Stimulus Check Received For Deceased Spouse

[RWG1950]

I know this has been covered in prior posts but just wanted to be sure.
Customer (MFJ) dies in February 2019.
Surviving spouse receives $ 2,400 stimulus payment.
Gets to keep it, right ?
Thanks for comments.

[Gene V]

Looks like the answer would be NO, if they died before receiving the stimulus payment. Look at Question 10 and 41, they were updated May 6
https://www.irs.gov/coronavirus/economic-impact-payment-information-center#collapseCollapsible1588783344562

[TaxGuyBill]

It depends on who you ask. :-)

The Secretary of the Treasury and the Frequently Asked Question from the IRS say it must be repaid.

The Law however doesn't necessarily say that. In my opinion, it depends on which year the Stimulus Payment was based on. If the payment was based on the 2018 tax return (because 2019 has not been filed yet), the Law indicates both spouses are "eligible" and therefore the payment is correct and it would be legal to keep it. If the payment was based on the 2019 tax return, the one spouse was dead, and "estates" don't qualify for the payment. So in that scenario, the payment was in error and should be returned.

[Burke]

It depends on who you ask. :-)
The Secretary of the Treasury and the Frequently Asked Question from the IRS say it must be repaid. The Law however doesn't necessarily say that. In my opinion, it depends on which year the Stimulus Payment was based on. If the payment was based on the 2018 tax return (because 2019 has not been filed yet), the Law indicates both spouses are "eligible" and therefore the payment is correct and it would be legal to keep it. If the payment was based on the 2019 tax return, the one spouse was dead, and "estates" don't qualify for the payment. So in that scenario, the payment was in error and should be returned.

Interesting take. But I tend to disagree. Law says payments are due to eligible "individuals." That means individuals who were alive in 2020. The fact that it was based on 2018 or 2019 tax returns was merely a mechanism to enable the quickest possible issuance by the Treasury. Payments made to deceased individuals after their death should be returned, IMO. Estates are not eligible for these payments, and it cannot be considered IRD income as it was not "earned" prior to their death. In the case of MFJ checks, only the deceased spouse's portion should be returned. Had these payments not been made in advance, and simply allowed as credits on 2020 returns, these situations would not have arisen.

[TaxGuyBill]

Law says payments are due to eligible "individuals." That means individuals who were alive in 2020.

I understand the debate, but where do you see that?




(f)Advance refunds and credits

(1)In general

Subject to paragraph (5), each individual who was an eligible individual for such individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.

(2)Advance refund amount

For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such taxable year if this section (other than subsection (e) and this subsection) had applied to such taxable year.



To me, that says the Advance refund is based on if you were eligible in 2019/2018.

With that being said, I do understand that the intent was not to pay dead people (hence the restriction on estates) and that because it is actually a 2020 credit, it is definitely arguable thing. But in my opinion, the way the law is worded, the Advance Refund is correctly sent to those that WERE eligible. But again, I understand both sides.

[Rapid Robert]

The fact that it was based on 2018 or 2019 tax returns was merely a mechanism to enable the quickest possible issuance by the Treasury.

I wonder why you keep on insisting the law says things it clearly does not say.

CARES Act Sec 2201 paragraph (f)(1). Try reading it.

[Rapid Robert]

That means individuals who were alive in 2020.

So to be consistent, it must be your position that if someone dies before the end of 2020, they have to send back the stimulus payment (because by the time they file their 2020 return, they will be an estate/trust entity).

There isn't much rhyme or reason to who gets the money. After all, why are the lucky people on fixed incomes such as Soc. Sec. getting stimulus payments? They did not suffer any loss of income due directly to Covid-19.

[Burke]

So to be consistent, it must be your position that if someone dies before the end of 2020, they have to send back the stimulus payment (because by the time they file their 2020 return, they will be an estate/trust entity).

Actually, that is not what I said or meant, but I should have been clearer and said "individuals who were alive in 2020 when the check was issued."

[dtlee]

Actually, that is not what I said or meant, but I should have been clearer and said "individuals who were alive in 2020 when the check was issued."

Let's beat a dead horse.

I asked this question elsewhere, but would like your opinion. You indicate that the person can keep the check if they were alive when the check was issued. The FAQ page says to return

A Payment made to someone who died before receipt of the Payment

Both of these indicate that if a person died between the signing of the law and some point afterwards, they need to return the check and you have a slight difference of opinion with the IRS.

My question is, why stop at either of these points?

So why do you not think it should be that they need to be alive until the time they file their return?

