Coronavirus Economic Impact Payments - Dependents and Decedents FAQS

By now, a majority of Americans qualifying for an Economic Impact Payment under the Coronavirus Aid Relief, and Economic Security Act (CARES Act), have received their money. As of Friday, the IRS has sent 89.5 million of the projected 150 million Economic Impact Payments. The IRS, who is notorious for extreme inefficiencies and archaic technology, worked quickly to develop information portals for taxpayers needing to update payment information and for non-filers needing to provide payment information.

Despite the IRS's overall success in expediting these stimulus payments, many Americans are still trying to figure out if they are entitled to a payment, how much their payment should be, or where there payment got sent.

Some of the common areas of confusion involve:

Dependents

An additional $500 payment will be given for each qualifying dependent under 17

Q1. I received an additional $500 Payment in 2020 for my qualifying child that turned 17 on March 1, 2020. Will I have to pay back the $500 next year when I file my 2020 tax return? A. No, there is no provision in the law requiring repayment. When you file next year, you can claim additional credits on your 2020 tax return if you are eligible for them, for example if your child is born in 2020. But, you won’t be required to repay any Payment when filing your 2020 tax return even if your qualifying child turns 17 in 2020 or your adjusted gross income increases in 2020 above the thresholds listed above.

Q2. I claimed my child as a dependent on my 2019 tax return. She is graduating from school in 2020. Will she receive her own Payment? A. No, your child will not receive a Payment in 2020 because you claimed her as a dependent on your 2019 tax return. She will not receive a $1,200 credit in 2021 if you can claim her as a dependent on your 2020 tax return. However, if your child can’t be claimed as a dependent on by you or anyone else for 2020, she may be eligible to claim a $1,200 credit on the 2020 tax return she files next year.

Q3. I claimed my mom as a dependent on my 2019 tax return. Will I receive an additional Payment for her or will she receive her own Payment?

A. No, you will not receive an additional Payment amount for your mom because she is not your qualifying child under age 17. Your mom will not receive her own Payment because you claimed her as a dependent on your 2019 tax return. You mom will not receive a credit in 2021 if you can claim her as a dependent on your 2020 tax return.

Decedents

Q1. My father died in March of 2020 but $1200 stimulus payment was deposited into his bank account. Will I have to repay it?

Generally, all tax credits are allowed on a decedent's final individual income tax return if eligible for such at the time of their death, so the payment would be legitimate and would not need to be repaid.

Q2. My father died in 2019 and a final tax return has not been filed, will the estate receive a stimulus payment?

Maybe. The CARES Act structures the stimulus payment as a rebate, that is a credit against your 2020 individual income tax. However, any payment received this year is based on the information on your last tax return filed— your 2019 return if filed, or your 2018 return. So if the decedent qualifies for the credit based on his 2018 return and the IRS will likely send the decedent a check. Furthermore, the CARES Act provides that you will not have to repay the advance rebate if it is greater than the amount it would have been based on your 2020 circumstances.

For more answers on the Economic Stimulus Payment, check out our blog post: https://www.floridalegalcounsel.com/post/coronavirus-economic-impact-payment

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