by Dana George | Jan. 19, 2021
Dead or alive, anyone who filed a 2019 tax return may receive a stimulus check.
In a rare act of bipartisan unity, Congress passed the CARES Act in late March, 2020. At the time, the world was just waking up to the impact of COVID-19 on the global economy. The IRS, tasked with getting the first round of stimulus payments out the door and into the hands of American families, sent over 1 million stimulus checks to people who were dead. Part of that was due to the speed with which the IRS was expected to distribute checks, and part was because the IRS did not believe they had the authority to deny payments to people who filed a 2019 tax return -- whether they died in the interim or not.
Although the IRS eventually requested that families of the deceased return the funds, it is unclear how many checks were recouped. What we do know is that Congress was more cautious with the second round of checks. The COVID-Related Tax Relief Act, passed in December, specifies that anyone who died prior to Jan. 1, 2020 is ineligible for stimulus funds. To aid the IRS with the monumental task of separating the deceased from the living, they were given access to the Social Security Administration's death master file. While some second-round checks will surely be sent to people who have died, the hope is that it will be far fewer than were sent the first time around.
According to AARP, the IRS is busy trying to ensure that the current batch of stimulus checks is not issued to people who died in 2019 or earlier. In fact, the legislation crafted in December by Congress says that the only payments that must be returned to the IRS are those sent to people who died in 2019 or earlier. If someone you care about passed away in 2020, they may still be eligible for the funds, provided they meet all other eligibility requirements. Because Congress did not directly address 2020 deaths, heirs should be able to request the $600 by claiming the Recovery Rebate Credit when the deceased's 2020 tax return is filed.
If someone who passed away in 2019 or earlier receives a check, prepaid debit card, or direct deposit into a bank account, the December relief bill clarifies that the money does not belong to the estate and must be returned. If it's a paper check, write the word "void" in the endorsement area on the back. Mail the voided check to the IRS location for your state, along with a note that includes the name of the deceased and their Social Security number or EIN. If your loved one was sent a debit card, the process is much the same. Mail the card to the IRS location for your state and include a note with the name of the deceased and their Social Security number or EIN. According to the IRS, if the check has been cashed or the money spent, it needs to be repaid. Make a check or money order payable to "U.S. Treasury" and write 2020EIP and the recipient's Social Security number on the notation line. .
2020 was a challenging year for many, made more difficult by grief and the myriad of issues that must be dealt with following a loved one's death. If one of the issues you are faced with is whether to keep a stimulus payment or not, Congress appears to have spelled out the answer -- at least to some degree. If your loved one died in 2019 or before, you should return the payment. If they died in 2020, the payment belongs to the estate.
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