Q&A of the Day – Should you keep stimulus checks sent by mistake?
Each day I’ll feature a listener question that’s been submitted by one of these methods.
Email: brianmudd@iheartmedia.com
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Today’s entry: Hello, Just a quick question. A friend of mine's wife died 2 years ago. He got a stimulus check for her and himself. On her check it said "Deceased". He cashed it. Did they send this check by mistake?
Bottom Line: Yes, it was sent by mistake and no, he wasn’t supposed to cash it. This has proven to be a common mistake by the IRS during the issuance of stimulus payments. Here’s how it happened...The IRS used the most recent tax return data to determine eligibility and the amount of the payments. As long as a tax return was filed in an individual’s name as recently as 2018, it was screened for eligibility based on income. If eligible it was scheduled to be paid out. There’s a process to screen out those who’re deceased but there was an error in processing that simply stamped it on some payments instead. The IRS hasn’t stated exactly how many payments have gone out to deceased individuals but it has been pervasive enough that they issued official guidance on how these payments should be handled by those who received them.
If the payment was a paper check:
- Write "Void" in the endorsement section on the back of the check.
- Mail the voided Treasury check immediately to the appropriate IRS location listed below.
- Don't staple, bend, or paper clip the check.
- 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:
- Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
- 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.
- Include a brief explanation of the reason for returning the EIP.
For Floridians the mailing address is:
Austin Internal Revenue Service
3651 S Inter regional Hwy 35
Austin, TX 78741
Probably not what your friend wants to hear. Now clearly the IRS is allowing for people to remit payment for checks cashed that shouldn’t have been issued without penalty. What isn’t known is what, if any, repercussions there may be down the line if the checks are cashed and money kept. There’s nothing in the law that specifically addresses issues like this. It's clear this type of error wasn’t considered, but not adhering to the IRS’s guidance may not be risk free.