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May 2020 - Who Ya Gonna Call...Tax Busters



It’s Friday May 8th but let’s do this in reverse order to hopefully pique your interest.

  • May 6th the Philadelphia Inquirer called Marty Abo as they were investigating inquiries, they were receiving from several of their readers. Their May 7th article citing Marty is attached here Dead people are getting coronavirus stimulus checks.
  • Ironically, Abo advised them that just the day before the IRS came down on this point with an announcement modifying what they had been posting before;
  • Abo had also received three calls on the same issue as ambiguities flourished (unfortunately only one of the calls was from a client but the other two, well, what are you waiting for).

Now let’s go back and see how Abo initially responded (not bad Abo) but do appreciate the IRS has just now cleared up their “oops”.

An attorney colleague called to ask about the $1,200 Stimulus check he got for his mother who passed away in 2019. What should he do?  Here was an Abo response:

“So sorry about your Mom. You do raise an interesting question. First, we can tell you that even the IRS’s Frequently Asked Questions (FAQs) advises WHO IS NOT ELIGIBLE for the Stimulus check:

Although some filers, such as high-income filers, will not qualify for an Economic Impact Payment, most will. Taxpayers likely won't qualify for an Economic Impact Payment if any of the following apply:

  • Your adjusted gross income is greater than $99,000 if your filing status was single or married filing separately; $136,500 for head of household; and $198,000 if your filing status was married filing jointly.
  • You can be claimed as a dependent on someone else’s return. For example, this would include a child, student or older dependent who can be claimed on a parent’s return.
  • You do not have a valid Social Security number.
  • ·You are a nonresident alien.
  • You filed Form 1040-NR or Form 1040NR-EZ, Form 1040-PR or Form 1040-SS for 2019.

“Going backwards, here’s IRS’ listing of WHO IS ELIGIBLE for the stimulus check:

  • U.S. residents will receive the Economic Impact Payment of $1,200 for individual or head of household filers, and $2,400 for married filing jointly if they are not a dependent of another taxpayer and have a work eligible Social Security number with adjusted gross income up to $75,000 for individuals; $112,500 for head of household filers and $150,000 for married couples filing joint returns.
  • Taxpayers will receive a reduced payment if their AGI is between $75,000 and $99,000 if their filing status was single or married filing separately; 112,500 and $136,500 for head of household; $150,000 and $198,000 if their filing status was married filing jointly. The amount of the reduced payment will be based upon the taxpayers specific adjusted gross income.
  • Eligible retirees and recipients of Social Security, Railroad Retirement, disability or veterans' benefits as well as taxpayers who do not make enough money to normally have to file a tax return will receive a payment. This also includes those who have no income, as well as those whose income comes entirely from certain benefit programs, such as Supplemental Security Income benefits. Retirees who receive either Social Security retirement or Railroad Retirement benefits will also receive payments automatically.

We are not aware of any requirement to be actually living at the time of this payment. The amount involved may not be significant enough to warrant our researching or looking into further but this is different than getting a social security check after a date of death and the government clawing it back as they will inevitably do. Our unofficial thought might be if you do deposit it, do not consider it taxable income and yet keep your fingers crossed that it’s proper. Be prepared to return it.

We then even sent him a Wall Street Journal article a few days later when we got another call with the same issue. The April 28th Journal article pretty much validated our initial approach. 

Well, on May 5th the Treasury Department finally put in writing the question regarding decedents receiving an Economic Impact Payment. Their answer is now NO, it needs to be returned as they updated their Frequently Asked Questions in #10 and in #41 -

Q10. Does someone who has died qualify for the Payment? (added May 5, 2020)

A10. No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000. 

Q41. What should I do to return an Economic Impact Payment (EIP)? (added May 5, 2020)

A41. You should return the payment as described below -

If the payment was a paper check:

  1.  Write "Void" in the endorsement section on the back of the check.
  2. Mail the voided Treasury check immediately to the appropriate IRS location listed below.
  3. Don't staple, bend, or paper clip the check.
  4. Include a note stating the reason for returning the check.

If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:

  1. Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
  2. 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.
  3. Include a brief explanation of the reason for returning the EIP.

For your paper check, here is the IRS mailing address to use for New Jersey: Kansas City Refund Inquiry Unit, 333 W Pershing Rd, Mail Stop 6800, N-2, Kansas City, MO 64108

For your paper check, here is the IRS mailing address to use for Pennsylvania: Philadelphia Refund Inquiry Unit, 2970 Market St, DP 3-L08-151, Philadelphia, PA 19104