Updated: March 26, 2021 – 3:00 PM
Many people are continuing to struggle to make ends meet due to the COVID-19 pandemic and related business shut-downs. On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (the “Rescue Plan Act”). Among many other things, The Rescue Plan Act provides “recovery rebates”, which are commonly referred to as economic impact payments (EIPs) or stimulus payments, to many taxpayers. This is the third round of stimulus payments, with the first two rounds coming from the March 2020 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the December 2020 Consolidated Appropriations Act (the “Appropriations Act”). One very common question is how to deal with the payments that are made to trusts and deceased persons. In this article discuss how estates and trusts should handle these stimulus payments.
Who is Eligible?
All three laws generally say that payments will be made to “eligible individuals.” An eligible individual is generally any U.S. citizen or U.S. resident alien. Under the CARES Act and the Appropriations Act, the payments are sent automatically to any eligible individual who filed a 2019 Federal income tax return. Under the Rescue Plan Act, the payment amount is based on 2019 income, or 2020 income if the 2020 tax return has been filed. The IRS has provided other methods for eligible individuals who did not file 2019 or 2020 tax returns to claim the payments.
What Amount Will be Provided?
The Appropriations Act provides direct payments of $600 per eligible individual, $1,200 for joint filers (down from $1,200/$2,400 under CARES Act) and $600 per qualifying child (up from $500 under CARES Act). Such payments phase out based upon an individual’s Annual Gross Income (AGI) based on 2019 returns. Under the Rescue Plan Act, payments are $1,400 to each eligible individual and $1,400 for each dependent of an eligible individual
Under the CARES Act and the Appropriations Act, the payments are reduced by 5% of the amount that the taxpayer’s AGI exceeds $75,000 (or $150,000 for married filers). For example, a single taxpayer with no qualifying children and with an AGI of $87,000 is considered “fully phased out.” In contrast, a single taxpayer with 2 qualifying children is “fully phased out” at AGI of $111,000. Under the Rescue Plan Act, however, individuals with an AGI of $80,000 or more (or couples with an AGI of $160,000 or more) will not be eligible to receive any stimulus payments whatsoever under the Rescue Plan Act.
The payments under the CARES Act and Appropriations Act are actually tax credits to be claimed on 2020 tax returns (which will be filed in 2021), while the payments under the Rescue Plan Act are tax credits to be claimed on 2021 tax returns (which will be filed in 2022). In all three cases, the payments pursuant to such credits are accelerated so that individuals can receive the funds now.
Payments Made to an Estate or Trust
There are numerous instances of checks being sent to deceased persons, with the recipients/holders of those checks being left with questions about what to do.
Note: Estates and trusts are ineligible for these stimulus payments. But a deceased individual is a separate taxpayer from his or her estate for the portion of the year that such individual was living.
All three laws specifically exclude estates and trusts from the definition of “eligible individual”. A trustee of a trust that receives an economic impact payment in his or her capacity as a trustee should return the money. The same is generally true under the CARES Act for an administrator or executor of an estate and for a family member, friend, attorney, agent, etc. of a deceased individual who obtains possession of a payment sent for such deceased individual.
The Appropriations Act actually indicates that only persons who died in 2019 or earlier are ineligible for payments. The IRS appears to have adopted this position. The instructions to the 2020 form 1040 state in part,
“Generally, you are eligible to claim the recovery rebate credit if in 2020 you were a U.S. citizen or U.S. resident alien, weren’t a dependent of another taxpayer, and have a valid social security number. This includes someone who died in 2020, if you are preparing a return for that person.”
Thus, persons who died in 2020 can still receive the stimulus payment under the Appropriations Act (such payment then becomes an asset of such individual’s estate). For an individual who did not receive the full payments for which they were eligible under the Appropriations Act and who died in 2020 or 2021, a personal income tax return should be filed for the portion of the year that such individual was alive and the amount should be claimed on such return.
While the foregoing may be the standard for the “second round” of stimulus payments under the Appropriations Act, the Rescue Plan Act says that anyone who died before January 1, 2021 is not eligible for a third round of stimulus money unless the there is a 2020 joint tax return filed, only one of the spouses died in 2020, and such deceased spouse was a member of the Armed Forces of the United States at any time during 2020. It follows, therefore, that persons who died in 2021 remain eligible for a payment under the Rescue Plan Act because they were alive for at least some portion of 2021 (making them an “eligible individual” as long as such individual was not a dependent and not a nonresident alien).
So how does one return a payment?
Many envelopes containing paper checks include a box on the outside of the envelope directing the person in possession to mark the box and place the envelope back in the mail if the payee is deceased. The IRS has provided instructions for those who need or want to return stimulus payments, including how to return payments made by direct deposit:
If the payment was a paper check that has not been cashed:
- Write “Void” in the endorsement section on the back of the check.
