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Taxes for 2020: Do you owe taxes on stimulus checks or unemployment?
Because of the coronavirus pandemic, 2020 can be a fiscal year like no other. Here are the answers to some of your main questions.
USA TODAY
Many Americans faced a dilemma last year when they received $ 1,200 stimulus payments from their deceased spouses or other family members. They were wondering what to do with the money and if they should return it.
The coronavirus pandemic left many deponents in a difficult fiscal situation for the 2021 filing season, after their family members unexpectedly died of the disease last year. The United States currently has 29.2 million confirmed cases of COVID-19 and more than 528,000 people have lost their lives, according to data from Johns Hopkins University.
Last spring, the IRS asked the deceased’s family members to return the money after nearly 1.1 million payments, totaling nearly $ 1.4 billion, were mistakenly sent to people killed in the first round of checks, according to with a report from the Government Accountability Office.
The Treasury and the IRS were quick to deliver the much needed help to millions of struggling Americans and did not consult the death records. Then, in December, the stimulus package that approved the second round of $ 600 checks for eligible Americans said that only recipients who died in 2019 or earlier should return payments.
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Now, some individuals who died in 2020 may still qualify for stimulus checks through Recovery Credit if they do not receive Economic Impact Payments – the stimulus checks, according to Lisa Greene-Lewis, CPA and tax expert from TurboTax.
Here’s what you need to know:
Is someone who died qualified for payment?
In some cases, yes. If you are preparing to return a deceased relative, some individuals who died in 2020 or 2021 may qualify for Recovery Discount Credit if they have not received a payment, but were eligible.
You must be an American citizen or foreigner resident in the United States, have not been declared dependent on another taxpayer and have a valid Social Security number to work with.
As long as the person died in 2020, he did not receive a stimulus check, but was eligible based on his 2020 income when his return is filed, then the person can claim the Recovery Discount Credit on the return, according to Greene- Lewis.
In December, the Tax Relief Act of 2020 increased the value of phasing out adjusted gross income for a qualified widow or widower from $ 75,000 to $ 150,000. This means that widowers and widowers with an income in excess of $ 75,000 can qualify for Recovery Credit.
How can I apply for recovery rebate credit?
If you file a 2020 return for an individual who died in 2020 or 2021, the IRS says that you must complete the Recovery Discount Credit Worksheet in the Instructions for Form 1040 and Form 1040-SR to determine if you can claim it .
Look for the Recovery Discount Credit listed on Line 30 on Form 1040 for fiscal 2020.
Do they qualify for a third stimulus check?
Taxpayers who died in 2020 do not qualify for a third stimulus payment, according to Alison Flores, principal tax research analyst at The Tax Institute in H&R Block. Trusts and properties are also not eligible to receive a third direct payment, she added.
For those who died in 2021, the IRS has yet to provide information indicating whether they would receive an Economic Impact Payment, tax experts say.
What to do with payments sent to deceased relatives
If your spouse died before January 1, 2020, and you received one or both of the stimulus payments last year that included an amount for your deceased spouse, the IRS says to return the portion of the deceased’s payment
Relatives were asked to return the checks because these people died before 2020 and the IRS filed the 2019 or 2018 income tax returns when it sent the checks in the first round. They would not be eligible since they died before stimulus checks were sent to 2020.
If you are married and filed a joint income tax return, but your spouse passed away before receiving payment, you only need to return the portion of the money that was for your spouse, according to the IRS.