Stimulus Check on Death: How to Return a Check to the IRS

The IRS made mistakes with the stimulus control program, and now Uncle Sam is asking some people to resend their payments.

Since CARES Law past and pledged coronavirus relief payments of up to $ 1,200 per adult to millions of Americans, people have had questions – of Who is eligible and who gets paid first, How do you want follow your dunning check, and what if the payment is Wrong amount or was sent to bad bank account.

Recently, the IRS tried to clarify one of the more puzzling questions: What should you do if a stimulus check has been issued to a deceased person?

It is not known how many widows and other family members of the recent deceased are in this situation at this time. During the first four weeks of the program, the IRS sent 130 million payments, and plans to send out about 150 million stimulus checks in total. And on May 6, the IRS added a new language to its FAQ page for Economic Impact Payments (aka Stimulus Checks), stating that deceased people are not eligible for payments.

This is because checks issued to deceased persons are supposed to be returned or refunded. Here’s exactly what the IRS says:

The new provision that stipulates that stimulus payments to deceased persons must be repaid may come as a surprise. Like The money has already paid off, tens of thousands of similar stimulus payments were mistakenly sent to people who died during the Great Recession, possibly due to a lag in reporting deaths to government agencies. At the time, there was little to no effort on the part of the IRS to recover payments to the deceased. Additionally, in recent weeks, many tax and legal experts felt that the 2020 stimulus payments sent to the deceased likely would not have to be returned.

Now the IRS says otherwise. Even so, it is still unclear what will happen if an ineligible stimulus payment is not returned to the IRS. (More on this below.)

Who else is not eligible for stimulation control?

As of May 6, the IRS also clarified that a few other groups of people were not eligible for stimulus payments, and that those payments should be reimbursed: incarcerated people and “foreigners” (aka non-citizens) who are either non-residents or non-residents. -eligible residents.

Who exactly counts as incarcerated for IRS purposes – and therefore is not eligible for $ 1,200, and is supposed to reimburse the money it was received – can be complicated. Are people who were in prison when the CARES law was passed but are now free eligible? Here’s what the IRS says about it, and you’ll likely need an accountant to sort it out: “A person is incarcerated if they are described in one or more of clauses (i) through (v) of Section 202 (x) (1) (A) of the Social Security Act (42 USC § 402 (x) (1) (A) (i) to (v)). “

If you are not a US citizen, the IRS considers you a foreigner. Non-resident aliens, or undocumented immigrants, are not eligible for payments. (Please note that some independent coronavirus relief fund provide emergency assistance to people who fall into this category.) Resident aliens are only eligible for payments if they have a valid Social Security number and are considered “eligible” by the IRS – which generally means that you have a green card and / or have lived in the United States for at least 31 days this year and 183 days in the previous three years. (This is how the IRS determines the tax status of foreigners, and definitions of things like resident aliens vs non-resident aliens.)

If the IRS says you’re not eligible for a stimulus check but you or a family member still received a payment, the agency expects you to return it.

Note that, according to the parlance of the IRS, even a person who died very recently might not be eligible. If your spouse or a relative died at any time before you received the payment – even a day in advance – technically the IRS says that person is not eligible and the money must be repaid.

On the other hand, the IRS says that U.S. citizens living abroad are eligible for stimulus payments, and people living in U.S. territories, such as Puerto Rico, Guam, and American Samoa, are also generally eligible for. receive payments.

How to Return a Stimulus Check for a Deceased Person

In addition to new explanations of who died and incarcerated ineligible for payments, the IRS has a new entry in its Stimulus Payments FAQ Page (Q41) explaining how to return a dunning check.

Basically if you received a paper stimulus check from the Treasury Department and it has not been filed, you must write “CANCELED” on the back, mail it to your regional IRS office, and “include a note indicating the reason for the return of the check. The IRS says.

If you received an ineligible payment by direct deposit, or if you received a check and have already deposited it, the IRS expects you to return the money, by personal check or money order. payable to the US Treasury. You are asked to write “2020EIP” on the check, as well as the social security number or ITIN (Individual Taxpayer Identification Number) of the non-eligible beneficiary on the check. Please also “include a brief explanation of the reason for the return of the PIE,” the IRS says.

What happens if you don’t return a pacing check?

While the IRS certainly seems clear in its guidance that some stimulus payments are ineligible and should be refunded, tax experts aren’t so sure.

Garret watson, a senior policy analyst at the nonprofit organization Tax foundation, told Money that there were many questions about the IRS guidelines regarding who is and is not truly eligible for stimulus payments.

“The reasoning of the IRS is not clear for asking for refunds from incarcerated people because the CARES Act does not prohibit them from being eligible. this is not contained in the reasoning of the IRS and is not true for other tax situations involving incarcerated persons, ”Watson said by email.

Also, because each stimulus payment is technically a early discount from your income tax returns for previous years, it appears that someone who died in the past year may be entitled to a check. “If a deceased person were alive in 2019, for example, they should arguably be entitled to a prepayment based on their 2019 income,” Watson said. “It looks like the IRS is pretty much disqualifying both groups.”

Nina Olson, Executive Director of the Center for Taxpayers’ Rights, also asked how and why the IRS decided to seek reimbursement of these payments. “What is the legal reasoning for this and why is this position different from the IRS position in 2008?” »Olson says AARP, noting that the IRS made little effort to recover similar “ineligible” payments during the Great Recession. “The government has the right to change its mind, but without explaining its rationale, this position appears arbitrary and capricious.”

So what if you don’t repay a stimulus payment that the IRS deems ineligible? Granted, some people won’t return the money, either because they’ve spent it already, don’t know the IRS rules, or just don’t want to pay it back.

No one really knows what the IRS will do at tax time next year, but the answer could be nothing.

“I suspect the IRS will encourage people to reimburse payments made incorrectly, but the agency is less likely to sue people legally or during tax season 2021,” Watson of the Tax Foundation said. “It is important to note that IRS FAQs are not considered legal documents or even formal advice. Therefore, while they are useful in establishing the agency’s position, we would need more details before knowing if they would have a strong case to prosecute individuals legally. on payments. “

Money has asked the IRS for comment, and this story will be updated if we get a response.

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