Our other articles in this series:
- 2019 IRS-California Tax Return, Contributions, Filing Deadline Extensions
- How the 2019 Coronavirus Relief Bill Helps Individuals (CARES Act)
- How the 2019 Coronavirus Relief Bill Helps Businesses (CARES Act)
As part of the historic The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020, a key component that will benefit many Americans is the provision for economic stimulus payments, also known as the Recovery Rebate Credit. Here are some key points:
- The payment is an advance payment of a 2020 tax credit; Taxpayers that did not receive the full rebate or any rebate this year as an advanced credit may still qualify based on their 2020 income when they file taxes early next year. However, if your 2020 income would otherwise disqualify you from the rebate, you do not have to pay it back.
- The maximum credit is $1,200 per individual ($2,400 MFJ) plus $500 per qualifying child under 17 years old.
- The credit is phased out by 5% ($5 for every $100 over the limit) for AGIs exceeding:
- $150,000 for MFJ — phased out at $198,000 if there are no children;
- $112,500 for HOH filers — phased out at $146,500 if the HOH has one child;
- $75,000 for all other taxpayers — phased out at $99,000; and
- For every child claimed, add an additional $10,000.
- For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The stimulus payment will be deposited directly into the same banking account reflected on the return filed. This is expected to occur within three weeks.
- For taxpayers who did not provide direct deposit information, in the coming weeks the Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online so that individuals can receive payments immediately as opposed to checks in the mail.
- For individuals who did not file a 2018 or 2019 return, the IRS is developing a simplified process for them to file.
- Seniors are eligible even if they did not file a 2018 or 2019 return. The IRS will base a rebate on Form SSA-1099, Social Security Benefit Statement or Form RRB-1099.
- College students generally are not eligible if they are claimed as a dependent on their parents’ return.
- The rebate will not be used to offset tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.
Here is a link to the IRS’s FAQs on these payments:
www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
As always, if you have any questions please contact us.