- Mail the voided check immediately to the appropriate IRS location.
- Do not staple, bend, or paper clip the check.
- Include a note stating the reason for returning the check.
If the payment was a paper check that has been cashed, or if the payment was a direct deposit:
- Submit a personal check, money order, etc., immediately to the appropriate IRS location.
- Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, 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 impact payment.
If the payment was a paper check that has been cashed, or if the payment was a direct deposit:
- Submit a personal check, money order, etc., immediately to the appropriate IRS location.
- Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, 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 impact payment.
How do I return an payment that was received as an EIP Card (debit card) if I don’t want the payment re-issued?
If you received your EIP as a debit card and want to return the money to the IRS and NOT have the payment re-issued, send the card along with a brief explanation stating you don’t want the payment and do not want the payment re-issued to:
Money Network Cardholder Services
2900 Westside Parkway
Alpharetta, GA 30004
If a single check is made payable to either a surviving spouse or a deceased individual with a surviving spouse, in both cases in which the spouses filed jointly in 2019 and for which the surviving spouse is an eligible individual, the surviving spouse should first cash the check and then return the portion paid to the deceased person to the Treasury by following the second set of instructions above. If a direct deposit is made into an account held by or for a surviving spouse, the surviving spouse (or custodian of the account) should send the portion paid to the deceased person to the Treasury by following the second set of instructions above. All remaining funds for which the surviving spouse is eligible can be kept by the spouse.
While the IRS instructions do not explicitly allow holders of a paper check to cash the check knowing it contains, in part, an ineligible payment, it does not make practical sense for the holder to send the entire payment back to the Treasury and then request that a new payment be issued. As long as the proper amount is timely returned to the Treasury pursuant to the appropriate set of instructions above, there should be no issues with cashing a check knowing that a portion of the funds were sent incorrectly. Certainly, any individual not entitled to any economic impact payment funds who receives a payment should return all of the funds pursuant to the appropriate set of instructions above.
Any Ohio resident returning to the Treasury economic impact payment funds from an already-cashed check or a direct deposit should send the money to:
Kansas City Internal Revenue Service
333 W Pershing Rd.
Kansas City, MO 64108
For non-Ohio residents, the appropriate mailing address can be found here: https://www.irs.gov/coronavirus/economic-impact-payment-information-center#eligibility.
We would like to thank everyone for your questions. Due to the nature of many of the inquiries we have receive on this topic, we are obligated to disable comment section on this forum. It is important that we as attorneys respect our code of ethics. We highly encourage those seeking legal advice to give us a call so that we can answer your inquiries in confidence. Please contact your Carlile Patchen & Murphy LLP attorney if you have any questions or need further guidance.
My mother was a widow and passed away in early October, is she eligible for the second payment of $600. I’m getting very conflicting answers. Maybe I should contact the IRS.
Hi Julie. Thank you for your question! Our response is below, but first we must provide a disclaimer: Please note that our response should not be taken as actual legal advice or tax advice. We are passing along recent statements and information given by the IRS, but such statements/information do not have the enforceability of law. Therefore, any decision you (or anyone else reading this response on our website) make with respect to the payment must be based solely on your own analysis and determination of the existing guidance, and not based upon any recommendation or advice, actual or perceived, by us.
The Consolidated Appropriations Act was not totally clear on this issue, but it did provide indications that only persons who died in 2019 or earlier are ineligible. The IRS appears to have adopted this interpretation. The IRS states on its website: “Regarding eligible individuals who died in 2020, the Recovery Rebate Credit may be claimed on line 30 of their 2020 tax return.” Furthermore, the instructions to IRS Form 1040 say, “Generally, you are eligible to claim the recovery rebate credit if in 2020 you were a U.S. citizen or U.S. resident alien, weren’t a dependent of another taxpayer, and have a valid social security number. This includes someone who died in 2020, if you are preparing a return for that person.”
Given this information, we plan to make some updates to the Article above.
My disabled sister died on 23/Nov 2020./She was not required to pay taxes does she get the1,400 stimulus check. I am also disabled can.I claim this check. I don’t file taxes either.*
I was not working in 2019 and 2020 because I was taking care of my mother who had cancer at home. I filed a short form of my tax returns for 2020 on line, took me a while and patience, and I was able to get my stimulus checks directly deposited at my bank. So, even if you had no income for 2020 you should report that zero income on your 2020 tax forms on line to get those checks. They ask you in the forms about the routing number and whether you have a checking or a savings account. Easy questions, but tedious. Those checks are a big help for many during this terrible pandemic.