[New York Enrolled Agent]

Good guest post by Nina Olson (former TA) on the procedurally taxing blog site - worth a read as Nina talks about "giving back" the stimulus for a deceased taxpayer.

https://procedurallytaxing.com/the-uncertainty-of-death-and-taxes-economic-stimulus-payments-to-deceased-individuals/

[Burke]

Let's beat a dead horse.

I would posit that we NOT beat a dead horse, because it is not really dead.......yet. See blog posted above by NYEA. Those comments are exactly my position, and he expounds more eloquently with more corroborating reasoning than I have posted. This is not going to be resolved until Congress weighs in, so stay tuned....... I have already sent a copy of this to my representatives, both Senate & House. Suggest we all do the same.

[dtlee]

I would posit that we NOT beat a dead horse, because it is not really dead.......yet. See blog posted above by NYEA. Those comments are exactly my position, and he expounds more eloquently with more corroborating reasoning than I have posted. This is not going to be resolved until Congress weighs in, so stay tuned....... I have already sent a copy of this to my representatives, both Senate & House. Suggest we all do the same.

I have agreed with Nina's position (that nothing in the law requires the funds to be returned under these circumstances) since the poorly worded FAQ appeared. While several of us differ in our opinion of whether or not to return these funds, that was not the point of my question. The FAQ follows the wording used by the Treasury Secretary using "should" rather than "shall" or "must" but I think the lawmakers declined to provide a clawback provision except in cases of fraud or reckless neglect. I was not asking for a citation for your position that these funds should be returned, but for the reasoning behind your selection of the date the payment was issued (assuming you meant alive for at least a moment on that date) as the factor to be used for whether or not to keep the check.

However, if you will not assist me in the horse beat, I am perfectly capable of carrying on alone.

It seems to me that there are various points where the individual might be perceived as being "entitled" to keep the funds. Here are a few:

1. Alive at any time during 2018
2. Alive at any time during 2019
3. Alive at any time during 2020
4. Alive on the date the law was passed
5. Alive on the date the payment was issued
6. Alive on the date the payment was received
7. Alive as of the end of 2020
8. Alive as of the date the 2020 return is filed

Various posters have picked one or more of the above and said that anyone failing that rule who receives a check should return it. I certainly think that anyone who was not alive at any time in 2018 should not have received a check based on the way the law was written, but would like to understand the rationale behind the selection of these other dates.

Since we seem to differ in terms of what date is appropriate for considering someone to be ineligible, I am wondering what prompted you to select the date you chose rather than one of the other dates.

[TAXNJ]

......
It seems to me that there are various points where the individual might be perceived as being "entitled" to keep the funds. Here are a few:[LIST=1][*]Alive at any time during 2018[*]Alive at any time during 2019
........ I certainly think that anyone who was not alive at any time in 2018 should not have received a check based on the way the law was written, but would like to understand the rationale behind the selection of these other dates.

I am wondering what prompted you to select the date you chose rather than one of the other dates.

Why are you selecting 2018 out of your extensive listing? “.. I certainly think that anyone who was not alive at any time in 2018 should not have received a check based on the way the law was written,...“

and where is as you state in the law “based on the way the law was written,...“. for you to select 2018?

Does the law specifically state that? If not, BURKE’s post is as correct as yours.

[dtlee]

Why are you selecting 2018 out of your extensive listing? “.. I certainly think that anyone who was not alive at any time in 2018 should not have received a check based on the way the law was written,...“

and where is as you state in the law “based on the way the law was written,...“. for you to select 2018?

Does the law specifically state that? If not, BURKE’s post is as correct as yours.

I picked it out because anyone not alive in 2018 should not have filed a 2018, 2019, or 2020 tax return. I was not saying that Burke was wrong nor that I am right. I said they should not have received a check, based on my reading of the law. The law uses the 2019 (if filed) and if not, the 2018 tax return. Hence, they should not have sent them a check. Per the law, it is my interpretation of the bolded parts below:

