Taxpayers and The CARES Act
The Coronavirus Aid, Relief and Economic Security Act provides the following for certain TAXPAYERS:
- Individuals get $1,200 – Couples $2,400
- Plus $500 for each dependent child under 17
- Income means adjusted gross income per your tax return
- Payment reduces to zero as your income increases
- No application
- Payment is a 2020 advance tax credit
Individual Taxpayers get:
$1,200 if income does not exceed $75,000, PLUS $500 for each dependent child under 17 claimed on your tax return.
- This amount is reduced by $5 for every $100 of income over $75,000 up to $99,000 without children
- Income over $99,000 get nothing, if no children
- If you have children add $10,000 for each child to the $99,000 to determine when you get nothing
- Example: Individual with one child gets $1,200 + $500 = $1,700 and can earn up to $109,000 before getting nothing. ($1,700 ÷ .05 = $34,000 + $75,000 = $109,000) or ($99,000 + $10,000 = $99,000)
Couple Taxpayers get:
$2,400 if joint income does not exceed $150,000 PLUS $500 for each dependent child under 17 claimed on your tax return.
- This amount is reduced $5 for every $100 of income over $150,000 up to $198,000 without children
- Income over $198,000 get nothing, if no children
- If you have children add $10,000 for each child to the $198,000
- Couple with one child gets $2,400 + $500 = $2,900 and can earn up to $208,000 before getting nothing
- ($3,400 ÷ .05 = $58,000 + $150,000 = $208,000) or ($198,000 + $10,000 = $208,000)
How can I apply:
There is no application. The IRS will automatically calculate the amount you are entitled to by reviewing your 2019 Tax return if filed, and if not yet filed, your 2018 return
What if I didn’t file a tax return in 2018 or 2019:
- Social Security Recipients who where not required to file a tax return in 2018 or 2019, can still qualify because the IRS will use your FORM SSA-1099, Social Security Benefit to determine if you are eligible
- Reevaluate your situation to see if you should or could have filed and take appropriate action
- If you anticipate filing a 2020 tax return that may help you but the amount will be determined based on your 2020 information and numbers (See the section below “What the payment really is”)
When is the payment:
No later than December 31, 2020
- Payment is by direct deposit if you used that option on your 2018 or 2019 tax return otherwise by mail
- It is anticipated the direct deposits will be within three week from March 29, 2020 and checks will be mailed some weeks after that
- If you do not use direct deposit the Treasury is setting up a portal for you to provide direct deposit information.
What the payment really is:
The payment is actually an advance payment of a credit you may be entitled to on your 2020 tax return. The 2020 tax return will include a calculation based upon your 2020 information to determine your 2020 credit.
If your situation has changed – think income or number of children changed – the payment you received, based on 2019 information, may be greater or lower than the 2020 credit you are entitled.
- If you received LESS than the 2020 credit, it helps reduce your 2020 tax liability
- If you received MORE than the 2020 credit it is not sure what happens so it could increase your 2020 tax liability or it could be a windfall. The CARES Act does not say nor provide a collection option.