My mother passed away shortly after receiving her economic impact payment card in January and did not use it then. Can those funds be deposited into her estate account?
Thank you for your question! We plan to make some updates to the Article above soon and your question should answered in such update.
I have seen a lot of articles relating to 2020; however, my brother died Jan 16 2021. He filed a joint return in 2020 (since he was alive) — and today his wife got $2400 deposited into their account. Does she have to return the $1200 or does she get to keep it because he was alive the entire year of 2020?
Thank you for your question! We plan to make some updates to the Article above soon and your question should answered in such update.
I have the same question. My father passed January 27th 2021. He filed a 2020 tax return. The $1400 stimulus was direct deposited to his bank account, and the bank sent it back to the IRS. How do I get those funds back?
Hello and thank you for your question. If the IRS does not automatically reissue the payment, its website does indicate there is a “Get My Payment application”. Otherwise, it will likely not be received until next year when a tax return is filed for tax year 2021 for your father and such credit is claimed on such return.
My mom died unexpectedly weeks ago, her check has already been issued. Do I keep it or do send it back?
Hi and thanks for your question. No, you do not need to return the money since they were alive in 2021. The payments become part of their respective estates. Hope that helps!
Hello my name is Shondell Respers.My daughter Shiaisa Respers passed away on jan.4th 2021. She never received the $600.00 stimulus and she died before the $1400.00 stimulus could be recieved my question is how do I claim her stimulus checks if she is qualified to get them being I’m her mother and she was not married or had any children.
Thank you for your question! We plan to make some updates to the Article above soon and your question should answered in such update.
My mother was 88 on ssi disability and in the Nursing Home her husband died April 3rd of 2020 my mom died on February 25th 2021 will she still recieve the 3rd stimulus check for 1400.00. I’ve read several articles and confused
Hi and thanks for your question. Because your mother died in 2021, she should still be eligible to receive the 3rd payment. However, if it does not come automatically, someone will need to prepare a 2021 tax return for her (in 2022) and claim the credit. Hope that helps!
My dad also passed away on January 27th 2021. He received a $1,400 stimulus check afterwards. It is my understanding that these funds are added to the estate. I had to hire a probate litigator for his estate so should the check be kept with this lawyer? Do I cash it and send in a new check with Estate of my dad’s name written by Pay to the order of? Thanks
Hi!
I really hope you can answer this question for me.. I have looked everywhere on the internet and I can’t find the answer!.
My mom passed away Jan 6th 2020.. would she qualify for the 1st or 2nd stimulus payment? I did just file her taxes 2.5 weeks ago.
Thank you..
Michele Sport
Hi and thanks for your question. Your mom should be eligible for the 2nd payment based upon the words of the legislation. It’s more unclear regarding the first payment. If the first one is received, it does not need to be returned. Hope that helps!
My brother passed away on Feb 2021 he received the first two stimulus payments if he gets the 1400 can it be used for funeral expense . I was my brother care taker ..
Hi and thanks for your question. Generally the payment would become part of his estate. If his estate planning documents provide for payment of funeral expenses, then such amount should be eligible to be used for such purposes. If his estate planning documents are silent on that question, or if he doesn’t have estate planning documents, then it may be necessary to seek approval from the Probate Court in the county where he was domiciled at the time of his death. Hope that helps!
My mom passed on January 10, 2021 and my dad passed on January 20,2021. Stimulus if $2800 was direct deposited to their checking account in March 2021. Do we need to return the money?
Hi and thanks for your question. No, you do not need to return the money since they were both alive in 2021. The payments become part of their respective estates. Hope that helps!
My father passed Feb 1 2021 ,he got a stimulus
Check direct deposit at he’s bank, they said I can’t keep it they were going to send it back, it’s he’s third one for 1400, is this true?
No. Anyone who dies in 2021 will have to have a tax return filed. As such they are entitled to have the 3rd economic impact check for 2021 of 1400. I did read it can not be placed in a trust though.
what happens if dependents were on the return of a deceased person for 2019 and 2020 becuase they lived until 12/29/2020. how will the dependents get their stimulus payments since the 2020 return is to be filed as the person was still alive per the IRS
Hello Tasha, eligible individuals who died in 2020, may claim the Recovery Rebate Credit on line 30 of their 2020 tax return.
My mom died March 28th 2021 her check just came in the mail can family cash the check or does it need to be sent back?
Hi and thanks for your question. No, you do not need to return the money since they were alive in 2021. The payments become part of their respective estates. Hope that helps!
My aunt died January 28, 2021 and her direct deposit for the stimulus was rejected by the bank as the account had closed. We received a check for the stimulus – can we deposit it into the estate account as we have done with other checks in her name. The bank has said no.
