Stimulus Credit calculated for deceased taxpayer

[carlson2114]

I'm using TurboTax Home & Business to prepare my deceased aunt's FINAL tax return for 2020.  She received the first stimulus check for $1,200 in April 2020. She died 8/4/2020, and her bank account used for SocSec Direct Deposit was closed 12/17/2020. TurboTax calculated that she is entitled to a $600 Stimulus Credit for not having received her second Stimulus Payment. Is this Credit correct, or is this an error that should be overridden or corrected in TurboTax?

[DMarkM1]

The credit is based on the information in the 2020 return and will calculate based on the taxpayer being alive.  First, I am sorry for your loss; our prayers to you and your family.  

Be sure in the Personal Info Section that you have checked the box indicating your aunt passed away before filing the return.  You will get a pop up box asking for the date of death.  Once you get to the Federal Review after that update, you would put in the $1200 for the first payment and leave the second box empty.  A credit will appear, but the IRS will review the returns before sending out refunds on these credits. 

[Edited 1/18/2021 7:13 pm EST] 

[AmeliesUncle]

From the Draft Instructions:

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.

https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf#page=58

[WA_Paul]

I have a similar situation. My parents each received a stimulus check for $1,200 in April 2020. My dad died in July 2020. My mom received a $600 stimulus check in January 2021. TurboTax calculates that my dad is eligible for a $600 stimulus check and thus enters it in the TaxReturn. I would think that TurboTax would use the date of death to determine that my dad is not eligible for the second stimulus check. If TurboTax does not fix this problem, I will enter that my dad did receive the $600 stimulus check and then the generated TaxReturn will be correct (it won't request a $600 refund that the IRS would have to review and then reject).

[MaryM428]

You are correct to override what TurboTax is showing and put the amounts in that give the correct results to the IRS.  

@WA_Paul
@ Carlson2114

[Critter-3]

NOOOO ... as long as dad was alive on 1/1/2020 then he IS ELIGIBLE  for the second stimulus on the joint  2020 return .... the program is CORRECT so don't mess it up.  

[WA_Paul]

AmeliesUncle and Critter-3 are correct! A person who died in 2020, prior to the second stimulus check, is still eligible to receive the second stimulus check. Here are the detail from the IRS website (the bold italics are added by me):

According to the IRS FAQs:

Will a deceased individual receive the payment? (added January 5, 2021)

A payment won’t be issued to someone who has died before January 1, 2020. If you filed a joint return in 2019 and your spouse died before January 1, 2020, you won’t receive a $600 payment for your deceased spouse, but you’ll still be issued up to $600 for you and $600 for any qualifying children, if all other eligibility criteria are met. 

Regarding eligible individuals who died in 2020, the Recovery Rebate Credit may be claimed on line 30 of their 2020 tax return.  Please refer to the instructions for the 2020 Form 1040 for more information.

According to the 2020 1040 Instructions for line 30:

Line 30
Recovery Rebate Credit
The recovery rebate credit was paid out to eligible individuals in two rounds of advance payments called economic impact payments. The economic impact payments were based on your 2018 or 2019 tax year information. The recovery rebate credit is figured like the economic impact payments except that the credit eligibility and the credit amount are based on your 2020 tax year information. If you didn’t receive the full amount of the recovery rebate credit as economic impact payments, you may be able to claim the recovery rebate credit on your 2020 Form 1040 or 1040-SR.
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. Use the Recovery Rebate Credit Worksheet to figure the credit, if any, you can claim. For more information on the recovery rebate credit, go to IRS.gov/RRC.

[jonesmom35]

I am REALLY confused!!!!  My Mom died on February 5, 2020.  She did not receive either stimulus payment, which is what I would expect since she passed away before COVID-19 hit and the stimulus bill was passed.  I have started working on her 2020 taxes and TurboTax is saying she is eligible for the full $1,800 credit.

According to the IRS Economic Impact Payment Information Center, she is NOT eligible (see below).  Is she eligible or not??????????

Q A5. Does someone who died qualify for the payment? Why did the IRS send payments to deceased indiv...

A5. No, a payment made to someone who died before receiving the payment 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 receiving the payment, 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, an Economic Impact Payment will be reissued to you.

• The IRS is aware that some surviving spouses weren’t issued their portion of the payment. We’re in the process of correcting this issue to send these payments as quickly as possible. We apologize for any inconvenience this may have caused. You can check the status of your payment using the Get My Payment tool. Eligible individuals who don’t receive a payment this year 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.  

[WA_Paul]

The only definitive date is January 1, 2020. If a person died before that date he is not eligible for stimulus payments, and if he received a stimulus payment, it must be returned. However, if a person died during 2020, there is some debate as to whether he is eligible or not. I am opting for following the IRS, since they deal with the tax returns. Therefore, I will file my Dad's taxes as TurboTax suggests, namely requesting the Recovery Rebate Credit. Ultimately, the IRS will decide whether my Dad receives the credit payment.

It makes no sense for the government to issue stimulus payments to dead people. But, this won't be the first time, or the last, that the government doesn't make any sense.

[DJBREEN1]

What he said!