EIP and survivor benefits

[kathyc2]

Husband/Dad passed in June 2019, leaving wife and 2 minor children.  Kids are each receiving SS survivor benefits. 

Wife received correct EIP payments:  3,400, 1,800 and 4,200.

However, each kid received 1,200, 600, and 1,400 direct deposited to the account where their SS goes. I'm guessing there was some kind of program saying if someone receives SS and does not file 1040, send them EIP, disregarding the fact they are minors.

I'm also guessing this is big enough that when they figure it out they may try to claw back EIP from SS benefits??? 

I'm telling Mom to just hold on to the money for now.  Agree??

[Slippery Pencil]

Yes.  Sending it back will only cause problems.

[grandmabee]

it was passed with no claw back provisions.  They will not ask for it back.

[Lee B]

It depends, if the third EIP was issued based on their 2019 return and there 2020 income increased substantially to a disqualifying amount, then they get to keep it.

I have client who based on their 2019 return as part of their 3rd EIP received $1,400 for their 20 year daughter, who was attending community college during 2019.

In 2020 the daughter lived with her fiance and was self supporting, filed her tax return in February claiming herself and she also received $1,400.

So when her parents file their 2021 return, do they get to keep the second $1,400?

The IRS has stated that people who received payments in"error" have to return the money.

 

[Slippery Pencil]

5 hours ago, cbslee said:

So when her parents file their 2021 return, do they get to keep the second $1,400?
The IRS has stated that people who received payments in"error" have to return the money.

No.  The law states that procedures are to be implemented to prevent double payments, but it doesn't say they have to be repaid:
https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-HE372FCE88BBF432D9CE73118562D7D33
6428B(h)
(2)regulations or other guidance to ensure to the maximum extent administratively practicable that, in determining the amount of any credit under subsection (a) and any credit or refund under subsection (g), an individual is not taken into account more than once, including by different taxpayers and including by reason of a change in joint return status or dependent status between the taxable year for which an advance refund amount is determined and the taxable year for which a credit under subsection (a) is determined.

The FAQs on irs.gov say they don't have to be repaid: 
https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-h-reconciling-on-your-2021-tax-return
I received a Third Economic Impact Payment. Do I need to pay back all or some of the third payment if, based on the information reported on my 2021 tax return next year, I don't qualify for the amount that I already received? (added March 26, 2021)

No, there is no provision in the law that would require individuals who qualify for a Third Economic Impact Payment or an additional payment based on their 2020 or 2019 information, to pay back all or part of the payment if, based on the information reported on their 2021 tax returns, they would have qualified for a lesser amount.

Even if they did have to be repaid, returning the check or writing a check to repay it would be foolish.  That piece of mail will sit in a truck for 10 to 20 months before it is opened and then you're gambling that the irs will process it and apply it to the taxpayers account the way you want.  That's an extremely foolish thing to hope for.