Cash Rebates - Breaking Down The Stimulus BillSubmitted by The Blueprint 360 | Financial Clarity Within Reach on April 10th, 2020
What you need to know about Cash Rebates and Coronavirus Stimulus Bill
By now you have probably heard or read about the $2 Trillion Coronavirus Aid Package signed into law last Friday by the President. This bill, referred to as the as the CARES Act, is meant to keep businesses and individuals afloat during these trying times.The purpose of this communication is to provide a summary of the legislation and highlight some of the most important provisions that may affect you.
Cash Payments to Individuals:
According to the law, all U.S. residents with adjusted gross income (AGI) under $75,000 ($112,500 for heads of household and $150,000 for married couples), who are NOT the dependent of another taxpayer are eligible for the full $1,200 ($2,400 if married) tax credit. The credit is increased by $500 for each child the taxpayer has under the age of 17.
This amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for heads of household filers with one child, and $198,000 for joint filers with no children.
Example: A single tax filer with one child would be eligible for up to a $1,200 + $500 = $1,700 refundable credit. A married couple, on the other hand, with two children who file a joint return, would be eligible for up to $2,400 + $500 + 500 = $3,400 credit.
Additional Facts to Keep In Mind:
- The IRS estimates that almost 90% of all tax filers should receive a partial or full rebate.
- The amount of your cash rebate will ultimately be based on your 2020 income. However, in order to put money in your hands as quickly as possible, the IRS will begin issuing payments based on your 2018 or 2019 tax filling.
- If you need the money and have not yet filed your 2019 tax return, consider holding off until payment is received if your 2019 income exceeds your 2018 income. However, if your 2018 income exceeds your 2019 income, file your 2019 tax return as quickly as possible to ensure you receive the maximum cash rebate.
- Taxpayers who had high incomes in 2018/2019, but had their income substantially decreased in 2020 can still receive their full rebate in 2021 if they meet the earning requirements.
- There is no claw back provision in the law. This means that you will not be forced to return excess payments received if your actual 2020 tax return shows that you received too much money or should not have not received a cash payment altogether.
- Your recovery rebate is increased by $500 for children under 17 who are not claimed as a dependent by someone else.