Subtitle B—Rebates and Other Individual
Provisions
SEC. 2201. 2020 RECOVERY REBATES FOR INDIVIDUALS.
(a) IN GENERAL.—Subchapter B of chapter 65 of subtitle F
of the Internal Revenue Code of 1986 is amended by inserting
after section 6427 the following new section:
‘‘SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.
‘‘(a) IN GENERAL.—In the case of an eligible individual, there
shall be allowed as a credit against the tax imposed by subtitle
A for the first taxable year beginning in 2020 an amount equal
to the sum of—
‘‘(1) $1,200 ($2,400 in the case of eligible individuals filing
a joint return), plus
‘‘(2) an amount equal to the product of $500 multiplied
by the number of qualifying children (within the meaning of
section 24(c)) of the taxpayer.
‘‘(b) TREATMENT OF CREDIT.—The credit allowed by subsection
(a) shall be treated as allowed by subpart C of part IV of subchapter
A of chapter 1.
‘‘(c) LIMITATION BASED ON ADJUSTED GROSS INCOME.—The
amount of the credit allowed by subsection (a) (determined without
regard to this subsection and subsection (e)) shall be reduced (but
not below zero) by 5 percent of so much of the taxpayer’s adjusted
gross income as exceeds— ‘‘(1) $150,000 in the case of a joint return,
‘‘(2) $112,500 in the case of a head of household, and
‘‘(3) $75,000 in the case of a taxpayer not described in
paragraph (1) or (2).
‘‘(d) ELIGIBLE INDIVIDUAL.—For purposes of this section, the
term ‘eligible individual’ means any individual other than—
‘‘(1) any nonresident alien individual,
‘‘(2) any individual with respect to whom a deduction under
section 151 is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual’s
taxable year begins, and
‘‘(3) an estate or trust.
‘‘(e) COORDINATION WITH ADVANCE REFUNDS OF CREDIT.— ‘‘(1) IN GENERAL.—The amount of credit which would (but
for this paragraph) be allowable under this section shall be
reduced (but not below zero) by the aggregate refunds and
credits made or allowed to the taxpayer under subsection (f).
Any failure to so reduce the credit shall be treated as arising
out of a mathematical or clerical error and assessed according
to section 6213(b)(1).
‘‘(2) JOINT RETURNS.—In the case of a refund or credit
made or allowed under subsection (f) with respect to a joint
return, half of such refund or credit shall be treated as having
been made or allowed to each individual filing such return.
‘‘(f) ADVANCE REFUNDS AND CREDITS.—
‘‘(1) IN GENERAL.—Subject to paragraph (5), each individual
who was an eligible individual for such individual’s first taxable
year beginning in 2019 shall be treated as having made a
payment against the tax imposed by chapter 1 for such taxable
year in an amount equal to the advance refund amount for
such taxable year.
‘‘(2) ADVANCE REFUND AMOUNT.—For purposes of paragraph
(1), the advance refund amount is the amount that would
have been allowed as a credit under this section for such
taxable year if this section (other than subsection (e) and this
subsection) had applied to such taxable year.
‘‘(3) TIMING AND MANNER OF PAYMENTS.—
‘‘(A) TIMING.—The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible. No refund
or credit shall be made or allowed under this subsection
after December 31, 2020.
‘‘(B) DELIVERY OF PAYMENTS.—Notwithstanding any
other provision of law, the Secretary may certify and disburse refunds payable under this subsection electronically
to any account to which the payee authorized, on or after
January 1, 2018, the delivery of a refund of taxes under
this title or of a Federal payment (as defined in section
3332 of title 31, United States Code).
‘‘(C) WAIVER OF CERTAIN RULES.—Notwithstanding section 3325 of title 31, United States Code, or any other
provision of law, with respect to any payment of a refund
under this subsection, a disbursing official in the executive
branch of the United States Government may modify payment information received from an officer or employee
described in section 3325(a)(1)(B) of such title for the purpose of facilitating the accurate and efficient delivery of
such payment. Except in cases of fraud or reckless neglect,
no liability under sections 3325, 3527, 3528, or 3529 of
title 31, United States Code, shall be imposed with respect
to payments made under this subparagraph.
‘‘(4) NO INTEREST.—No interest shall be allowed on any
overpayment attributable to this section.
‘‘(5) ALTERNATE TAXABLE YEAR.—In the case of an individual who, at the time of any determination made pursuant
to paragraph (3), has not filed a tax return for the year
described in paragraph (1), the Secretary may—
‘‘(A) apply such paragraph by substituting ‘2018’ for
‘2019’, and
‘‘(B) if the individual has not filed a tax return for
such individual’s first taxable year beginning in 2018, use
information with respect to such individual for calendar
year 2019 provided in—
