According to the IRS she is not entitled to the first check which is why the executor returned it, but it was mandated in the second stimulus that the deceased person could receive it, so the answer that I keep getting is she is not entitled to EIP 1 but she is entitled to EIP 2.  It can be claimed on the tax return.

From the link you provided from the IRS: "You are not eligible for a payment if any of the following apply to you: You may be claimed as a dependent on another taxpayer’s return (for example, a child or student who may be claimed on a parent’s return or a dependent parent who may be claimed on an adult child’s return). You do not have a Social Security number that is valid for employment. You are a nonresident alien. The following are also not eligible: a deceased individual or an estate or trust." That is exactly where I found the information for the first payment.  The IRS says if the person died before the first payment you have to return it, but the second payment was mandated that it could still go to a deceased person, so the second one does not have to be returned, but the first one does.

I have the same question.  The taxpayer, who is a spouse on a MFJ return died in 2020 before the first stimulus payment, but she received both the first and the second payments. It is my understanding that she (the spouse) has to return the first one in the amount of $1200 but not the second one.  There doesn't seem to be any way to do this within ProSeries.  The IRS says you have to mail the money back to a special address. I'm just wondering if I should tell my client she needs to return the $1200, or if I just ignore it.  There doesn't seem to be any mandate or regulation.  It just seems unethical to keep it.   Is there a way to do this within ProSeries? Will she be hit with a monstrous penalty and interest three years from now? A second opinion would be greatly appreciated.

Just so you know, I am a CPA and I have been doing taxes for 30 years and have NEVER done that.  If there is no 1099, then my clients or sometimes me, have to obtain it from the source.  In this case there is no 1099 because it is not pension funds.  It is settlement funds.

I wonder if they had two completely separate taw suits then, because these checks were received on May 14, 2020.  The clients were former participants not current.  There was nothing even close to what this says on the website that I was sent to and the forms had to be mailed in June of 2019.  The checks were received in May, 2020. It doesn't matter.  It is the same idea.  The funds aren't from the pension itself.  The client's pension was actually rolled over into a different plan long before this lawsuit.  It is from the settlement. It has no effect on Minimum Distributions or early penalties.  I think is is Other Income.    

I did not contact JP Morgan.  I contacted the phone number listed for the JP Morgan Class Action lawsuit, which would be the attorney's office. I don't believe any taxes were withheld.  I considered grossing it up by 20% but if nothing was withheld that would mess up everything.  I am satisfied that no taxes were withheld and there is no 1099.  

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Thank you very much. I did inform this contractor of the notice and I did request a copy of the official letter for the EIN or the Social Security card as well as a corrected Form W-9. I decided to do this as a service to him and maybe he will be my next new client since he must be having a problem.   I was thinking of this procedure as an imposition and burden rather than as a service to him. I have no idea if he will respond. Thanks!  

Yes, the notice states, "If they agree, send the B notice."  The accounts did agree.  The question was still, should I contact that contractor?  The letter stated explicitly that I do not need to contact the IRS or prepare a corrected 1099.  This implies to me that they already know he gave them the wrong number.  Whether he was cheating on his taxes or not remains unknown.  It was a substantial payment.  They have his name and address, of course.   I did not send the B notice because there will never be any future contact with him and cannot be backup withholding.