Social Security Error Leads to Huge Revelation for Colorado Woman

A Social Security error has led to a huge revelation and plenty of financial troubles for Colorado resident Judy Olson.

In February 2021, Olson's mother died, and shortly after, she began tidying up her affairs, which included alerting the Social Security Administration of her death.

During the call, Olson was asked for her Social Security number along with her mother's, which she did not fully understand at the time. She told CBS Colorado: "I said why do you need my information? He said to verify who you are and that you're related."

However, when Olson later went to liquidate her mother's trust, she received some disturbing news. "'Judy, you've been banking here for 15-20 years so we know who you are, but when we pulled up your account, you are considered deceased,'" Olson said a bank employee told her.

Because she was legally considered dead by the SSA, Olson was no longer able to get into her accounts and found herself in what seemed like an impossible situation. "Why did that happen? How did it happen?" Olson told CBS.

Olson's case likely came down to a small error by the SSA employee that transformed into a significant problem.

"This is not a common mistake, although it does happen," Kevin Thompson, a finance expert and the founder of 9i Capital Group, told Newsweek. "As we all know, the SSA is underfunded and likely understaffed, and possible future cuts may be coming to these organizations in regard to staffing, based on political rhetoric."

Fixing the error on the SSA's part didn't turn out to be simple in the long term either.

"The lady I spoke to was very nice, she apologized profusely and she said that the only way she could think of that this could have happened was the person on the phone accidentally marked me as deceased. She said, 'It's clear you are you, and we'll get it taken care of,'" Olson said.

Two weeks later, Olson was able to access her accounts, but the error caused her to face financial roadblocks down the line.

The following year, Olson filed her mother's 2021 taxes, but she did not receive a return, though she said she was owed about $4,000.

"'We're working on your account, we need an additional 60 days to send you a complete response.' This is a different date, same letter, 60 days," Olson said of the letters she received from the IRS.

Olson said she called the agency and visited its office several times. She also refiled for the money in 2023, but she is still receiving frustrating responses.

"'We're sorry but since we have no record of receiving your tax filing from the period above, we must ask you to file again,'" Olson said, citing another letter from the IRS.

She told CBS that when she goes online to check the status of the tax return, it is still marked as "in process."

"It kept me from really acknowledging my mom's death in an emotional way. And as trustee, I felt like I had to do everything the right way and get it done for everybody. It did definitely push back my mourning process quite a bit," Olson said.

If Olson hadn't acted quickly, she would likely be facing a lot more financial difficulties as a woman declared legally dead, Thompson said.

"Ramifications could be dire, especially if it is not caught quickly," he added. "If this went on for a year, maybe two or even three, you would begin to notice during your tax filing. Your tax returns or refunds are not likely coming back to you. You are not being credited with any work history via Social Security."

"The employer has to send one half of the FICA tax to the government, but if you no longer exist, that money would either be returned or go to a reserve account," Thompson continued.

An SSA spokesperson told Newsweek: "If a person suspects that they have been incorrectly listed as deceased on their Social Security record, they should contact their local Social Security office as soon as possible.

"They should be prepared to bring at least one piece of current (not expired) original form of identification. Social Security takes immediate action to correct our records and we can provide a letter that the error has been corrected that can be shared with other organizations."

According to the spokesperson, about 3.1 million deaths are reported to the SSA each year. And less than a third of 1 percent end up needing to be corrected.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek, "Situations like this one are statistically speaking very rare, but there have been mistakenly declared deaths to Social Security that have serious ramifications on affected taxpayers."

Beene said if you find yourself in this situation, you should look for an advocate at the tax service you use to help you navigate the IRS.

"The declared death can be fixed, but it normally takes time to clear up and get any lingering financial issues that stemmed from it cleared up," he said. "You want someone other than yourself who can keep track of any updates and reach out to the right people to make sure it's resolved. Most importantly, be calm and patient with both Social Security and others helping you. Any time money is involved, there's a sense of urgency there, but unfortunately, issues like these aren't often fixed quickly. Be prepared for a wait."

Michael Ryan, a finance expert who founded MichaelRyanMoney.com, said while Olson's situation is not common, he once knew someone who was mistakenly declared dead. The person subsequently couldn't pay his mortgage and lost his home because of the financial hit.

"It's crucial to have a 'financial emergency plan' in place, including easily accessible savings and a list of key contacts to reach out to in case of such unexpected events," Ryan told Newsweek. "The SSA processes millions of death reports annually, and while errors affect less than 1 percent, that still translates to thousands of people each year."