Recovery Rebate Credit for a deceased taxpayer

[MikeB_CPA]

I have had several returns this year where one spouse passed away in 2020, and where the second Economic Impact Payment was paid only to the surviving spouse ($600 vs. the full $1,200 for joint filers).  The Recovery Rebate Credit Worksheet calculates the credit amount based on filing status and income, so in every case I have had an additional $600 credit calculate for the deceased spouse.  This doesn't seem correct, especially since IRS only issued $600 by way of the second payment.  To this point I have just kept the credit on the return, but I am not sure if that is correct.  Thoughts?  Thanks very much.

Mike

[TAXOH]

As long as they were alive part of 2020 they are entitled to both stimulus payments.

[BobKamman]

When all else fails, 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 · Accepted solution]

"where the second Economic Impact Payment was paid only to the surviving spouse ($600 vs. the full $1,200 for joint filers)"

I think the counter just rolled back one! Lots of people seem concerned that the taxpayer got both amounts, even though the spouse died in 2020. Not getting the second payment means the IRS somehow cross-referenced the info, since there was no tax return filed that informed them of that death.

In either case, there is no splitting of the tax year. Alive on Jan 1, 2020 = meets the eligibility, assuming everything else is qualified.

[BobKamman]

I have several clients filing joint returns who are both still alive -- they both received EIP#1, only one received EIP#2 (and yes, we made sure they didn't toss out a debit card).  So it's not just dead people that IRS forgot.  

[garman22]

same here.......i usually know why but a few left me scratching my head as to why they didnt receive.

[BobKamman]

It's just another unreported scandal.  Wait six months and maybe GAO will investigate it.  The wheels of IRS payments grind slowly, but they let a lot of money slip through the cracks.    

[karen0224]

Hello,

You keep offering up responses stating that a taxpayer who died in 2020 is eligible for the RRC.  I just opened one of these tax returns, that was E-filed a few days ago, to find a message front and center from Intuit that something changed since the return was filed.  The suggestion is to amend the return to remove the $600 RRC that was claimed for the deceased taxpayer.  If the surviving spouse is really entitled to this, why is Intuit telling me that I should amend the return to remove it?  Thank you for your assistance!

[BobKamman]

Maybe the deceased received a debit card. Is his mail being forwarded (not to Heaven, but to an heir)? Did you check "Get My Payment" to see if a payment was made?  (Sorry, can't do that this weekend, they are updating it for use with EIP#3.)  

[karen0224]

Surviving spouse says no to the debit card but I will check, when I can to see if that's the issue.  All other payments were directly deposited into the bank account but perhaps she had already removed his name from the account....not sure that would matter.  Its just strange to me that Proseries would have that warning message pop up.  Strange in that I have never seen anything like it before!  Thank you for the tip!

[qbteachmt]

"You keep offering up responses stating that a taxpayer who died in 2020 is eligible for the RRC."

Yes, because there is no Splitting of 2020. They either qualify, or they don't, based on the 2020 tax return. Not part of the return or only a few months of the return. It's an Annual Tax Return.

And you are reconciling what they are entitled to against what they got.

The change in Unemployment is going to affect some taxpayers' qualification now, as well, if they were pushing the income limits.

You can do your own research, and you should do it for the third advance payment.

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.

If the person is not a dependent in 2020, then they would be entitled to the payment/credit as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

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

Interactive wizards portal for determining dependency:

https://www.irs.gov/help/ita

And:

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.