The CARES Act will provide a direct cash payment to individuals and families to help ease the economic impact of COVID-19.
Eligibility
Any individual who meets the following criteria is eligible for a full $1,200 rebate:
- Reported no more than $75,000 annual adjusted gross income on last federal tax return.
- Cannot be claimed as a dependent by another taxpayer.
- Has a work-eligible Social Security number.
Individuals filing jointly who meet the following criteria are eligible for a full $2,400 rebate:
- Reported up to $150,000 joint annual adjusted gross income on last federal tax return.
- Cannot be claimed as dependents by another taxpayer.
- Have work-eligible social security numbers.
In addition, individuals filing a single tax return and those filing jointly are eligible for an additional $500 rebate for each child under the age of 17 claimed on their last federal tax return. This is also true for those who have no income, as well as those whose income comes entirely from non-taxable, means-tested benefit programs (such as SSI benefits).
Cap
The rebate amount will be reduced $5 for every $100 of taxpayer annual income that exceeds the phase-out threshold – which is $75,000 for individuals and $150,000 for those filing a joint tax return.
- Individuals making between $75,000 and $99,000 per year will receive a $1,200 rebate, minus $5 for every $100 they make over $75,000 but up to $99,000.
- Couples filing jointly who make between $150,000 and $198,000 per year will receive a $2,400 rebate, minus $5 for every $100 they make over $150,000 up to $198,000
- Individuals making more than $99,000 per year, and joint filers who make more than $198,000 per year, do not qualify for a rebate.
Turnaround Time
The IRS will send electronic transfers to eligible taxpayers via direct deposit or paper checks. That process has already started.
Application
No action by the vast majority of Americans is necessary to receive a rebate. The IRS will use a taxpayer’s 2019 return if it has been filed. If it has not been filed, then the IRS will use their 2018 tax return. Persons receiving Social Security and whose income is too low to require fling of income tax returns, should receive the payment without having to file a return or additional information. Low-income individuals who file tax returns in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit are included. Do consider logging into the IRS system to check on your payment, to change your address or direct deposit information or if you have not filed a return for 2018 or 2019, to request a payment. https://www.irs.gov/coronavirus/economic-impact-payments
More In-Depth
This payment is technically an advance credit to your 2020 tax return. If, for example, your income was too high on your 2019 return to qualify for the credit, but your income for 2020 is lower (low enough to qualify for the payment based on your 2020 income), the credit will be issued to you with your 2020 filing. The credit is also not recaptured, meaning that if you do get an advanced credit in the near term, and your income for 2020 is high enough that you are above the phase-out ranges described above, you will not have to repay the credit.
Keep this in mind – if your 2019 income will be so high that you would not qualify, but your 2018 was low enough to qualify, then hold off on filing your 2019 return until AFTER you receive your advance payment. You will receive the payment, but since it is not recaptured, you will not have to repay.
For more information, visit the https://www.irs.gov/coronavirus/economic-impact-payments .