My disabled brother as dependent

My brother was disabled and i claimed him on my 2019 taxes. If i amend my taxes and take him off, can he receive the stimulus to help out the family? If he's not a dependent in 2020, and files his own taxes, can he get the stimulus then on his own?

Just trying to find out before I amend my taxes.

The tax years related to the $1,200 and $600 stimulus payments makes this issue somewhat complex.

Lets go back to last spring. A law was passed that gave people a $1,200 stimulus payment. The secret was that it was an advanced payment for a tax cut on your 2020 taxes that you file in 2021. To determine if the person was to receive a check in advance the IRS used the 2018 or 2019 income tax forms to calculate the eligibility and amount of the check. But when you file in April 2021 the IRS will recalculate your final stimulus payment.

When the IRS redoes the calculation, the law said no bad news. That means if they gave you too much in 2020, they don't claw it back; but if they didn't give you enough then you get what you qualify for.

The rules for the new $600 payment are similar. But there is a deadline of ~15 January. If the IRS hasn't sent the check by that date you have to wait until you file in April 2021.

Now onto your situation.

If you amend the 2019 taxes:

• If you had done that in the Spring of 2020 , or even as late as the Fall of 2020, that might have triggered the advanced payment. But now it would only work if the forms was submitted to the IRS, they processed it, and they send the check in the next 7 days. That is unlikely.

• Depending on your situation, changing your brothers form might also require you to change your form. You could lose more than $1,800 if it changes you from head of household to single.

That means you should wait and file your 2020 taxes in the Spring of 2021.

I assume that how you file will be legal and honest.

The time for getting the stimulus payment has essentially passed. The government is now in the process of sending out the second round of stimulus payment, and they are going to be all done sending out stimulus payments by January 15, 2021. So if your brother is not at this point eligible for a payment, there really isn't realistically anything you could possibly do that would be able to be completed by then.

However, on the 2020 tax return is a new credit called the Recovery Rebate Credit. This tax credit, which is calculated when you do your 2020 tax return this year, is a refundable tax credit (meaning you can claim it and get a "tax refund" even if you don't actually owe any taxes), and it is based on your 2020 status (unlike the stimulus checks that were sent out, which was based on your 2018 or 2019 status). You are potentially eligible for this credit if you didn't receive a stimulus payment, or your stimulus payment was too low.

In order for your brother to be eligible for this tax credit, he would need to meet the following requirements. From the IRS Recovery Rebate Credit webpage:

Generally, you are eligible to claim the Recovery Rebate Credit, if you were a U.S. citizen or U.S. resident alien in 2020, are not a dependent of another taxpayer for tax year 2020, and have a social security number valid for employment that is issued before the due date of your 2020 tax return (including extensions).

(emphasis mine)

The key for your brother is that in order to be eligible for this tax credit, he cannot be your dependent. However, there is a caution here: According to the rules, it is not enough that you and he agree that you won't claim him. If he is in the situation where he meets all the requirements for being your dependent, he must check the box on his return that says "Someone can claim me as a dependent" and therefore cannot claim the credit, whether or not you actually claim him on your return.

You and he will have to look at the rules for being a Qualified Relative Dependent very closely as described in IRS Publication 501, especially the Gross Income Test and the Support Test. If either your brother's gross income is over $4200 in 2020, or if you do not pay at least half of all the money spent to support him, then he is not your dependent: He would not check the "Someone can claim me" box on his tax return and could claim the Recovery Rebate Credit. But if his 2020 income is less than $4200 and if you pay for at least half of his total support, then he is not eligible for the Recovery Rebate Credit.