As taxpayers receive their stimulus payments under the Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES Act), there may also be surprise and confusion along with it. In recent days and weeks, people have taken to social media with stories of deceased relatives receiving a stimulus payment. As can be expected, people are puzzled with how to handle the situation.
The CARES Act does not directly provide guidance on whether deceased individuals may receive a payment. Although estates and trusts are specifically excluded from the definition of “eligible individuals,” deceased individuals are not mentioned. This means that they are not explicitly excluded by the law itself from receiving a stimulus check. Payments are being sent out based on 2018 or 2019 returns, depending on the most recent return filed by the taxpayer. Therefore, if someone died after filing their 2018 or 2019 return, there is a chance they will still receive a check. Due to the uncertainty surrounding the issue, tax experts debated the proper treatment of these payments, while the President and Secretary of the Treasury stated they would need to be returned.
On May 6, the IRS released guidance in the form of two FAQ’s posted on its Economic Impact Payment Information Center. FAQ #10 under “EIP Eligibility and General Information” states that a payment made to someone who died before receiving the payment, should be returned to the IRS. When one spouse has died, the surviving spouse should return the portion of the payment attributable to the deceased spouse, but may keep the rest of the payment. Under “More About the Economic Impact Payment,” a second FAQ provides detailed instructions on how to return the payment, depending on whether or not there is a paper check that can simply be voided and sent to the IRS.