Yes! Tax Rebates are coming.

Tax Rebates (or Stimulus Checks)

March 27, 2020 the President signed into law a $2.2 trillion package called the CARES Act.  This legislation included relief to certain taxpayers by way of Tax Recovery Rebates (also referred to as stimulus checks or stimulus payments).  Here is everything we know.

What are Tax Recovery Rebates?

Are you eligible to receive a rebate?

How will you receive the rebate?

What are Tax Recovery Rebates?

Tax Recovery Rebates are an advance payment on a credit that will be available on the Tax Year 2020 federal tax return.  Eligible taxpayers will receive these rebates now and then reconcile them on their future tax return.  Rebates will continue to be sent out until 12/31/20.

The rebates are $1200 per eligible individual taxpayer, $2400 for eligible couples filing jointly, and an additional $500 per eligible child.  These amounts are based on your Adjusted Gross Income and are subject to phaseout limits.  The amount you receive now will be based on information from your Tax Year 2019 federal tax return.  If you have not filed your 2019 tax return at the time the rebates are calculated, the amount you receive will be based on your 2018  federal tax return.  If are not required to file taxes and you are receiving Social Security or Railroad Retirement benefits, the information from your 2019 benefit statement will be used.

 

When you file your tax return in calendar year 2021 for the tax year 2020 (one year from now), a credit will be available on that tax return.  If you receive the advance payment (also called a Rebate or Stimulus payment) you will have to claim the amount received now against the credit.  If, after this reconciliation, you did not receive a high enough rebate, a credit will be allowed on the 2020 tax return.  If, after this reconciliation, you received too much of a rebate, you will not be required to pay back the over-payment.                                                          Back to Top

Who is Eligible to receive a Tax Recovery Rebate.

Eligible recipients -

1. are U.S. residents

2. are not eligible to be claimed as a dependent of another taxpayer

3. have a valid Social Security number

Eligible recipients will receive $1200 ($2400 if married filing jointly) if their Adjusted Gross Income is less than $75,000 ($150,000 married filing jointly, $112,500 head of household).  The rebate is reduced by $5 for every $100 of adjusted gross income over the thresholds.  Rebates will completely phaseout at $99,000 ($198,000 married filing jointly, $136,500 head of household).

Eligible recipients will receive an extra $500 per qualified child.  Eligibility follows the same rules as Qualifying Children for the Child Tax Credit.  These children -

1. are children under age 17

2. have a valid Social Security number or Adoption Taxpayer Identification number

3. lived with you over half of the year

4. are U.S. citizens, U.S. Nationals, or U.S. Resident Aliens

5. did not provide more than half of their own support

6. are your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (ie. grandchild, nephew, niece,etc.)

Taxpayers will not receive the additional $500 for dependents other than qualified children.  If a person can be claimed as a dependent of another taxpayer, they will not receive the tax rebate for themselves.  If a person can be claimed as a dependent of another, they cannot file a tax return claiming themselves, even if nobody does claim them as a dependent, to get the rebate.  This means dependent college students and dependent parents are not eligible.   Back to Top

How Rebates are being sent out.

Eligible individuals who don't file taxes but receive Social Security or Railroad Retirement benefits will receive their tax rebate through the Social Security or Railroad Retirement benefit program.  If you normally receive payments by direct deposit, your tax rebate will be direct deposited.  If you normally receive a check, your rebate will be sent by check to the address on file with that benefit program.

For other non-filers, the Treasury has said they will set up a simplified filing system to make getting your stimulus easier.  We are waiting for more information on this.

If a tax return was used to determine your tax rebate, then the refund will be sent using the same method as your tax returns.  If a bank account was listed on your 2018 or 2019 tax return, the rebate will be deposited to that bank account.  If not bank account has been listed on file in 2018 or 2019, then a check will be sent. 

Within 15 days of the rebate being sent out, a notice will be mailed to the last known address of the taxpayer informing them of the amount of the rebate, the method of delivery used, and a phone number to contact if no rebate is received.                                                   Back to Top

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