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Why many young adults, students will not receive a stimulus payment

5 months 1 week 1 day ago Wednesday, April 15 2020 Apr 15, 2020 April 15, 2020 3:24 PM April 15, 2020 in News
Source: USA Today, VOX
Image via Max Pixel

Americans are beginning to receive their financial relief checks from the federal government's $2 trillion stimulus plan to assist them during the COVID-19 crisis.

Many young adults, college students, and recent graduates were disappointed to discover they will not receive the $1,200 from the government, even if they are affected by the pandemic.

Those ages 17 to 24 that were claimed as dependents on their parents' 2018 or 2019 tax filings are left out of the relief package.

Under the coronavirus stimulus bill or the CARES Act, most taxpayers will receive a one-time payment from the IRS. That is, those who earn $75,000 or less a year will receive $1,200, or $2,400 for couples who filed jointly, and an additional $500 bonus for each dependent ages 16 years old or younger.

However, families with dependents in the 17-24 age group are entirely excluded from receiving any money for that child, including the $500 bonus.

In order to receive money for dependents, the child must be under the age of 17 at the end of the tax year. 

A 'qualifying' child must meet the following requirements in order to receive stimulus payments:

  • They must be related to you (blood, marriage, or adoption) 
  • They must either be under age 19 or a full-time student under 24 
  • For the stimulus payment, your dependent must be under age 17. 
  • You must financially support them 
  • They must live with you for at least half of the year 

They must also meet the requirements to be eligible for the Child Tax Credit. While these are similar, there are some subtle differences: 

  • You must claim them as a dependent on your tax return 
  • They must be under age 17 
  • They must be related to you (blood, marriage, or adoption) 
  • They cannot provide more than half of their financial support during the tax year 
  • They must be a U.S. citizen, a U.S. national or a U.S. resident alien 
  • They must live with you for at least half of the year 

If they meet these requirements, the additional $500 will be sent to the taxpayer that claimed the child on their most recent tax return (2018 or 2019).   

This prevents many high school and college students from receiving any stimulus money. The tax code defines a child as "not attained age 17."

The CARES Act excludes immigrants without a social security number, green card, or eligible work visas; elderly or disabled people who are claimed as dependents; and dependents ages 17 to 24.

”This under-17 rule for the child tax credit is just a product of a budget process,” Elaine Maag of the Urban-Brookings Tax Policy Center said. “There’s a certain amount of money that’s going to go into child tax credit, and whatever amount was chosen could cover kids up to 16.” 

By her estimates, there are about 4 million dependents ages 17 and 18 in high school who will not qualify for the $500 bonus and about 9 million under 24 and full-time students, that will most likely not receive any money, she said.

Young adults are arguing that the stimulus package unjustly leaves out dependents who are taxpayers and workers with expenses of their own. Many are saying they would appreciate any monetary support, sent to either them or their parent.

Many young adults are categorized as a dependent to qualify for federal student aid or to receive health care benefits.

"If you’re a dependent student, it doesn’t mean your parents are required to pay anything toward your education; this is just a way of looking at everyone in a consistent manner," according to the Federal Student Aid website.

Some dependents ages 17 to 24 hold lower-paying, entry-level jobs, have less-secure housing arrangements and struggle with student loan debt.

As schools closed due to the coronavirus outbreak, many students were displaced by the chaos, some even forced to move out of campus housing. While many have a home to return to, some are struggling to find a place to stay during this time.

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