More than 89,000 Americans have died from the coronavirus as of Monday morning, raising the question of whether or not family members of those who have died of the virus can cash their loved one's stimulus check and use the payment for medical and funeral expenses. Similar questions have lingered ever since the first round of payments went out in mid-April, with some Americans reporting that their deceased loved ones had received a check as well. At this time, however, it seems that the Internal Revenue Service (IRS) is expecting people to send stimulus money of those who died prior to receiving their stimulus check back.
In new guidelines issued on May 6, the IRS addressed the growing number of Americans reporting such scenarios. With stimulus payouts based on 2018 or 2019 tax filings, some Americans who had passed months or even years ago had inadvertently received a payout, which is part of the CARES Act.
"A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions in the Q&A about repayments," the IRS writes. "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."
The IRS has not yet clarified if there would be legal consequences for those who fail to return the money, and some law experts have said that the language used in the stimulus package does not allow the IRS to take back payments. Nina Olson, executive director of the Center for Taxpayer Rights, pointed to the stimulus checks sent out in 2008, noting that the IRS did not make an effort to have Americans return money sent to deceased citizens.
"What is the legal reasoning for this and why is this position different from the IRS’s position in 2008?” Olson said in an emailed statement to AARP. "The government is entitled to change its mind, but without explaining its rationale, this position appears arbitrary and capricious."
For now, however, the safest thing to do seems to be adhering to the IRS' guidelines to return the money. The IRS has since issued guidelines on how to do so, including a list of appropriate addresses to return the stimulus payments to. The IRS also has guidelines on how to return payments that have already been cashed or those that were distributed via direct deposit.