Stimulus Payment for a Child Born in 2020: How to Update Your Taxes

Are you a parent who had a baby in May 2020, and you were unaware of how to claim your child for a tax stimulus payment?

Did You File Your 2019 Tax Return?

The first step to ensure you receive the maximum tax relief is to verify if you filed your 2019 tax return. Even if you didn't file, there is a way to update your previous tax filing to claim the dependent credit for your child. However, filing a 2019 return would have been for the 2018 tax year, as tax forms for the 2019 return were not available until mid-January 2020.

Amending Your 2019 Tax Return

If you did not include your child as a dependent on your 2019 tax return, the return is inaccurate and you should amend it to claim the child credit for the 2019 tax year. To claim the child credit, you must meet the qualifying criteria. If you do not meet these criteria, you may still amend your return to update the information accurately.

Amending your 2019 return to claim your child as a dependent can have financial implications for your 2020 tax return. If you qualify, you can claim one of the child tax credits: the regular child credit, the additional child tax credit, or the child and dependent care credit. These credits can range from $1,000 to a maximum of $1,600 per child and can provide a significant reduction in your tax liability.

Claiming a stimulus payment for 2020

Note that these credits are not the same as the stimulus checks that were issued earlier in 2020. The stimulus payments you receive will be based on your 2020 tax return, which should be filed no later than April 15, 2021. Therefore, it is crucial to update your tax information accurately and include your child as a dependent on your 2020 return.

Once you file your 2020 return, the IRS will use the details from this return to determine your eligibility for the additional credit. This means the credit you claim for your child in 2020 can directly affect your stimulus payment, reducing your tax liability and potentially giving you a larger refund or a lower tax bill.

Important Considerations for Filing

It is important to file your 2019 return if it hasn't already been filed. Even though it would have been for the 2018 tax year, it can help you backdate your child as a dependent and claim the child tax credit. The 2020 return should be filed as soon as possible, but you are required to file it by April 15, 2021, at the latest. If you meet the criteria, you can claim a maximum of $1,000 in the regular child credit, $1,000 in the additional child tax credit, or up to $3,000 for a qualifying child under the child and dependent care credit.

Ensure that your 2020 return is accurate and complete. If your return shows a refund, provide your bank account information to receive the refund by direct deposit. Do not skip filing a return if you meet the requirements and need to claim your child as a dependent.

Conclusion

Claiming your child as a dependent on your tax returns, especially 2020, is crucial for receiving both the child tax credit and the corresponding stimulus payment. Make sure to file your 2019 return, if needed, to update the previous year's tax information accurately. This will ensure you are eligible for the maximum benefit and avoid any potential issues related to late filing or tax discrepancies.