Recovery Rebates for Individuals under the CARES Act
The Corona Aid, Relief, and Economic Security Act (“CARES Act”) provides for recovery rebates for taxpayers through an advance refundable tax credit against 2020 income taxes. Individual taxpayers with an adjusted gross income (“AGI”) up to $75,0000 are eligible for a rebate of up to $1,200, and joint filers with an AGI up to $150,000 are eligible for a rebate of up to $2,400. Additionally, taxpayers with children will receive $500 for each child under the age of 17, and there is no limit on the number of children. Dependents over the age of 17 do not qualify. The amount of the credit will be reduced by 5 percent per dollar, or $5 per $100 earned, of qualified income that exceeds $75,000 for individuals and $150,000 for joint filers. The rebates phase out at $99,000 for single taxpayers with no children and $198,000 for joint taxpayers with no children.
The rebates are calculated based on the AGI reported on 2019 tax returns, or the AGI reported on 2018 tax returns will be used if 2019 returns have not been filed. Taxpayers eligible for a larger rebate based on 2020 income will receive the rebate after the 2020 tax return is filed. However, if taxpayers have a higher income in 2020, the overpayment associated with the advanced rebate pursuant to the Act will be forgiven. By way of example, a single taxpayer with $100,000 AGI on the 2019 tax return would not be eligible and phased out of an advanced rebate, but would receive the $1,200 credit on their 2020 tax return if their AGI for 2020 was below $75,000. Conversely, a single taxpayer with $70,000 AGI on the 2019 tax return that receives a $1200 advanced rebate will not have to pay the rebate back on the 2020 tax if they have an AGI of $100,000 in 2020. The rebates are not considered income for tax purposes.
Bruning & Associates, P.C. remains able to assist you during the pandemic. Bruning & Associates, P.C. offers complimentary video or telephone consultations.
Please contact the skilled attorneys at Bruning & Associates, P.C. at (815) 455-300 if you have further questions regarding the CARES Act.
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