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Level 5
March 24, 2021

Should I amend clients return to add dependent even though IRS says not if there is unemployment?

  • March 24, 2021
  • 1 reply
  • 20 views

A client owes the IRS after filing their initial return. They filed February 14 before the unemployment change. When initially filing they were not able to claim their child but now they are able to. So I need to file an amendment to add a dependent my client didn't initially claim. This client also has unemployment that wasn't excluded on the initial return.

The IRS most recently said "As noted within the guidance, if a 2020 Form 1040 or 1040-SR return has already been filed, there is no need to file an amended return to figure the amount of unemployment compensation to exclude. The IRS will refigure the taxes using the excluded unemployment compensation amount and adjust the tax account accordingly. The IRS will send any refund amount directly to the taxpayer."

So I don't know if I should amend to add the dependent or not? The client owes and it's possible the IRS won't adjust their tax account until after taxes are due. If I amend to add the dependent, I might as well add the exclusion to? 

 

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1 reply

dkh
Level 15
March 25, 2021

If you are amending anyhow, yes, correct the unemployment.   I'm sure IRS has been bombarded with amended returns for the unemployment.  And I don't think it's written in stone that IRS is going to do the adjustments.   Personally, I think they are just stalling us until after they implement the CTC advance payment system. 

 As a side note,  I'm curious as to why the client couldn't claim their child initially but now they can.  🤔 🤔

eaf1213Author
Level 5
March 27, 2021

The childs mother refused to sign the custodial release form even though it was his year to claim so he just filed without claiming the child. After filing she decided she would sign the form.