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CARES Act – Recovery Rebate

Under the recently enacted CARES Act, eligible taxpayers will receive a rebate check of up to $1,200 ($2,400 for joint taxpayers) with an additional $500 for each eligible child under the age of 17. To qualify you must have a work eligible social security number and not be a dependent of another taxpayer.

The full rebate will be available to those with adjusted gross income (“AGI”) of up to:

  • $75,000 per year for single taxpayers,
  • $150,000 per year for joint taxpayers, and
  • $112,500 per year for head of household taxpayers

A reduced portion of the rebate will be available to those with AGI of up to:

  • $99,000 per year for single taxpayers,
  • $198,000 per year for joint taxpayers, and
  • $146,500 per year for head of household taxpayers

Taxpayers who do not have eligible children and whose AGI is in excess of these amounts will not be eligible to receive a rebate check.  Please note that the phase-out thresholds increase by $10,000 for each eligible child claimed by a taxpayer.

Determining Income and Rebate Amounts

  • In determining your rebate amount, AGI will be based on 2019 federal tax returns if already filed, and otherwise will be based on 2018 returns. If you did not file a 2018 or 2019 return but receive Social Security, Disability, or Survivor benefits your rebate will be based on the benefits you received in 2019.
  • If you did not file a 2018 or 2019 return and do not receive the benefits listed above, please go to the IRS Economic Impact Payments page and click on “Non-Filers: Enter Payment Info Here” to provide the IRS with the information necessary to process your rebate payment.
  • If you did not file a 2018 or 2019 tax return and do not provide the IRS with your information using the above link, you will still be eligible to claim the credit when filing your 2020 tax return (subject to the income limits mentioned above).

How Will Rebate Payments Be Made?

  • Rebates may be deposited electronically to any account used to make Federal tax payments (or deposit Federal refunds) on or after January 1, 2018.
  • If you have not used electronic payments when filing your Federal taxes, a check will be mailed to the address used on your last filed return.
  • The IRS will mail a notice to the taxpayer’s last known address to notify the taxpayer of the amount of the rebate sent and the method of payment.
  • The IRS has launched a portal on their Economic Impact Payments page that allows taxpayers to update their payment information and monitor the status of their rebate.

When Will Rebate Payments Be Made?

  • Rebate payments will start to be sent out in mid-April, though the processing of payments may take several weeks. Please visit the IRS Economic Impact Payments page and click on “Get My Payment” to check the status of your payment.

As a reminder, the IRS will not call, text or email you to obtain personal or banking information.  All IRS correspondence relating to the rebate payments will be made via mail.  Any fraudulent attempts to obtain your information as it relates to this or any other IRS matter should be reported to local authorities.

Questions and Answers for Rebate Payments:

Q.  What if I haven’t filed my 2019 tax return yet, will I still get the rebate?

A.  Yes you will get the rebate if your 2018 adjusted gross income is under the respective thresholds. If you have not filed a 2018 or 2019 return but receive federal benefits (i.e. social security or disability), your rebate will be based on your 2019 earnings statement as issued by the Social Security Administration. Otherwise, you can visit the IRS Economic Impact Payments page to provide the IRS with the necessary information to process your rebate payment or you may file a 2020 return in order to claim the credit.

Q.  What if I lost my job in 2020 and my income will be less than 2019?

A.  If your income was too high in 2019 to receive the advanced rebate check but your income in 2020 makes you eligible, you will receive a credit when you prepare your 2020 tax return.

Q.  What if my income goes up in 2020 and is above the threshold, will I have to repay the credit?

A.  No. When filing your 2020 tax return your credit will be recalculated using 2020 information. If the amount calculated based on 2020 income results in a larger credit, you will receive the excess credit on your 2020 return. If the amount calculated based on 2020 income results in a smaller credit, the credit will not be reduced below the amount you have already received and you will not have to repay any portion of the credit received in your rebate check.

Q.  Will the check I receive now be included as taxable income on my 2020 income tax return?

A.  No. The rebate received will not be included in taxable income.

Q.  What if my bank information and/or address information on my most recently filed tax return is no longer correct?

A.  Please visit the IRS Economic Impact Payments page and click on “Get My Payment” to update your information or track the status of your rebate payment.

Q.  By what date do I need to file my 2019 tax return in order for my 2019 return to be used in calculating my rebate rather than my 2018 return?

A.  The IRS has not released specific details regarding the cut-off date for filing a 2019 return in order for the rebate to be based on 2019 information. If you have questions about your specific filing situation, please consult your tax advisor.

Disclaimer: This post was current as of the date of posting.  Any changes made to the law or regulations since original posting has not been incorporated.  Please view the recent postings for current information or contact us directly with any questions.

Teal, Becker & Chiaramonte Certified Public Accountants