As part of the CARES Act, signed into law today, The Treasury will be sending rebate checks to all qualifying individuals.
The check you are getting is called the 2020 Recovery Rebate (§2201) It is a 2020 tax credit that you can get early.
How the calculations works:
- They need to determine your Adjusted Gross Income (AGI):
- They will look for your AGI on your 2019 return. (Line 8b of your 2019 Form 1040)
- If you have not filed 2019, they will look at your 2018 return. (Line 7 of your 2018 Form 1040)
- If you did not file 2018 or 2019, they will look at the income on your 1099 from Social Security (SSA-1099 or RRB-1099).
- If you have none of these items, you will have to file a 2020 tax return to get your rebate.
- The rebate amount is $2400 for joint filers/$1200 for all other filers + $500 for every qualifying child.
- You will get the full rebate if your income is less than $75,000 (Single), $112,500 (Head of Household), $150,0000 (Married Filing Jointly)
- The rebate amount is reduced by $5 for each $100 that your income exceeds the threshold.
- Once your AGI is above $99,000 (Single), $136,500 (Head of Household), $198,000 (Married Filing Jointly) you get $0 rebate.
- Tax Strategy:
- If you are going to be eligible for a rebate and 2019 income will be higher than 2018, then wait to file your 2019 return.
- If your 2019 income will be lower than 2018 then file 2019 as soon as possible.
- The rebate will be reconciled on your 2020 return. If you are eligible for more rebate, you will get it as part of your 2020 refund. If you should have received less rebate, you do not have to pay it back.
- The rebate will be paid by direct deposit or check.
We do not know WHEN the calculation will occur or when checks will be issued or what bank account they will use. We hope more guidance will be forthcoming.