One of the first government actions to restart the economy after the financial impact of coronavirus business shutdowns this spring was to send out stimulus checks to taxpayers. However, one problem quickly surfaced. The IRS inadvertently sent some checks to recently deceased taxpayers. As a result, several family members soon discovered one of their deceased loved ones (even those who had died in 2018) had received a stimulus check.
How the check errors happened
The $1,200 stimulus checks were based on 2018 and 2019 tax returns and the IRS didn’t correctly cross reference the Social Security Administration’s Master Death File to avoid sending checks to those who are now deceased. A similar problem occurred in 2010, with $250 stimulus checks sent to about 72,000 taxpayers who were no longer living. There’s no estimate currently how many stimulus checks were sent to deceased taxpayers in the last couple months.
What to do with an improper stimulus check
Very quickly after discovering the problem, the IRS asked that family members who discover stimulus checks sent to deceased relatives send them back. If you were married and your now-deceased spouse received a stimulus check, you should return the $1,200 given to them and keep your own stimulus check.
For paper checks issued to now deceased taxpayers, family members can do the following:
- Write void in the check’s endorsement section.
- Send the check to the IRS location in Connecticut (assuming your relative lived in Connecticut).
- Include a note as to why you are returning the check.
If you or a family member cashed the check or received it through direct deposit, you need to follow these steps:
- Submit a personal check or money order to the appropriate IRS location for Connecticut.
- Make the check or money order payable to the U.S. Treasury.
- Write 2020EIP and the recipient’s Social Security number or tax ID number in the check’s note section.
- Include a note as to why you are returning the check.
It’s difficult to predict how the IRS ensure all these improperly issued funds are returned. For those who are administering a loved one’s estate, it will be better to deal with the issue promptly. No one wants to discover months down the line that your loved one’s estate owes the IRS that money, plus interest.