IRS confirms stimulus funds will likely be issued for individuals who died in 2020: That’s Wealthy! Q&A

CLEVELAND, Ohio – Why is my property tax bill so high? Do you still have to pay city income taxes if you’re working in another city at home because of coronavirus? And, on the receiving end of government money, what if a stimulus check arrives for a deceased parent?

Those are some of the questions sent to That’s Rich! recently.

That’s Rich! – My mom died from COVID on December 26. Will she get the Fed’s $600 stimulus check, and if so, is it legally correct? Since she didn’t do anything digitally, it would certainly come as a physical check. I would hate to get a check and cash it, then later find out that she/her estate wasn’t entitled to it and have to pay it back, god forbid with penalties. I know that Congress passed the new Stimulus law just before her death, and the president signed it just after. So I’m not sure about this. – Vince

Vince – The stimulus package you referred to was signed into law, Dec. 27 the day after your mother’s death. Though you likely won’t get the money sent to you unsolicited by this point, it is available on behalf of your mother in completing her 2020 tax form, the IRS confirms.

The IRS explains eligibility for stimulus payments this way: “Generally, you are eligible to claim the recovery rebate credit if in 2020 you were a U.S. citizen or U.S. resident alien, weren’t a dependent of another taxpayer, and have a valid Social Security number. This includes someone who died in 2020, if you are preparing a return for that person.”

As to who specifically is entitled to the money, an IRS spokesman said, “It depends on their probate status. But his mother’s estate is entitled to it. If there are others in the will or otherwise entitled to a portion of the estate, like siblings, that’s another issue.”

This is a reversal from IRS statements after the first round of the stimulus last spring. The IRS in June issued an explainer saying that money needed to be returned if it arrived after someone’s death.

Nina Olson, executive director of the Center for Taxpayer Rights, said this was cleared up as part of the second stimulus package, and retroactively covers the first stimulus checks – money the IRS initially asked to be returned.

“Congress explicitly stated in the law that persons who died in 2020 would be eligible not just for the second round of payments but also for the first round,” Olson explained. “This is really helpful for all those folks who turned in their deceased spouse’s payment at the IRS direction. They can claim that $1,200 as well as the $600 on the 2020 tax return unless they were able to cash them.”

That’s Rich! – I was shocked at my property tax bill this January. Approximately 10 years ago, I moved to my present residence and bought a unit for approximately $137,000. At the latest appraisal, it was assessed at $170,000, which I contested. … I am going to have to move. I do not qualify for the Homestead Exemption and am a retired school teacher. It is shameful what the appraisals, real estate taxes, and what cities have done to add charges to senior citizens. I hope future articles can address solutions to these issues. – Joan

Joan – Likely because you contested the value, your home is now actually appraised less by the county for tax purposes than before you bought it in 2011 (though 9.6% above your purchase price). That’s a good lesson for people unhappy about their appraisal. File an appeal. Your tax bill is actually less now than what the previous owner paid a decade ago, county records show.

But you raise another issue, that of the Homestead Exemption. As I’ve noted before, the legislature and Gov. John Kasich in 2013 eliminated this senior citizens discount for people who turned 65 after Jan. 1, 2014, unless they qualified as low income. This break previously had been offered to all seniors. What stunned me about this change is that it went through without any outcry from the public. This is not something the cities did; this is a question for the lawmakers in Columbus. Tell your state representative and state senator what you think.

That’s Rich! – We lived in our previous house for 50 years and had the Homestead Exemption for many of them, since before 2012 certainly. We moved to another Cuyahoga County house in 2019 and are going to apply for the exemption on this house. We do not qualify by income level, but can we claim it because we had it in 2013, although on a different house? – Carol, Mayfield Heights.

Carol. Yes. This is a benefit of being old enough before the state changed the program. I took your question to the Ohio Department of Taxation, and the answer was direct: “Yes, if they had homestead without the income test for 2013 they are grandfathered in the no-income-test program for life.”

