IRS tells people how to send back stimulus cash sent to the deceased

So how exactly do you return a stimulus check that was sent to a dead person? It's a question that's been on the minds of way too many grieving families who saw stimulus money just show up in April for loved ones who died in 2018 or 2019, including wives, husbands, fathers, and mothers. Jerry Maziar's mother-in-law Muriel Lesselbaum lived to age 100. Maziar remembers her as a special, wonderful person, quite a character, who was pleasant even after her memory declined in her later years. She died Oct. 13, just a month after celebrating that 100th birthday. In April, the sent her a $1,200 stimulus check — marked deceased — in care of her daughter Judy Maziar. "Which was the appropriate amount had she been alive," said Maziar, 78, who lives in Atlanta. For weeks, Maziar wondered what to do. The couple had seriously thought of cashing the check and donating the money to a local food bank. They've been inspired to send $50 or $100 here and there to food banks during the coronavirus pandemic after they were pleasantly surprised one morning during a trip to Kroger when an anonymous donor — who later was revealed to be Atlanta media mogul Tyler Perry — picked up the grocery bills during the senior shopping hour. They know plenty of people need food right now. The seven-week tally on Thursday hit 33.5 million unemployment claims across the country. Now, instead of paying it forward, they'll be sending it back. Fortunately, the couple didn't cash that stimulus check because they had a nagging feeling that the IRS might come calling. They knew they couldn't be the only people seeing checks for the deceased — and they weren't. On May 6, the addressed the issue and added Question No. 41 to its ever growing list of questions and answers regarding Economic Impact Payments. "What should I do to return an Economic Impact Payment?" The Economic Impact Payments represent serious money. The amounts are up to $1,200 for individuals, and up to $2,400 for married couples. An extra $500 is added per dependent child ages 16 and younger. So while it might be tempting for some to keep the money sent to the deceased, the Treasury Department doesn't want you to do that. Here's what the IRS said people need to do if they must return an Economic Impact Payment, such as one issued to a deceased person. If the payment was a paper check: And if you cashed that paper check already, or you received the stimulus money via direct deposit, the IRS said you should: On May 6, the Treasury Department advised that people who received a stimulus payment for someone who died before the payment was received should return the money. While there remains some debate on whether the money must actually be returned based on the details of the Coronavirus Aid, Relief and Economic Security Act itself, several tax preparers maintain that it may be best for taxpayers to simply follow IRS instructions. "If payments are not returned, the IRS may try to bring a test case to see if a court will support their position, hoping that will bring in more payment returns," said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. The IRS could try to charge you interest and penalties at some point if you do not return the money. Luscombe said the IRS may also try to offset the claim against any tax refund that you might be due on a 2020 or even a 2019 tax return, especially if the stimulus money went into a joint account. "In short, it will likely create a very complicated situation if people do not voluntarily return the payments," Luscombe said. Ken Milani, professor of accountancy at the Mendoza College of Business at the University of Notre Dame, said his advice is that taxpayers "do the right thing," with a tip of the hat to Spike Lee. "Given the cash flow shortfall of the U.S. Treasury and the obvious ethical implications of a person who is dead receiving a stimulus payment, my take on the situation is that the money should be returned to the U.S. Treasury," Milani said. Also, he said, taxpayers should realize that this would be "low-hanging fruit" for the IRS to go after. Susan Hiltz of Macomb Township, Michigan, couldn't believe it when two stimulus payments popped up at once in her bank account on April 15 — and then she received another stimulus check in the mail shortly after that. Only one payment of $1,200 was really hers. The other $2,400 she knew was clearly a mistake. Her mother, Arlene Hiltz, who died at age 82 in May 2018, received a $1,200 payment last month via direct deposit because she was on Hiltz's account. Her aunt Mary Ann Osmialowski, who was her mother's only sister and died at age 79 in April 2018, received a check of $1,200. The check was sent to Hiltz, who handled her aunt's estate. How could two people who died two years ago be getting stimulus payments? Both had been on Social Security so it seemed to Hiltz that it should have been easy enough for the government to know they had died. The paper check even had an abbreviated indication that the check was for someone who was dead. Hiltz marked the check "Void" and sent it back immediately to the address on the envelope. She didn't wait until the IRS spelled out where some of those checks should go. She tried to search for answers on what to do with the other $1,200 that showed up via direct deposit. She was upset at the haphazard way the payments were made to the dead and what she views an ineptness on the part of the federal government in rushing out payments during the coronavirus crisis. She still felt the money had to be returned, though, even if it was someone else's mistake. While the situation created extra work for her — and brought up sad memories of when both sisters were in hospice care at once — she felt that finding some way to return $2,400 to the federal government was the only right thing to do, especially during the economic fallout related to the coronavirus pandemic. "There are people who are in dire need of that money and small businesses that aren't getting it," Hiltz told me in a phone interview Thursday. "There are people who live in our state and our country who really need it right now." 313-222-8876 or