Stimulus for deceased
Hi Terry,
I watch you on WGN and have a question. My grandmother passed away in Jan. of this year. She left me to handle her affairs and noticed she received the $1400 stimulus payment direct deposit in a checking account I left open to pay for costs associated with closing out her will. Even though her death was reported to Social Security back in Jan. so we could stop her payments. Is this because she filed 2019 taxes? I have an accountant working on her 2020 taxes now and even the accountant wasn’t sure. Are we allowed to keep it or does it need to be sent back?
Terry Says
This is allowed because she was alive in 2021 — this year! That means she would qualify based on her 2019 tax return. And if she had too much income when her 2020 final return is filed, she wouldn’t have to return the $1400 if she were alive!
This got confusing because although the law was written for the original stimulus to provide for people who died in 2020, stimulus checks were sent out based on 2019 income. But then the Treasury secretary heard that checks were actually being made to deceased people or “estate of the deceased” and threw a fit, demanding those checks be returned. And they started checking the death records with Social Security.
But a group of legal experts pointed out that’s not what the law said about qualifying for a stimulus, and there was a lot of confusion. As long as the checks were deposited, the “common wisdom” was to hang on to the money until this was resolved. To my knowledge it never was –and I haven’t heard more under the new administration.
My suggestion is to do the same. The money was deposited, and was “earned” under the law, and there is no tax obligation on it. Since it is tax-free the stimulus doesn’t have to be reported on her return. And I very much doubt that the IRS will come back to claim it from the heirs after the estate is closed.
