Stimulus Payment to a Deceased Taxpayer

[MikeB_CPA]

In early March 2020 I filed a final 1040 for a client who died during 2019.  She was widowed and had no surviving spouse or children who would qualify for the stimulus.  This week her estate administrator received a $1200 stimulus payment and would like to return it to IRS.  I am shocked that they made the payment considering the final 1040 had already been filed for 2019.  Does anyone have a clue how to go about doing this?  Any suggestions will be greatly appreciated.   Thanks very much!

[Just-Lisa-Now-]

They probably sent it based on 2018..not much you can do.  Hold onto it just in case they ask for it back, but I doubt that will happen.

[George4Tacks]

You are not alone https://www.google.com/search?q=stimulus+payment+to+deceased+person

[IRonMaN]

Based on the posts here, it sounds like more dead people got stimulus payments so far than the living ones did.

[MikeB_CPA]

Thank you.  I had no idea this was so widespread.

[MikeB_CPA]

Thank you, Lisa.  Always helpful with your guidance!

[abctax55]

Yep...crazy.  I would hold on to it for a while until there's further guidance (if there IS further guidance...) then consider donating it to a worthy cause.  

[BobKamman]

@abctax55 "I would hold on to it for a while until there's further guidance"

OK, here's some further guidance. Since they can't get it back from everybody, they aren't going to spin their wheels trying to get it back from a few.  

The original post says, "her estate administrator received a $1200 stimulus payment."  Was it a check? The early payments were direct deposit, but if someone died in 2019 that account should have been closed by now, with remaining funds placed in an estate account.  The administrator doesn't have to cash the check, but is acting in a fiduciary capacity for the beneficiaries.  So before sending it back, they should be asked their opinion.  

(And of course, "stimulus" is a word left over from 2008. I'll pay $100 for every time it's used in the CARES Act.  We might as well call $600 weekly unemployment checks a "stimulus."  But those PPE "loans" that are really "grants" -- there's a stimulus for you.)

[abctax55]

 should have been closed by now...

Should being the operative word.  Based on the number of posts all over the internet, lots of dead folks haven't closed "their" bank accounts. 🤣

[BobKamman]

@abctax55  lots of dead folks haven't closed "their" bank accounts.

"I was just keeping it open in case there were some unsolicited deposits I could complain about."

[abctax55]

@BobKamman  LOL...

[cryptoidtax]

My situation is even more bizarre. The 2019 return (filed in February 2020, as it was exceedingly simple) reported the taxpayer as deceased in 2019, and the check is made out to (Name of Taxpayer) Dec'd. So it's not like the IRS doesn't have the taxpayer recorded in their system as deceased in 2019.

I think the best approach is to sit on the check for a month. Maybe the IRS will get around to issuing guidance.

[MikeB_CPA]

Hilarious, and apparently somewhat true! My favorite has been the response about the check made payable to the taxpayer as deceased! 😂

[BobKamman]

@cryptoidtax  "I think the best approach is to sit on the check for a month. Maybe the IRS will get around to issuing guidance."

I think what's bizarre about the situation is that hardly anyone complained about it in 2008 when they sent checks to 2007 decedents, and now many expect IRS to admit it was a mistake for it to follow its own FAQs from back then, when the EIP Code Section now is nearly verbatim what the Stimulus Code Section was in 2008.  (The difference between Section 6428 v1.0 and v2.0 is mostly that IRS could now go back two years, not just one.)

The difference is probably due to social media.  We didn't have Twitter and Facebook 12 years ago, sharing anecdotes and images.  

[Just-Lisa-Now-]

I was gonna say....Im sure people were "complaining" back then, but the lack of widely used social media curbed the volume of complaints.

[cryptoidtax]

Practically speaking, I'm not sure how one could even cash a check made out to "XYZ Deceased". Can't see the bank accepting it. If it was payable just to XYZ or to the Estate of XYZ, the small estate affidavit procedure would probably work.  Maybe the IRS would reissue the check just to the taxpayer if I filed an amended return claiming resurrection. 

[BobKamman]

Feed it to an ATM, they'll eat anything.  

[RGreco]

I also filed my dad's final tax return in January 2020 because he died in 2019.  It had "deceased" all over the return, but he still received a stimulus payment into his bank account in March.  I have been waiting for guidance from the IRS, and this week I received a letter from The White House addressed to my dad followed by the word "Deceased" and c/o me.  It was just verifying that he received his stimulus payment via direct deposit, and what a great country we live in, signed by our president.  It also gave a phone number if I had any additional questions, which I immediately called, and it turned out to be a recording stating who is eligible for the payment.  It did not list the dead, but was otherwise not helpful either.  My worry about keeping the money is dealing with an agency that knows a person is deceased and still sends them money, what will they do next?  What kind of penalties will they assess?  I have closed his estate, there is no money left except this stimulus payment and  any insignificant interest it may accrue.  I'm afraid if I file another tax return for him next year to declare the stimulus money, they may think he rose from the dead and I will have to deal with that tax consequence!  

