To help individuals stay afloat during this time of economic uncertainty, the federal government will payments up to $1,200 to eligible taxpayers and $2,400 for married couples filing joint returns. An additional payment of $500 will be sent to taxpayers for each qualifying child dependent under age 17 (using the qualification rules under the Child Tax Credit).
Rebates are gradually phased out, at a rate of 5% of the individual’s adjusted gross income over $75,000 (singles or married filing separately), $122,500 (head of household), and $150,000 (married filing joint). There is no income floor or “phase-in.” All recipients under the previously listed threshold will receive the full payment. Tax filers must have provided, on the relevant tax returns or documents (see below), Social Security Numbers for each family member for whom a rebate is claimed. Adoption taxpayer identification numbers will be accepted for adopted children. Social Security Numbers are not required for spouses of active military members. The rebates are not available to non-resident aliens, to estates and trusts, or to individuals who themselves could be claimed as a dependent.
The rebates will be paid out in the form of checks or direct deposit. Most individuals won’t have to take any action to receive a rebate. The IRS will compute the rebate based on the taxpayer’s tax year 2019 return (or tax year 2018, if no 2019 return has yet been filed). The IRS issued guidance April 2, 2020 stating there is no need to file a simple tax return for those not required to file a 2018 or 2019 tax return. If no 2018 or 2019 return has been filed, the IRS will use information for 2019 provided in Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.
Rebates are payable whether or not tax is owed. Thus, individuals who had little or no income, such as those who filed returns simply to claim the refundable earned income credit or child tax credit, quality for a rebate.
Please feel free to contact us with any questions or for additional information.