CARES Act: Calculating your rebate
As part of the recently-passed massive Coronavirus Aid, Relief, and Economic Security (CARES) Act, taxpayers will receive a direct stimulus payment within the coming weeks. This one-time remittance is based on an individual’s 2019 adjusted gross income (line 8b of your 2019 Form 1040) and is considered an advance payment of a refundable credit. If the taxpayer has not yet filed their 2019 tax return, the IRS will use their 2018 adjusted gross income (line 7 of your 2018 Form 1040) to calculate their allowable credit.
We’re answering some of the most common questions about the recovery rebate below, including who’s eligible, amounts and questions about dependents.
amounts and qualifications
Every United States resident or citizen who filed a tax return in 2018 or 2019 may be eligible to receive a recovery rebate under the CARES Act. Filers are eligible for a $1,200 rebate ($2,400 for married filing jointly) according to the following gross adjusted income parameters:
- $75,000 or less for single or married filing separately
- $112,500 or less for head of household filers
- $150,000 or less for married filing jointly
Individuals with no requirement to file a tax return also qualify for a rebate, provided they aren’t claimed as a dependent of another taxpayer and have a work-eligible Social Security Number (SSN). This includes seniors receiving social security, veterans on disability and similar. The rebate is denied for an individual with an SSN if the individual filed a joint return with a spouse who has an Individual Taxpayer Identification Number (ITIN), or filed a return with a qualifying child who has an ITIN (Filing the 2020 Form 1040 as married filing separately would qualify the individual for the rebate, however, it may disqualify the individual for larger deductions or subsidies).
The IRS is not requiring those individuals to file a 2019 tax return to receive the credit. For filers exceeding the income thresholds above, recovery rebates decrease by $5 for every $100 of adjusted gross income:
- $99,000 maximum for single or married filing single with no children
- $146,500 maximum for head of household filers with no children
- $198,000 maximum for married filing jointly with no children
Taxpayers are eligible for an additional $500 per qualifying child.
A qualifying child is any child under the age of 17, claimed as a dependent on another’s taxes. Dependents age 17 or over do not qualify for a $500 additional rebate. Those who file a tax return but are considered a dependent of another—like a college student—are not eligible for a rebate.
What if I
If your gross adjusted income in 2019 (or 2018 if you have not yet filed) exceeded eligibility levels, you may still receive a partial rebate based on your 2020 tax return. This rebate acts as an advance on a tax credit against your 2020 tax return. If your income is lower in 2020, you’ll be refunded the additional credit or can apply it to reduce your tax liability when you file next year’s tax return. Conversely, overpayments due to higher 2020 income won’t be clawed back.
How do I
receive my rebate?
Most taxpayers don’t need to do anything. Recovery rebate checks will be direct deposited using bank information from the 2019 or 2018 tax return or issued via check in the same fashion as a tax return. Currently there is no deadline on issuance of recovery rebates; however, it’s likely we’ll see them mid-to-late April. The IRS also promises to provide a web-based portal for individuals to provide their banking information to the IRS online.
Individuals who haven’t filed a 2018 or 2019 tax return are encouraged to do so as soon as possible.