CARES Act: Rebates To Individuals

Updated April 15, 2020

Please note: Due to rapidly occurring changes as well as continual issuances of guidance and clarity being released, JPS is regularly updating pertinent, previously-posted articles, as needed.  Updates are identified by this text color.  

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) into law. This Act provides relief to taxpayers affected by the coronavirus (COVID-19).

One provision that has received significant attention is what many have referred to as stimulus payments or checks. The Act refers to these as “2020 recovery rebates.” Technically, this provision is structured as a refundable tax credit for the year 2020. But the government is advancing those funds to taxpayers now. Why 2020? More on that below.

These payments are not taxable and will be sent to eligible individuals, meaning anyone who is a legal resident, is not claimed (or eligible to be claimed) as a dependent on someone else’s tax return and falls within certain income limitations (more on that below too).

What do I need to do to ensure I get this money?
If you filed a 2018 or 2019 tax return, you shouldn’t have to do anything. There’s no application process and you don’t need to sign up. If you are eligible, you should receive the payment.

[Updated April 15, 2020] A taxpayer can now check the status of their economic stimulus check on this IRS website page. 

[Updated April 14, 2020] If you did not have enough income to require filing a return in 2018 or 2019, you will need to submit certain information to the IRS in order to get the advance payment. The IRS has provided this website for that information to be submitted. 

[Updated April 2, 2020] After initially indicating that individuals who were not required to file tax returns in 2018 and 2019 would have to file a simple tax return to receive the rebate, the Treasury Department has now indicated that non-filers receiving Social Security benefits will not be required to file such a tax return. Instead, direct deposit information already on file with the Social Security Administration will be used to deposit the rebate.

How much will I get?
Each adult is eligible for a payment of up to $1,200 plus an additional $500 per qualifying child under age 17. This means that a married couple with one child could receive up to $2,900.

Those with higher income, however, could receive smaller amounts or nothing at all. The credit is reduced based on the following levels of adjusted gross income:

• Single – starting at $75,000, fully phased out once income reaches $99,000.
• Married filing joint – starting at $150,000, fully phased out once income reaches $198,000.
• Head of household – starting at $112,500, fully phased out once income reaches $136,500.

How will the IRS calculate what to pay me?
As noted above, technically this is a tax credit based on 2020 income. But since the funds are being advanced now, the IRS will look at your 2019 income tax return to calculate how much to pay you. If you haven’t filed your 2019 tax return yet, they’ll look at your 2018 tax return to come up with the amount.

In preparing your 2020 income tax return, you’ll consider your total income and determine the amount that your recovery rebate check should have been. If you were overpaid in your recovery rebate payment, you will not have to repay the excess. If you were underpaid, you’ll receive the difference upon filing your 2020 tax return.

If you receive Social Security or Railroad Retirement benefits and were not required to file a tax return in 2018 or 2019, you can still expect this advance payment. Others whose income was too low to require an income tax filing may have to wait until they file their 2020 tax return to claim the credit and receive the funds.

What if I still owe Federal tax on 2019 or earlier years?
Since this is an advance on a 2020 tax credit, even if you have a balance due on your 2019 tax return or are making payments on prior year’s taxes, you should receive this rebate.

When can I expect the payment and how will it come to me?
The Act requires the IRS to make these payments “as rapidly as possible.” If you have provided banking information to the IRS anytime since January 1, 2018, whether for payment of taxes you owed or direct deposit of a refund, the IRS will use that information and pay the funds via direct deposit. Those funds are expected to arrive within three weeks. Others will receive checks in the mail, and those could take longer for the IRS to process.

To learn more about this topic, read the JPS article posted on April 10, 2020, “CARES Act: Individual Taxpayer Highlights”. 

JPS is busy writing several articles on the provisions of the CARES Act, so stay tuned and check out our website for more information.

As always, feel free to contact your JPS team to assist you.