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Update Regarding Deceased Taxpayers

Update Regarding Deceased Taxpayers

In 2020, after the CARES Act and the issuance of the first Economic Impact Payment, the then Secretary of the Treasury Mnuchin, instructed surviving taxpayers (spouses or heirs) to return any payments received after the death of the taxpayer regardless of when the death occurred.

In December 2020, the Consolidated Appropriations Act changed the handling of checks for deceased taxpayers, clarifying that the death would have had to occur prior to January 1, 2020, and the IRS updated their FAQs to include the following:

Q A5. Did the IRS send payments to deceased individuals? (updated March 9, 2021)

A5. If a first payment was made to someone who died prior to January 1, 2020, it should be returned to the IRS by following the instructions in Topic I: Returning the Economic Impact Payment.

Joint filers with a deceased spouse: For payments made to joint filers with a deceased spouse who died before January 1, 2020, return the decedent’s portion of the payment. This amount will be $1,200 unless your adjusted gross income exceeded $150,000.

If you can’t cash or deposit the check: If you cannot cash or deposit the payment because it was issued to you and a deceased spouse, return the check as described in Topic I: Returning the Economic Impact Payment. After the IRS receives and processes your returned payment, your first Economic Impact Payment will be reversed to you and you can claim the Recovery Rebate Credit on your 2020 tax return, Form 1040 or Form 1040-SR.

The IRS is aware that some surviving spouses weren’t issued their portion of the payment. Eligible individuals who didn’t receive a payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return.

The Bureau of the Fiscal Services (BFS) has cancelled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible, including those who may be deceased. Recipients should still return these checks as described in Topic I: Returning the Economic Impact Payment instructions.

Update: With regard to eligible individuals who died in 2020, the Recovery Rebate Credit may be claimed on line 30 of their 2020 tax return if the first Economic Impact Payments were not issued. Please refer to the Instructions for Form 1040 and Form 1040-SR for more information.

The NSTP requested clarification from the IRS on how to proceed for those taxpayers who did follow the instructions of Mr. Mnuchin and returned the payment, or the payment was directly debited from their bank account. "For the following inquiry, the deceased taxpayer issue ... If someone who could not cash a check for EIP1 or EIP2 and returned it to the IRS – they would be able to claim it on their 2020 tax return as a Recovery Rebate Credit – if they are eligible."