‘‘(i) Form SSA–1099, Social Security Benefit Statement, or
‘‘(ii) Form RRB–1099, Social Security Equivalent
Benefit Statement.
‘‘(6) NOTICE TO TAXPAYER.—Not later than 15 days after
the date on which the Secretary distributed any payment to
an eligible taxpayer pursuant to this subsection, notice shall
be sent by mail to such taxpayer’s last known address. Such
notice shall indicate the method by which such payment was
made, the amount of such payment, and a phone number for
the appropriate point of contact at the Internal Revenue Service
to report any failure to receive such payment.
‘‘(g) IDENTIFICATION NUMBER REQUIREMENT.—
‘‘(1) IN GENERAL.—No credit shall be allowed under subsection (a) to an eligible individual who does not include on
the return of tax for the taxable year—
‘‘(A) such individual’s valid identification number,
‘‘(B) in the case of a joint return, the valid identification
number of such individual’s spouse, and
‘‘(C) in the case of any qualifying child taken into
account under subsection (a)(2), the valid identification
number of such qualifying child.
‘‘(2) VALID IDENTIFICATION NUMBER.—
‘‘(A) IN GENERAL.—For purposes of paragraph (1), the
term ‘valid identification number’ means a social security
number (as such term is defined in section 24(h)(7)).
‘‘(B) ADOPTION TAXPAYER IDENTIFICATION NUMBER.—
For purposes of paragraph (1)(C), in the case of a qualifying
child who is adopted or placed for adoption, the term ‘valid
identification number’ shall include the adoption taxpayer
identification number of such child.
‘‘(3) SPECIAL RULE FOR MEMBERS OF THE ARMED FORCES.—
Paragraph (1)(B) shall not apply in the case where at least
1 spouse was a member of the Armed Forces of the United
States at any time during the taxable year and at least 1
spouse satisfies paragraph (1)(A).
‘‘(4) MATHEMATICAL OR CLERICAL ERROR AUTHORITY.—Any
omission of a correct valid identification number required under
this subsection shall be treated as a mathematical or clerical
error for purposes of applying section 6213(g)(2) to such omission.
‘‘(h) REGULATIONS.—The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the
purposes of this section, including any such measures as are deemed
appropriate to avoid allowing multiple credits or rebates to a taxpayer.’’.
(b) ADMINISTRATIVE AMENDMENTS.— (1) DEFINITION OF DEFICIENCY.—Section 6211(b)(4)(A) of
the Internal Revenue Code of 1986 is amended by striking
‘‘and 36B, 168(k)(4)’’ and inserting ‘‘36B, and 6428’’.
(2) MATHEMATICAL OR CLERICAL ERROR AUTHORITY.—Section 6213(g)(2)(L) of such Code is amended by striking ‘‘or
32’’ and inserting ‘‘32, or 6428’’.
(c) TREATMENT OF POSSESSIONS.—
(1) PAYMENTS TO POSSESSIONS.—
(A) MIRROR CODE POSSESSION.—The Secretary of the
Treasury shall pay to each possession of the United States
which has a mirror code tax system amounts equal to
the loss (if any) to that possession by reason of the amendments made by this section. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.
(B) OTHER POSSESSIONS.—The Secretary of the
Treasury shall pay to each possession of the United States
which does not have a mirror code tax system amounts
estimated by the Secretary of the Treasury as being equal
to the aggregate benefits (if any) that would have been
provided to residents of such possession by reason of the
amendments made by this section if a mirror code tax
system had been in effect in such possession. The preceding
sentence shall not apply unless the respective possession
has a plan, which has been approved by the Secretary
of the Treasury, under which such possession will promptly
distribute such payments to its residents.
(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED
STATES INCOME TAXES.—No credit shall be allowed against
United States income taxes under section 6428 of the Internal
Revenue Code of 1986 (as added by this section) to any person—
(A) to whom a credit is allowed against taxes imposed
by the possession by reason of the amendments made by
this section, or
(B) who is eligible for a payment under a plan described
in paragraph (1)(B).
(3) DEFINITIONS AND SPECIAL RULES.—
(A) POSSESSION OF THE UNITED STATES.—For purposes
of this subsection, the term ‘‘possession of the United
States’’ includes the Commonwealth of Puerto Rico and
the Commonwealth of the Northern Mariana Islands.
(B) MIRROR CODE TAX SYSTEM.—For purposes of this
subsection, the term ‘‘mirror code tax system’’ means, with
respect to any possession of the United States, the income
tax system of such possession if the income tax liability
of the residents of such possession under such system is
determined by reference to the income tax laws of the
United States as if such possession were the United States.
(C) TREATMENT OF PAYMENTS.—For purposes of section
1324 of title 31, United States Code, the payments under
this subsection shall be treated in the same manner as
