The Moneyist: ‘The thought of her keeping these ill-gotten funds just chaps my behind’: My granddaughter, 7, lives with me — yet her mother received her stimulus


Dear Quentin,

My husband and I took custody of our 7-year-old grandchild in August 2019, and finalized the adoption in 2020. We did not claim her as a dependent in 2019 because she lived with her mother for more than half of that year.  

When the stimulus checks came, we did not receive any for her. Her mother received money for both my grandchild and for another child who was also removed from her care in 2019. She did not pass any of the money on to us (of course). We claimed our grandchild on our 2020 taxes, and received the stimulus credit for her.

My question is: Will her mother have to repay the money she received for children she did not have custody of in 2020? Should it be reported to someone? The thought of her keeping these ill-gotten funds just chaps my behind.

The Grandmother

You can email The Moneyist with any financial and ethical questions at [email protected].

Want to read more? Follow Quentin Fottrell on Twitter and read more of his columns here.

Dear Grandmother,

That sounds uncomfortable, so I am more than happy to help.

Eligibility for the first and second round of stimulus checks issued by former President Donald Trump in 2020 under the Cares Act of 2020 was based on Americans’ 2019 tax returns or their 2018 tax returns, if their 2019 tax returns had not yet been filed. The second batch issued by President Joe Biden under the American Rescue Plan of 2021 was based on Americans’ 2020 tax returns. They are tax credits, not a loan, and as such do not have to be repaid. 

Given that you did not claim your granddaughter as a dependent last year, the Internal Revenue Service is unlikely to require your daughter to return the money for your granddaughter. It all depends on the timeline, of course. I cannot speak for the situation with the other child. If your daughter claimed your grandchild as a dependent for the third economic stimulus payment — when you are her legal guardian and you claimed her on your tax return — the IRS will claw that back.

Claiming false deductions is tax evasion, and considered a felony. Your daughter files her taxes under the penalty of perjury.

Claiming false deductions is tax evasion, and considered a felony. Your daughter, like everyone else, files her taxes under the penalty of perjury. “However, the IRS will only consider alleging a malicious-dependent fraud if the taxpayer demonstrated willfulness. Without the intention, the offense is considered negligence. There are still penalties for neglect; it’s your responsibility to know the rules, but it’s not a crime,” according to

If you believe your daughter claimed money that was not hers to claim in 2020? You can fill out a refund trace or Form 3911 and/or choose a taxpayer advocate service that has remote workers at law schools working to help people in situations such as this, and legal aid. If you had not become legal guardians of your granddaughter until last year, it may be a hard case to make. You need to weigh up the hassle of pursuing this against your and your granddaughter’s happiness.

Ultimately, she is your granddaughter’s mother, so causing her more trouble — whether she deserves it or not — may only end up hurting your family. 

Hello there, MarketWatchers. Check out the Moneyist private Facebook  group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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