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Recovery Rebate Worksheet

jctax
Level 2

Taxpayer was deceased on 03/28/20 before the first stimulus payment went out.  Worksheet states she is entitled to both checks in refund.  If I enter ZERO in each, she will get it in her refund.  If I enter the amounts as if she received them, IRS could ask for it back later knowing she was deceased.  Any Suggestions?

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8 Replies 8
IRonMaN
Level 15

You enter what was received - zero.  As long as she was alive on 1/1/20, she is entitled to the credits.

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
jctax
Level 2

Thank you!

BobKamman
Level 13

IRS asking for decedent checks to be returned was on Page 1.  IRS admitting that was a mistake was on Page 20.  Make sure to read all of the news, all of the time.  

qbteachmt
Level 15

"In addition, the following are ineligible for a payment: individuals who died prior to January 1, 2020, and estates or trusts.

Update: Individuals who died in 2020 or 2021 may not have received Economic Impact Payments. If you file a 2020 return for an individual who died in 2020 or 2021, you should complete the Recovery Rebate Credit Worksheet in the Instructions for Form 1040 and Form 1040-SR to determine whether the Recovery Rebate Credit is allowable for the decedent."

Perhaps it would help to review what is really happening for EIP “stimulus” funds: The funds were paid out as Advanced payment against a projection. The first two payouts were projected based on 2018 or 2019 tax returns, but the eligibility is part of tax year 2020 as Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.

If the person is not a dependent in 2020, then they would be eligible for consideration as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent." You must correctly address whether they Can be Claimed as a dependent on someone else’s tax return.

The third payout which started in Jan 2021, has different eligibility rules as to dependents and this payout is a projection, using 2019 or 2020 tax returns, then reconciled against Actuals on the 2021 tax return.

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal includes one for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

One for each of the three EIP “stimulus” payments.

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ritastone001
Level 3

I have a widow client that her husband died January 20,2020. She did receive the first 1200 for him. She returned the amount per directions. She then received a letter stating she had not paid it back. We did a letter showing the cancelled check. Letter then cleared it. Prepared her taxes, showing she is due the stimulus amount for her deceased husband for 2020. Guess what! The amount of stimulus was held and she received a letter stating he was not eligible for the payment. I want to do another letter and lead the IRS down the path again to her rightful refund. But at this point she doesn't want to deal with anything more. So her choice, I will do what the client wants in this case. But I just get a headache trying to see that everything is done correctly and still it doesn't work like it is suppose to!  Rant over!

 

jctax
Level 2

Page 1 of what?  I've been searching and searching.  Thank you for any help.

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qbteachmt
Level 15

You don't need to be searching. Enter what was received. The dead person is entitled to the amounts for EIP #1 and EIP #2, because they were alive Jan 1, 2020 and that's what applies.

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jctax
Level 2

Thank you.  Done.

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