Because the check is made out to her name and was not received and deposited during her lifetime, it is likely an asset of her probate estate. Depending on your jurisdiction, you would likely need to file with the probate court in the county where she died. If this is the only asset of her probate estate, there may be a small estate procedure available that could be used in lieu of a full estate, the need to open an estate bank account, etc.
If you would like more specific advice feel free to contact one of the members of our Family Wealth and Estate Planning Group directly.
My aunt passed away in Feb 2021. I just received her stimulus check in the mail. What do I do with it? I am the executor of her estate and it is going through probate right now.
Because the check is made out to her name and was not received and deposited during her lifetime, it is likely an asset of her probate estate. Depending on your jurisdiction, you would likely need to file with the probate court in the county where she died. If this is the only asset of her probate estate, there may be a small estate procedure available that could be used in lieu of a full estate, the need to open an estate bank account, etc.
If you would like more specific advice feel free to contact one of the members of our Family Wealth and Estate Planning Group directly.
My son passed away.in.msrch 2021 do I have to return this check or can I use it to reimburse funeral expense to family members
Hi and thanks for your question. No, you do not need to return the money since they were alive in 2021. The payments become part of their respective estates. Hope that helps!
Hi my sister died Dec 30 2020 and I handle her estate do she get a stimulus check if so do I send it back
Hello Sheryl, eligible individuals who died in 2020, may claim the Recovery Rebate Credit on line 30 of their 2020 tax return.
My Mom died Jan 4th 2021. I got a paper check for the 3rd stimulus check in her name on April 20th 2021. There is no probate and no estate checking account so how do I cash the check to help pay for her funeral that we are waiting to have this summer due to the pandemic? She does have a will where I am named personal representative and I filed her 2020 taxes. Do I have to open an estate bank account in order to cash it or can I sign it over to the funeral home? Thank you
Because the check is made out to her name and was not received and deposited during her lifetime, it is likely an asset of her probate estate. Depending on your jurisdiction, you would likely need to file with the probate court in the county where she died. If this is the only asset of her probate estate, there may be a small estate procedure available that could be used in lieu of a full estate, the need to open an estate bank account, etc.
If you would like more specific advice feel free to contact one of the members of our Family Wealth and Estate Planning Group directly.
My father passed away in March 2021. His first two Covid payments were automatically deposited to his checking account which I am also on. The third Covid payment came as a debit card in the mail after he passed. If it had gone directly to the checking account I would be using it on his expenses. Can I use this debit card or what do I do?
Hi,
The father of my son passed Away January of this year. Who does the payment go to? Does it go to his dependent or his parents?
My husband passed away 3 weeks after our stimulus was deposited. (Stimulus deposited March 17th, husband passed April 9th). Do I have to return the $1400, or is it pro-rated for the 3 weeks he was alive?
Hi and thanks for your question. No, you do not need to return the money since they were alive in 2021, and it will not be pro-rated you may keep the full amount. The payments become part of their respective estates. Hope that helps!
My father died in early March 2021 and his check came in the mail in late April 2021. His estate checking account was already established. As court appointed Personal Representative, do I sign the EIP check as the PR or “Deposit Only” to the estate account?
Father in law died 2/18/2021. Undertaker stopped SS and Feb. payment was returned. Spouse received stimulus but deceased did not. They have been non-filers for past 4-5 years with AGI in 4 figures. Their 2020 stimulus was automatically deposited. What to do?
My father died February 2nd 2021 we just received a check for a stimulus and I don’t know what to do with it he had no estate or anything like that he has a bank account but they froze his card for that account I don’t know what to do we need the money to help finish paying off the bills that he left for us I need to know what to do as soon as possible
Hi, my mom passed in May 2020. We had already notified the government as she was receiving her social security payments and we needed to stop them. She received all 3 of the stimulus payments, 2 of them being after she passed. Do we still need to withdraw the money from the 3rd check and send it back?
Hi my fiancé passed February 2021 he had filed on his taxes every year also this year and in 2020. I received a stimulus check in his bank account but the bank sent it back. Then I have received one in a paper check do I keep it or does it have to go back he has no executor of his estate we’ve been together 25 years. He passed of Covid.
How do I cash a check for my son who died on.march 262021 I am going to court to get probate as an administrator of his chsck
HI,
My step-father passed away on January 13, 2021 and then my mother passed away on February 2, 2021. I just received their 3rd round of stimulus in the mail but since they were married it was issued in both of their names. I know that they are eligible but I will need their own portion of the stimulus to go into their perspective estate accounts. There is not a joint account to deposit this check into. Is there anyway to get the checks reissued in their own names?