The IRS has has been sending stimulus payments to deceased taxpayers directed to the last known address. The IRS and Treasury have advised that these payments should be returned in some instances. Here are the rules provided by the IRS to return these payments.
It should be noted that there appears to be nothing in the law that disallows a payment to an individual who died in 2020. The stimulus payment is an advance rebate based on 2019 (or 2018) income for a credit to be claimed on the 2020 tax return. An individual who was alive on January 1, 2020 very well may have to file a tax return for 2020 and would likely have a filing requirement for 2019. So, why would this individual not qualify for a stimulus payment just because he/she passed away before the check arrived in the mail or the direct deposit was received in the bank account?
We will have to wait and see if the IRS reverses course on this matter. Until then, here is how you return the payment.
Checks to Be Returned
Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.
Returning a Paper Check
- Write "Void" in the endorsement section on the back of the check.
- Mail the voided Treasury check immediately to the appropriate IRS location listed below.
- Don't staple, bend, or paper clip the check.
- Include a note stating the reason for returning the check.
Return Payments that were cashed or Direct Deposit
- Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
- Write on the check/money order made payable to “U.S. Treasury” and write 2020 EIP, and the taxpayer identification number (social security number, or individual taxpayer identification number) of the recipient of the check.
- Include a brief explanation of the reason for returning the Economic Income Payment (stimulus).
The addresses to return the payments are provide at the bottom of this post.
You may want to wait just a couple of weeks before returning these checks to see if the IRS reverses course. There is some fundamental unfairness in the rule. For example, the family of an individual who passed away one day after a direct deposit is received in 2020 is allowed to keep the payment. Another family receives a check one day after an individual passed away in 2020 and must return the payment. Does this seem right? Absolutely not.
If you decide to wait a couple of weeks, don't deposit the check yet, and if you have a direct deposit, then segregate the funds to avoid spending them.
If the decedent passed away in 2019 or an earlier year, then I think the checks should be returned immediately.
Our office serves clients in Lubbock and throughout the state of Texas. Join the discussion with us on facebook at bradleysmithinc
Addresses for Returning Stimulus Payments