[cryptoidtax]

You can keep the money so long as your dad votes for Trump in November. 

[MikeB_CPA]

So sorry for your loss, and this aggravation you have to deal with on top of it.  The level of ineptitude is beyond comprehension, and this mess has really exposed the weak links.  Yesterday there was an article in Politico about the large number of foreign students who worked summer jobs in the U.S., and they received stimulus payments!  Much like your and my situations, they cannot find any guidance from IRS on returning the payments!  IRS issued some guidance the other day on the deductibility of expenses for companies who received PPP loans, and lo and behold it doesn't agree with what congress says is the intent of the loans!  You're likely as surprised about that as I am.

I don't know why IRS even has telephone numbers.  They are useless.  I had a client who had a need to call about a refund that was not answerable online.  After listening to an IRS message in English and Spanish, with no option to opt out of the non-native language, or to drill down to another menu, the call was disconnected-three times!

I suspect we will be dealing with this nonsense for years, and there will be a lot of conflicting "guidance."  It will be like the past two years when in December major tax legislation was passed, in some cases retroactive to prior years, and we will need to wait for IRS and Intuit to update software to allow us to file returns.  Still waiting for Intuit to update the 2018 ProSeries software so I can amend 2018 returns.

Good luck and thank you.  Please keep me advised if you hear anything official on this.

[MikeB_CPA]

Ha!  If you do that you can keep the money and probably skip filing a tax return all together! 😂

[cryptoidtax]

Let's not overthink this. If you have a letter from the President of the United States addressed to John Joe Deceased confirming Deceased's receipt of an EIP, it's pretty difficult for anyone to make a case that the government didn't know about the death and that the payment was erroneous. 

[BobKamman]

@MikeB_CPA 

Criticizing IRS is like going to a prize fight and booing the boxer who gets knocked down because he has one arm tied behind his back. Part of our professionalism as tax preparers should be educating clients that IRS does only what Congress tells it, with only the money that Congress gives it.

We shouldn’t use the word “stimulus” because it’s not in the law and the purpose of the bank liquidity payments is different from the program where the term appeared 12 years ago. The President was against it before he was for it – he favored instead a payroll tax cut, and there’s some of that but not enough to matter. We shouldn’t use the word “loan” even if it is in the PPP scheme because these are really grants. When was the last time you heard someone say they hope to pay off their loan early?

If this were malaria the $1,200 checks could be used to swat mosquitoes. But it’s transmitted when people sit next to each other in small cubicles, answering phone calls from the greedy who want to know why they have to wait two more weeks for money that didn’t exist two months ago. Let’s point out to clients that it will be years before life gets back to what we remember before the Covid Depression.  

[MikeB_CPA]

Thanks for your commentary, history lesson, and schooling on misused terminology. My most sincere apologies. I will share these lessons with my greedy out of work clients the next time I have one ask about their $1200 economic impact payment. See, I am already applying what I learned. 😉

[BobKamman]

I hope your unemployed clients are not in Florida, which overtook California on Thursday as the U.S. state with the most weekly unemployment claims as Tallahassee began to process in earnest its sizable backlog of filings.  There is a lot of frustration there, also, and many are directing it at state employees who are doing the best they can with the law and resources given them.  The paycheck-to-paycheck crowds are not greedy, they're just desperate -- and many don't have a tax professional to call who is somewhat familiar with reality and anger management.

Advice to clients:  Wash your hands, don't touch your face, and think about what you expect from a phone call to IRS that you can't learn online, or from asking someone who follows the news.

There are a lot of wackos protesting outside (well, OK, sometimes inside) state Capitols.  At least their anger is directed at the people who can make and change the laws.  When those anxious for $1,200 start congregating outside IRS offices, this country will have taken another step backwards.

[MikeB_CPA]

Thsnks Bob. Yes, extremely difficult situation all around, and especially with so many in the country living paycheck to paycheck. The state systems and employees are stretched more than I ever thought they could be before completely breaking down. 

[retIRS]

I too received a letter from the president addressed to my deceased father (the letter used 'Decd" after the name) who passed away last fall notifying 'me' that the "Economic Impact Payment" was made. I have scanned on-line resources and it appears there are no 'official' procedures for returning the check. After spending a career with the IRS I would wager there will be no concerted effort to retrieve missent payments.  It should have been clear the payment was improper as the info taken to make the the direct deposit was included on the return that was clearly indicated 'Final Return' and the return was filed and refund received about a month ago now.  The bank account where the check went was a joint account I had with my father so I could manage his financial affairs and file his returns through his later years and is the account his final expenses were paid from and from which , once the attorneys are through, distributions will be made to the heirs from.  I assume this is a fairly common methodology.   

[Just-Lisa-Now-]

https://www.caltax.com/news/podcast/podcast-irs-addresses-erroneous-economic-impact-payments/?fbclid...

