Deceased Taxpayer- $250 Retiree Credit

[taxit]

I have a client , deceased March 2009, Executor asked if the estate would receive the $250.00 Retiree Credit. I don't know the answer & haven't been able to find one. Sch M instructions, SS web site, & IRS web site do not mention an eligible deceased person. Does anyone know & if so can you direct me to where you found the answer. Thanks for any help!

[TAXBILLY]

By retiree credit are you referring to the credit for retired government workers who were not eligible for Social Security?

taxbilly

[taxit]

This individual was both a federal retiree and a SS recipient. She passed in March, her account receiving her SS payment was closed in April. She did not receive the $250.00. I am trying to find if I should include it on her final return. I did shorten the title of the credits name but thought it was still clear.

[JohnH]

If she had no W-2 earnings or self-employument income, then there's nothing to be done on the final return with respect to the $250 payment. You can't obtain it via the return if she was entitled to it but didn't receive it, and there's no $400 credit to be reduced if there is no earned income.

[Terry D EA]

I'm going to have to disagree here. If this person received a pension or an annuity and social security benefits, then they are eligible for the credit based on the Sch M instructions. Being that she did not receive the credit while she was alive, then she is entitled to it via the tax return. There is no mention of a deceased tax payer in the instructions. If she was entitled to the credit, then the refund should go to her estate. I would think the same forms to claim the credit (1310 I think) should be filed with the return and the header on the return must be marked deceased. As I see it, the only that can happen is it could be denied.

[Terry D EA]

One more thing, there are two different credits covered on the Sch M. The work to pay credit and the government retiree's credit. I was wrong in my statement above about social security benefits. The person must be a government retiree as identified in the instructions. Sorry

[taxit]

Terry , I handled it exactly the way you mentioned. She is a Federal Goverment Retiree. I just wanted to have something in writing to support what I am doing. As you mentioned, it's not covered in the instructions.

[Lion EA]

I thought if a retiree did not receive their $250, they had to get it from SS or their retirement agency and NOT from the IRS.

[JohnH]

That's still my understanding, but I've been waiting for other comments. If there is no entry on line 1a of the Schedule M, then it's my understanding that the form doesn't apply, there's no need to complete anything else, and the form doesn't even apply. Line 1a first asks if there are wages, and secondly if there's other earned income. No earned income, no schedule M needed.

Stated another way, Schedule M establishes the eligiblity for the credit for everyone who receives earned income and provides a mechanism for reducing it if the retiree received the payment, but it doesn't provide any mechanism for receiving an unpaid payment if there's no earned income to begin with. That's a separate matter to be hashed out with the retirement agency.

[TAXBILLY]

That's still my understanding, but I've been waiting for other comments. If there is no entry on line 1a of the Schedule M, then it's my understanding that the form doesn't apply, there's no need to complete anything else, and the form doesn't even apply. Line 1a first asks if there are wages, and secondly if there's other earned income. No earned income, no schedule M needed.

Stated another way, Schedule M establishes the eligiblity for the credit for everyone who receives earned income and provides a mechanism for reducing it if the retiree received the payment, but it doesn't provide any mechanism for receiving an unpaid payment if there's no earned income to begin with. That's a separate matter to be hashed out with the retirement agency.

I believe Schedule M computes the Making Work Credit, adjusting for AGI and people who have received economic recovery payments (which does not include the government retiree who is not on Social Security, SSI or VA). The government retirees do get their $250 here as there was no distribution by the government for them as it was for the Social Security, SSI and VA folks. I think the reason they didn't get checks was because the government doesn't know if they eventually qualified for Social Security, for example, after they retired. I had a client years ago that retired from the government, went to work and eventually qualified for Social Security.

taxbilly

[JohnH]

Interesting. Thanks to all of you for the clarification before I ran into one of these. (I think I just heard a bolt of lightning nearby.)