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Should you keep a stimulus check for a deceased relative?

New guidance from the IRS says you should return it.
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/ Source: AP (Associated Press)

Payments from the $2.2 trillion coronavirus relief package have gone out to many people across the United States.

And while many Americans are still waiting for their stimulus checks to arrive, there's a surprising group of people who may have already received their payment: the deceased.

How are the deceased receiving coronavirus stimulus checks?

If someone filed his or her 2018 or 2019 taxes and has since passed away, relatives may see stimulus checks arrive in that person's name. That's because the IRS is using the most recent tax information it has on file to determine eligibility and send out payments.

"The Social Security administration has a master file of all deaths in the United States, but if the IRS had taken the time to cross-reference that date, it would have delayed checks for everyone for weeks," Nicole Kaeding, vice president of policy promotion at the National Taxpayers Union Foundation, told TODAY by phone.

Has something like this happened before?

Yes. During the financial crisis of 2008, "more than 71,500 deceased Social Security beneficiaries received $250 payments through the American Recovery and Reinvestment Act," according to CNBC.

Should I keep a coronavirus stimulus check meant for a deceased relative or return it?

The Treasury Department and the IRS issued guidance on May 6 stating that individuals who receive this type of check should return it. The IRS updated its website with additional FAQs about inadvertent payment and how to return the money received in error whether it is by check, direct deposit or a check you already cashed.

"Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, " the website states, "in which case, you only need to return the portion of the Payment made on account of the decedent."

Anyone thinking of keeping the payment should think twice. Jennifer Benda, a shareholder at the law firm Hall Estill in Denver, advised today that "heirs of deceased individuals should be aware that the Internal Revenue Code provides measures for the IRS to recover improperly issued refunds, with interest."

What if I receive extra funds in my name?

You can keep extra money arriving in your name. Kaeding said that the Coronavirus Aid, Relief and Economic Security Act outlines that if someone receives too much money, it's considered a clerical error on behalf of the IRS, and "the money, in general, doesn't need to be paid back."

But Benda said, "I would not plan on keeping money that you received and not paying it back if you think you got more than you’re entitled."