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Some TurboTax users are reporting that they have yet to receive a stimulus check due to a single checked box in the popular tax preparation software. The checked box asks if the taxpayer’s spouse can be claimed as a dependent by someone else.
The issue first surfaced in a TurboTax support forum on April 24th. The user reported that they filed their 2019 returns as married filing separately, and that a box was checked accidentally indicating that someone else could claim their spouse as a dependent. They had yet to receive their stimulus check and wanted to know if the checked box was the issue.
Two days later on April 26th, another user reported the same issue. In contrast to the first report, however, this user said that neither he nor his wife would knowingly check the box. At that time, he and his spouse had not received a stimulus payment. He wondered if the issue had to do with information being carried over from the previous year’s tax return in TurboTax.
Comments in the thread trailed off until June. On June 9th, a user reported that the IRS had confirmed that the checked box was the issue preventing a stimulus check from going out. After that, multiple users reported a similar issue and the same response from the IRS. Comments in the thread on the TurboTax forum have intensified over the past several weeks as individuals anxious for their first stimulus payment look for answers.
In response to questions I sent to TurboTax’s public relations, Intuit, the owner of TurboTax, responded by email that there were a “a very small number” of customers who had this checked box carried over from their 2018 tax returns:
“For a very small number of customers, the ‘spouse claimed as a dependent’ check box was carried over from their 2018 tax return when it was no longer relevant. This has no effect on the outcome of an individual’s tax return and has been resolved in TurboTax.”
Why Did It Affect Stimulus Check Eligibility?
Perhaps the bigger question is why this checked box would affect eligibility for the Economic Impact Payment (EIP). It’s true that a person is ineligible for an EIP if they can be claimed by some one else as a dependent. But the checked box at issue asks about the taxpayer’s spouse. Why a checked box in TurboTax indicating that a spouse can be claimed as a dependent by someone else would render the taxpayer ineligible for an EIP is unclear.
Intuit is working with the IRS to understand and resolve this issue: “We are working closely with [the] IRS to understand why and how this would have impacted a taxpayer’s eligibility to receive an economic impact payment (EIP). We expect more information will be available in the near future.”
Intuit also noted that the TurboTax customers had the box at issue correctly checked for their 2018 tax returns:
“All of these TurboTax customers correctly had this box checked for their 2018 filing. We do not know which filing/s IRS used to determine eligibility for this small number of filers or why this checkbox would be used for EIP eligibility.”
Some TurboTax users, however, say that the box was checked in their 2018 filing, but not by them:
“In 2018 my tax return had the ‘spouse could be claimed by someone else as dependent’ checked. I certainly did not do this – we are both in our 70’s and no one else can claim either of us!!!!”
Still, it may be that the EIP issue rests with the IRS, not TurboTax. While sending out more than 160 million stimulus payments in a matter of weeks is a daunting task, this wouldn’t be the first issue to arise. This past week the IRS began the process of resolving other stimulus payment issues involving those who used the non-filer tool but didn’t receive the $500 dependent payment.
2020 Tax Returns
If the IRS cannot resolve the issue, the taxpayers can claim the EIP as part of their 2020 tax returns to be filed next year if they are eligible for the payment. As the IRS has noted related to those not eligible based on 2018 returns, “taxpayers can claim amounts based on their 2020 tax returns in 2021 if they remain eligible for 2020.”
While this may be confusing, it helps to keep in mind that the stimulus payment is an advance on a temporary refundable tax credit for tax year 2020. The IRS used 2018 or 2019 returns to determine eligibility so that it could send payments out immediately. That in turn underscores the challenges facing those who for any number of reasons qualified for but didn’t receive an EIP this year.
In the midst of a pandemic causing unemployment to exceed 10%, many are in desperate need of these payments. As one TurboTax user noted in the forums: “So damned angry, our family really needed that relief now being told you’ll just have to wait until you file next year which defeats the whole purpose of issuing the payments!”