in the first round of checks. Because these payments are essentially tax credits, they don't have to be repaid to the IRS, even if both (again, not married to each other) parents end up with a check for the same children. 

We don't yet know if these rules will change with a third stimulus check. (You can read our story about how stimulus checks impact child support payments here. And here's more information from the IRS about the qualifying child of more than one person.)

What about my dependents with disabilities?

This is one area where the qualifications diverge for stimulus checks and taxes. If you have a child dependent with disabilities whom the IRS defines as "permanently and totally disabled," they can still count as a child dependent on your tax return, regardless of their age. The IRS says your child falls under this category if both of the following apply:

• "They can't engage in any substantial gainful activity because of a physical or mental condition."
• "A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death."

The rule has been different for stimulus checks so far. Children who are disabled and aged 17 years or older are not eligible for the $600 allotted to child dependents, unless they were aged 16 or younger on your 2019 tax return. However, it appears this rule could change with a third stimulus check. 

What should I do if my dependent has died?

With the first check, if a child dependent who was listed on your last tax return has since died, it's likely you were still sent the extra $500, and that they would be included in a second stimulus payment too. However, a payment made to someone who died before they received it should be returned to the IRS. You also cannot claim a stillborn child as a dependent, according to the IRS. 

For more information, here are all the details we know about so far about a third stimulus check. If you still haven't gotten your first or second check, find out how to claim a missing payment and learn how to report your missing check to the IRS.

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