Deceased receiving EIP payments

[gene8]

Taxpayer, single,  is deceased 4/9/2020. Executor receives $1200 and returns check to IRS. As of today, no $600 received but when filling out form 1040 on Pro Series, the program shows she is due a $600 refund due to EIP2. She has no mortgage, credit card etc, so opening up an IRS account is not possible. 

Question 1. Is she entitled to EIP 1?

Question 2. Is she entitled to EIP 2?

[Just-Lisa-Now-]

If she died in 2020, yes.

If she died prior to Jan 1, 2020, then no.

[Chris268]

I have the same question.  The taxpayer, who is a spouse on a MFJ return died in 2020 before the first stimulus payment, but she received both the first and the second payments.

It is my understanding that she (the spouse) has to return the first one in the amount of $1200 but not the second one. 

There doesn't seem to be any way to do this within ProSeries.  The IRS says you have to mail the money back to a special address.

I'm just wondering if I should tell my client she needs to return the $1200, or if I just ignore it.  There doesn't seem to be any mandate or regulation.  It just seems unethical to keep it.  

Is there a way to do this within ProSeries?

Will she be hit with a monstrous penalty and interest three years from now?

A second opinion would be greatly appreciated.

[Just-Lisa-Now-]

If they were alive for even 1 day in 2020, they are entitled to the full RRC amount.

People that died in 2018 or 2019 and had an advance sent to them in 2020, are supposed to return the money....personally Id wait for IRS to ask for it back.

[qbteachmt]

"The IRS says you have to mail the money back to a special address."

This was because these initial payments were based on 2018 (and some 2019) tax returns. This was correct: "but she received both the first and the second payments."

2020 is all that matters.

"died in 2020 before the first stimulus payment"

There is no Splitting the year.

Perhaps it would help to review what is really happening:

The funds were paid out as Advanced payment against a projection. The projection used 2018 or 2019 tax returns. But 2020 is the Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.


You might want to bookmark these links and read the IRS guidance.

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

One for each EIP.

[Chris268]

From the link you provided from the IRS:

"You are not eligible for a payment if any of the following apply to you: You may be claimed as a dependent on another taxpayer’s return (for example, a child or student who may be claimed on a parent’s return or a dependent parent who may be claimed on an adult child’s return). You do not have a Social Security number that is valid for employment. You are a nonresident alien. The following are also not eligible: a deceased individual or an estate or trust."

That is exactly where I found the information for the first payment.  The IRS says if the person died before the first payment you have to return it, but the second payment was mandated that it could still go to a deceased person, so the second one does not have to be returned, but the first one does.

[Chris268]

According to the IRS she is not entitled to the first check which is why the executor returned it, but it was mandated in the second stimulus that the deceased person could receive it, so the answer that I keep getting is she is not entitled to EIP 1 but she is entitled to EIP 2.  It can be claimed on the tax return.

[Just-Lisa-Now-]

again, if she died in 2020 shes entitled the the entire RRC for 2020....dont worry about the advances that were sent out in 2 payments.

[qbteachmt]

You are confusing the various statements.

How can this even be true? "so the answer that I keep getting is she is not entitled to EIP 1 but she is entitled to EIP 2"

She did not Return to life in 2020 to be impacted by the covid disaster. There is no Splitting of 2020.

The people who had died in the meantime while the old tax returns were being used for Advanced payments, didn't get to keep the money, because they were not alive in 2020. Using a 2018 or even a 2019 tax return did not point out to the IRS they just sent the EIP to a dead person.

The arrival of the checks has nothing to do with any analysis. That's just the Banking.

The Code stated that a person alive in 2020 is impacted and gets the payment, and the payments happened in two parts already, and a likely third part. Just like the 2021 payment that already arrived is the Second payment of 2020 and is being reported on the 2020 tax forms.

You can read the CARES act yourself, you know.

[BobKamman]

That IRS FAQ has not been updated since November 10.  The December tax legislation made clear that 2020 decedents are eligible for both EIP's.  Failures by IRS to update its websites is a known issue.  Don't rely on their fake news.  

[BobKamman]

@qbteachmt "You can read the CARES act yourself, you know."

It’s easier to find in the Consolidated Appropriations Act

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf

Starting around Page 1969. What it says is that someone does not qualify if they died before 2020. But most people are too lazy to read the law, they would rather focus on outdated IRS press releases. When all else fails, maybe they can read the instructions.

Form 1040 Instructions, page 56:

Generally, you are eligible to claim
the recovery rebate credit if in 2020 you
were a U.S. citizen or U.S. resident alien,
weren't a dependent of another taxpayer,
and have a valid social security
number. This includes someone who
died in 2020, if you are preparing a return
for that person.

[qbteachmt]

Once again, Bob, you didn't have to tag me. But you could have tagged the person who asked. Thanks for the info. I already know this stuff.