Do You Need to Return an Economic Impact Payment That Was Sent Erroneously?

The IRS and the U.S. Treasury had disbursed over 160.4 million Economic Impact Payments (EIPs), which are the payments being sent to eligible individuals in response to the economic threats caused by the Coronavirus pandemic. The U.S. Government Accountability Office reports that over $269.3 billion of EIPs have already been sent through a combination of electronic transfers to bank accounts, paper checks and prepaid debit cards.

stimulus checkThe CARES Act authorized eligible individuals to receive a stimulus check up to $1,200 or $2,400 for a married couple filing a joint return. Individuals may also receive up to an additional $500 for each qualifying child. Those with adjusted gross income over a threshold receive a reduced amount.

Deceased individuals

However, the IRS says some payments were sent erroneously and may need to be returned. The IRS canceled uncashed checks sent in error to deceased individuals. If the deceased person’s check hasn’t been cashed yet, you don’t need to do anything anymore.

If a payment was made successfully, either by direct deposit or the check was cashed, you will need to send a personal check or money order to an IRS facility. Instructions for returning the payment can be found here.

The entire EIP should be returned unless it was made to joint filers and one spouse hadn’t died before receipt. In that case, you only need to return the EIP portion made to the decedent. This amount is $1,200 unless your adjusted gross income exceeded $150,000. If you cannot deposit the payment because it was issued to both spouses and one spouse is deceased, return the check as described here. Once the IRS receives and processes your returned payment, an EIP will be reissued.

In addition, the IRS states that EIPs sent to incarcerated individuals should be returned.

Payments that don’t have to be returned

Some people receiving an erroneous payment don’t have to return it. For example, if a child’s parents who aren’t married to each other both get an additional $500 for the same qualifying child, one of them isn’t required to pay it back.

But each parent should keep Notice 1444, which the IRS will mail to them within 15 days after the EIP is made, with their 2020 tax records. The notice provides information about the payment and is especially important for people to keep if they think the amount is wrong. When taxpayers file their 2020 tax return, they can refer to Notice 1444 and claim any additional credits for which they may be eligible

Some individuals still waiting

The government is still sending out EIPs. If you believe you’re eligible for one but haven’t received it, you will be able to claim your payment when you file your 2020 tax return.

If you need the payment sooner, you can call the IRS EIP line at 800-919-9835, but the Treasury Department notes that call volumes are high.

© 2020

Join Our Newsletter

Sign up to receive exclusive newsletters with the latest information affecting you and your organization.

Posted in