That’s Rich! As with many people my husband has been working from home since March 16. My question is why on Earth would we still have to pay RITA taxes to Beachwood when he has not worked in the city of Beachwood since March 2020? And to make it worse, we have to “request a refund” in order to get a refund for these taxes. Clearly we, as many, many people, are being unfairly taxed. RITA informed us we may be entitled to a refund based on current litigation. We shouldn’t have to request to get our money back from a city he didn’t work in. – Eileen

Eileen. You’re essentially making the same argument made in the lawsuit brought by the Buckeye Institute against the city of Columbus, that being that it’s not legal to tax people where they neither work nor live. But as of now, even the Buckeye Institute agrees that’s the case under the pandemic law passed by the legislature in March to cover people whose work location changed because of COVID-19. The suit could take years to sort out. The best advice I can offer for anyone in this situation, short of filing their own lawsuit, is to keep a log where you are working, file any available paperwork such as the RITA refund request form (available on the RITA website), and wait.

Side note here. There is no RITA tax. RITA (Regional Income Tax Agency) is hired by cities and villages to collect their taxes for them. RITA is just the administrator.

That’s Rich! – I liked the article Jan. 21 about RITA refunds for people who were forced to work from home due to COVID. This is an important issue impacting so many people. I saw the paragraph at the end of the article about CCA not yet addressing this. I’d imagine this impacts most people as many worked in Cleveland and were forced to work from home. CCA does have a refund worksheet that would seem to address this general topic, but does not specially mention COVID – Mark

Mark. You are correct. Cleveland’s Central Collection Agency (CCA), which administers municipal income taxes for Cleveland and dozens of other cities and villages, does have a downloadable refund form on its website that looks much like, if not identical, to the form from past years. But there are no changes specifically to address COVID work situations. There is a box with one option to check in justifying a refund request that reads, in part, “If you did not work in the municipality shown on your W-2, indicate the name of the work city.”

I asked City Hall if an update will be coming, and the answer was that the existing form is the form to be used for 2020 refunds, but if there are any later updates they will be posted on the CCA website with other tax forms.

Rich Exner, data analysis editor, writes’s and The Plain Dealer’s personal finance column – That’s Rich! Follow on Twitter @RichExner.

Email questions and suggestions to [email protected]. Include your hometown and first name for publication. And to help me sort through the clutter of my email box, try to remember including “That’s Rich!” in the subject of the email.

Previous That’s Rich! columns

Here’s why some Ohioans are still out PUA unemployment benefits from December

With bank CD rates so low, where can I park my savings to make at least a little interest?

President Biden extends student-loan breaks through September; here’s what to consider even if you can afford to keep paying

Compare Greater Cleveland, Akron property tax rates, and learn why they have changed this year

Here’s how to make a case to lower your property tax bill

Cuyahoga County home prices in 2020 up more sharply than at any time since the housing bust; see details for each town

$200,000-plus is now the norm for homes in Cleveland’s Detroit-Shoreway, Ohio City and Tremont neighborhoods

What you need to know about the new stimulus checks, and $300 extra weekly in unemployment benefits: Q&A

2021 personal finance calendar: key dates for tax documents, student grants and loans, Obamacare, Medicare and more

‘Tis the season for the stock market’s typical ‘Santa Claus Rally’

7 end-of-the year money-saving ideas: picking tax brackets, IRA withdrawals, loan refinancing, more

Extended warranties are free with credit cards; don’t waste the benefit

Is a gift card the right gift? Some ideas, cautions, and protections to know under the law

You can go to college tuition-free if you’re 60 or older by auditing classes in Ohio

How to be sure you’re getting a fair deal on auto insurance during COVID-19 with traffic, accidents down

Is your budget tight during coronavirus? See these tips to help you cope, now and in the long run

How to avoid scams; newest fraud tricks; can payment be stopped?

Organize your financial records in case you get sick – a reader Q&A

Explaining Ohio’s maze of city income tax rates and credits, and why you should log where you’ve been working

With mortgage rates at historic lows, should you join the rush to refinance? – That’s Rich!

Ohio has $3.2 billion in unclaimed funds; find out if some of that money is yours – That’s Rich!

Roth retirement plan or traditional IRA and 401(k) plans? Is this the time to adjust your thinking?

Taking college classes online? Here’s how students can save a lot of money

Does it make sense to pay off your mortgage early? Here’s what to consider

CARES Act makes this ideal time for a student-loan payment checkup

What you need to know to get an unemployment check in Ohio