Did You Get a Stimulus Check for Someone Who Died?
The CARES Act did not provide a mandate to return stimulus money that was mistakenly sent by the IRS to dead people. Now the IRS wants this money back. It would be less expensive to return it to them now, even if the taxpayer must negotiate a payment plan. Otherwise, the IRS has two years to file a lawsuit to get the money back plus the interest that accrues from the date of the first request.
Why Did Dead People Receive Stimulus Checks?
The IRS sent stimulus payments to approximately 1.1 million dead people that total nearly $1.4 billion. To quickly get money in taxpayers’ hands, the IRS sent direct deposits, checks, or debit cards to individuals who filed tax returns in 2018 and 2019. Taxpayers who died before 2020 were not removed from the IRS records.
Who Is Entitled to a Stimulus Payment?
The stimulus payment that many Americans received is not free money. It is a tax credit that is paid in advance of filing an income tax return in 2021. Stimulus funds are intended for those who were alive for at least part of 2020 and might file a federal income tax return for the year. If an individual died before 2020, they would not file a return in 2021 and are not entitled to a stimulus check.
Those who are eligible to receive a stimulus payment under the CARES Act include individuals who:
- Have a valid social security number or are married and filing jointly with someone who does
- Are not a nonresident alien
- Cannot be claimed on someone else’s tax return
- Is an individual and not an estate or trust
What to Do with Stimulus Payments Sent to the Deceased?
Now the IRS wants the stimulus money that was mistakenly sent to deceased taxpayers back. They have provided guidance on how to return stimulus funds and uncashed checks. They have canceled checks that have not yet been cashed. If checks were cashed, the money must be returned to the IRS. Recipients must also return any money received via direct deposit or a debit card intended for a deceased person.
If a surviving spouse received a payment for a deceased spouse, he or she must return the portion that is meant for the decedent. The amount returned should be $1,200 unless the adjusted gross income was more than $150,000.