a refund due from a credit provision referred to in subsection (b)(2) of such section.
(d) EXCEPTION FROM REDUCTION OR OFFSET.—Any credit or
refund allowed or made to any individual by reason of section
6428 of the Internal Revenue Code of 1986 (as added by this
section) or by reason of subsection (c) of this section shall not
be—
(1) subject to reduction or offset pursuant to section 3716
or 3720A of title 31, United States Code,
(2) subject to reduction or offset pursuant to subsection
(d), (e), or (f) of section 6402 of the Internal Revenue Code
of 1986, or
(3) reduced or offset by other assessed Federal taxes that
would otherwise be subject to levy or collection.
(e) PUBLIC AWARENESS CAMPAIGN.—The Secretary of the
Treasury (or the Secretary’s delegate) shall conduct a public awareness campaign, in coordination with the Commissioner of Social
Security and the heads of other relevant Federal agencies, to provide
information regarding the availability of the credit and rebate
allowed under section 6428 of the Internal Revenue Code of 1986
(as added by this section), including information with respect to
individuals who may not have filed a tax return for taxable year
2018 or 2019.
(f) APPROPRIATIONS TO CARRY OUT REBATES.—
(1) IN GENERAL.—Immediately upon the enactment of this
Act, the following sums are appropriated, out of any money
in the Treasury not otherwise appropriated, for the fiscal year
ending September 30, 2020:
(A) DEPARTMENT OF THE TREASURY.—
(i) For an additional amount for ‘‘Department of
the Treasury—Bureau of the Fiscal Service—Salaries
and Expenses’’, $78,650,000, to remain available until
September 30, 2021.
(ii) For an additional amount for ‘‘Department of
the Treasury—Internal Revenue Service—Taxpayer
Services’’, $293,500,000, to remain available until September 30, 2021.
(iii) For an additional amount for ‘‘Department
of the Treasury—Internal Revenue Service—Operations Support’’, $170,000,000, to remain available
until September 30, 2021.
(iv) For an additional amount for ‘‘Department
of Treasury—Internal Revenue Service—Enforcement’’,
$37,200,000, to remain available until September 30,
2021.
Amounts made available in appropriations under clauses
(ii), (iii), and (iv) of this subparagraph may be transferred
between such appropriations upon the advance notification
of the Committees on Appropriations of the House of Representatives and the Senate. Such transfer authority is
in addition to any other transfer authority provided by
law.
(B) SOCIAL SECURITY ADMINISTRATION.—For an additional amount for ‘‘Social Security Administration—Limitation on Administrative Expenses’’, $38,000,000, to remain
available until September 30, 2021.
(2) REPORTS.—No later than 15 days after enactment of
this Act, the Secretary of the Treasury shall submit a plan
to the Committees on Appropriations of the House of Representatives and the Senate detailing the expected use of the funds
provided by paragraph (1)(A). Beginning 90 days after enactment of this Act, the Secretary of the Treasury shall submit
a quarterly report to the Committees on Appropriations of
the House of Representatives and the Senate detailing the
actual expenditure of funds provided by paragraph (1)(A) and
the expected expenditure of such funds in the subsequent
quarter.
(g) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ‘‘6428,’’ after ‘‘54B(h),’’.
(2) The table of sections for subchapter B of chapter 65
of subtitle F of the Internal Revenue Code of 1986 is amended
by inserting after the item relating to section 6427 the following:
‘‘Sec. 6428. 2020 Recovery Rebates for individuals.’’.

Like I said, I do not believe that there is a clawback provision. That is not the point I am raising.

Please clarify why you think someone who was not alive after 2017 should have been sent a payment under the law? I would be glad to learn how I misread this.

[TAXNJ]

I picked it out because anyone not alive in 2018 should not have filed a 2018, 2019, or 2020 tax return. I was not saying that Burke was wrong nor that I am right. I said they should not have received a check, based on my reading of the law. The law uses the 2019 (if filed) and if not, the 2018 tax return. Hence, they should not have sent them a check. Per the law, it is my interpretation of the bolded parts below:

Like I said, I do not believe that there is a clawback provision. That is not the point I am raising.

Please clarify why you think someone who was not alive after 2017 should have been sent a payment under the law? I would be glad to learn how I misread this.

Think you misunderstood. Never said anything about 2017 as you mentioned above. Please reread the reply post.

If someone was alive for a certain amount of time in 2018, had income and received a tax refund or owed tax, a 2018 tax 1040 return would be filed. Is that correct? As a result receives a stimulus check.