[George4Tacks]

https://www.irs.gov/taxtopics/tc161

[cryptoidtax]

I really appreciate all the thoughtful responses to the original question of what to do with an EIP to a person who died in 2019.  Here's my takeaway:

1. This isn't a tax/IRS issue, it's more analogous to an erroneous Social Security payment.

2. Social Security recoups erroneous direct deposits by backcharging the account. So I'd leave the cash in the account for now and see what, if anything, happens. My guess is nothing happens. 6 months from now, distribute the money to the heirs.

3. Erroneous physical checks are a different animal. Chase Bank has taken the formal position, which I think is correct, that they won't cash a check that says "Dec'd" on it, which is my situation. So I'm going to frame the check along with the eventual letter from Trump, a 5 cent refund check from my HMO, the followup letter from my HMO asking why I hadn't cashed the 5 cent check, and a $9 securities fraud class action settlement issued in 2019 to my dad who died in 2007.

[LIVO51]

I received a stimulus check today for my deceased father (d. Jan. 2018). On the outside of the envelope near the preprinted first class postage is a box with the words  [  ] "IF RECIPIENT DECEASED Check here and drop in mailbox".

IF you don't have the envelope, the return address is:

U.S. Department of the Treasury

Bureau of the Fiscal Service

P.O. BOX 51320

Philadelphia,  Pennsylvania  [social security number removed]

[LIVO51]

The ZIP code for  the IRS in Philadelphia,  PA. is **[social security number removed] **

The system read it as a SSN and deleted it from my original message.

[sjrcpa]

@LIVO51Thanks for posting this. Can you try adding the zip code again? The system thought it was an SSN.

Maybe try spaces, spelling a couple of the numbers?

[LIVO51]

aw shucks. Just try 19115 as the ZIP!!

[LIVO51]

the last four digits are 6320

[LIVO51]

IRS 10-digit Zip code for Philadelphia, PA

19115

6320

Hope that helps!😜

[cryptoidtax]

Dear LIVO51, as your self-anointed attorney I am pleased to advise you that since you received the envelope, you are its "recipient" and since you're not deceased, no action is required. Had the government meant to refer to the deceased, the correct term would be "payee".

The envelope I received several weeks ago had no such instructions. Someone must have printed up a new batch of envelopes. 

[BobKamman]

I haven't filed any amended returns lately for a deceased taxpayer, so I'm wondering if "Decd" shows up on the refund checks sent to the survivor or PR.   There's no question that a 2016 refund can be paid to a 2017 decedent, and that's a tax question, nothing akin to a Social Security question.  If there happens to be an estate account open, the bank should accept checks paid to the decedent whether current status is shown on it or not.  So, refusal to accept certain checks by certain banks is just another legal opinion made by tellers with GED's.  That happens a lot, in banks.  

[qbteachmt]

"I am pleased to advise you that since you received the envelope, you are its "recipient" and since you're not deceased, no action is required."

ha ha ha...

How do they expect the Deceased person to, "Check here and drop in mailbox." Man, our tax dollars at work...

[abctax55]

is just another legal opinion made by tellers with GED's.

LOL...  I put a lot of mortgage bankers/underwriters in that same category.

[Pac1303]

I received a check today also. Payable to my mother with the word “DECD” and next line “%” my name. It also has a check box saying if the recipient deceased check the box and drop in mailbox. My mother passed away in 2018 and I filed her final return in 2019. I am the estate administrator of her account that has a federal tax ID and is still active. Do I drop it off at mailbox ASAP? 

[qbteachmt]

@Pac1303 

Google this:

return stimulus check for deceased person

Instead of making a Username on this tax preparer forum for those people trying to use ProSeries Tax Preparation programs. This is not a General Public forum for stimulus help.

[Pac1303]

Some says to wait, while other news state that Mnuchin wants it back. My mother’s estate and her checking account are still open, and I am the administrator and signer on the account. 

[George4Tacks]

https://www.irs.gov/taxtopics/tc161

[LeanHound]

For those of you who received a ‘check in the mail.’  You may with pen or pencil check the box “If Recipient Deceased.”  Then, drop in any USPS mail box.

Doesn’t take a GED grad or, goodness forbid, a CPA.

[MikeB_CPA]

And had that box been included on the first round of envelopes that included the checks sent to deceased taxpayers (which included the word "Deceased" on the payee line), the question would not have been asked in the first place.  Thanks for your valuable guidance. 

[sjrcpa · Accepted solution]

Hot off the press. See Q41

https://www.irs.gov/coronavirus/economic-impact-payment-information-center

[MikeB_CPA]

Thank you!

[Rntlguru]

What is the check is written as follows:

NAME Followed by DECD

%my name

in theory is that not made out to me and how on the good lords earth did they mail it and they acknowledged he passed???

[cryptoidtax]

That's all well and good, but if the check is never cashed, it expires in a year by its terms so it's not like returning it makes any difference. Also, I hope to receive one of those letters from Trump addressed to my dearly departed. It'll be a fine addition to my framed collection of stupid.