Stimulus check to a Deceased Person

[Randall]

A client just emailed me that she received a stimulus check for her deceased sister.  The check was payable to the deceased person's name comma, Dec'd.  She died in early 2019 and both the 2018 and 2019 returns were marked deceased with her date of death.  The client sister asked what to do.  I wasn't sure but told her to hold the check for now, not cash it and try to call the IRS.  But with the current situation, it might be a long time.  Any suggestions.

 

 

[Abby Normal]

I'd cash it. The rule is that it's not to be taken back by the government. Maybe donate it to a local food bank.

If the estate bank account is closed, I'd have the personal rep endorse the check over to the sister.

[GLJEANNE]

I'd hold it, because while that's the rule for taxpayers, it can't hold true for the deceased.  I heard last night about another couple of folks who has the same thing happen.  I suspect it's not the weirdest thing we'll see before this is over!

[Lee B]

Back in 2008, there Stimulus checks sent to 72,000 deceased taxpayers

[Pacun]

Cash the check and when it clears, pull out your checkbook and make a check payable to the sister and put it in her tomb.

[RitaB]

Ask her if the envelope has a box to check indicating that it was mailed to a deceased person, and checking the box instructs postal service to return to sender.

Top of envelope, a little to the right of center.

 

[TAXMAN]

If tp decd 2019. Final return not yet filed. Gets 1200 based on 2018. There will not be a 2020 return to reconcile payment. So does this money belong to the estate of?

[jklcpa]

In an interview recently with the WSJ, Mnuchin said that those checks to deceased persons should be returned and said that Treasury is working on a method to retrieve the funds by matching up databases.  That should have been done  before the checks were issued because they won't get money back from a lot of these cases.

I received a call from the son of a married couple client.  The mom died 3 days ago and the father is in hospice and is expected to pass in a few days.  I haven't done the 2019 return yet because I hadn't received any datta, and that was the reason for the son's call, to find out what documents he should look for. Dad is still alive at this point, and I think these people would be a case where they were both alive when the law was passed, and those funds would go toward their final medical and care expenses.  I think the funds shouldn't be returned in their case but I'm not sure now.    

[Abby Normal]

Had a client with 3 kids tell me she got the full 500 for each kid, even though two of them were over 16. From what I've heard, when she files 2020, the excess will not have to be returned.

 

 

[Lion EA]

Ex-client called all in a tizzy because her daughter was yelling at her because daughter won't get $1,200 because parents claimed her. Daughter is 15 or so, earned a few bucks in the summer, and is definitely a dependent of her parents. But, all her girlfriends got $1,200 and are planning how to spend it. Daughter doesn't have $1,200 to join her girlfriends and is mad at mom. And, can I fix it? At least can I tell her how to fix it -- without charging parents, of course. Seems like the entire student body of that high school got $1,200 !!

[Pacun]

24 minutes ago, Lion EA said:

Ex-client called all in a tizzy because her daughter was yelling at her because daughter won't get $1,200 because parents claimed her. Daughter is 15 or so, earned a few bucks in the summer, and is definitely a dependent of her parents. But, all her girlfriends got $1,200 and are planning how to spend it. Daughter doesn't have $1,200 to join her girlfriends and is mad at mom. And, can I fix it? At least can I tell her how to fix it -- without charging parents, of course. Seems like the entire student body of that high school got $1,200 !!

I would ask the parent to give the child $1,200 because it is legal and less expensive for them.  If you take out child from return, it will cost them $2,000 plus what you will charge them.

[Lee B]

"The U.S. Treasury Department is planning to instruct people whose deceased relatives received coronavirus stimulus payments to return the money to the federal government, according to a department spokesman.

The Treasury is aware that some individuals who have recently died received the $1,200 economic impact payments and plans to issue guidance in the coming days, the spokesman said."

[Catherine]

On 4/29/2020 at 12:57 PM, RitaB said:

Ask her if the envelope has a box to check indicating that it was mailed to a deceased person, and checking the box instructs postal service to return to sender.

Top of envelope, a little to the right of center.

 

I just love that your example envelope has been opened and the check removed!

[Catherine]

34 minutes ago, Pacun said:

I would ask the parent to give the child $1,200 because it is legal and less expensive for them.  If you take out child from return, it will cost them $2,000 plus what you will charge them.

While that would certainly be fastest and easiest, the response that would do the kid more good in her life would be a good spanking, along with some mission work in a seriously poor area, to learn how good she really has it.

[Terry D EA]

4 hours ago, Abby Normal said:

Had a client with 3 kids tell me she got the full 500 for each kid, even though two of them were over 16. From what I've heard, when she files 2020, the excess will not have to be returned.

 

 

I believe I read somewhere that these checks issued in error would have to be reconciled on the 2020 tax return. I think it may follow the same example of the person who has not filed a 2019 tax return but received a stimulus check based on 2018 and their 2019 taxable income is above the threshold, they will be required to reconcile that with their 2020 filing as an additional tax due.

Too many scenarios and mistakes makes me glad I haven't got mine yet. I'm one of those who paid by direct draft for 2018 and have not filed my 2019 yet. Working on it but it may be a moot issue at this time to be in any hurry to get the 2019 done. I'll have to pay again so......

[RitaB]

2 hours ago, Catherine said:

I just love that your example envelope has been opened and the check removed!

"Experience is something you (and my clients) don't get until just after you need it." - Steven Wright

[Lee B]

43 minutes ago, Terry D said:

, , , , , I think it may follow the same example of the person who has not filed a 2019 tax return but received a stimulus check based on 2018 and their 2019 taxable income is above the threshold, they will be required to reconcile that with their 2020 filing as an additional tax due. . . . . 

Based on my reading of the available info on irs.gov, this will not happen, however taxpayers that don't receive a stimulus rebate or received a smaller rebate than they had coming,

will be able to claim it as a credit on their 2020 tax return.

[Lion EA]

Pacun, she's not my client nor can she afford to pay me! You are right that the parents would lose more than the child gains.

Catherine, I love taking teens to serve on Appalachia Service Project. It's an eye-opener for teens who've never been out of Fairfield County, CT.

[Gail in Virginia]

My first summer job was working as in "intern" at a summer enrichment program run by the United Methodist church locally.  I got to do a lot of different things, and saw a whole different side of life than I had seen before.  I even got to help dig an outhouse!  My mother arranged this job for me but I can no longer ask if she did it because she thought it would be a good attitude adjuster for me.  I know it was a good experience, and not because I learned to use a shovel.