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Astoria Strategic Wealth

C.A.R.E.S. - Part I - Recovery Rebates - aka "The Checks"

By way of introduction, on Friday, March 27, the United States government made further efforts to help those suffering from the economic impacts associated with the Coronavirus when it passed the Coronavirus Aid, Relief, and Economic Security Act (The C.A.R.E.S. Act).

It's worth noting that this is actually Phase III of the laws passed this month in response to the pandemic. Phase 1 was the Coronavirus Preparedness and Response Supplemental Appropriations Act (March 6th). This was $7 Billion mostly to the Department of Health and Human Services, CDC, and FDA to fight the pandemic. Phase 2 was the Families First Coronavirus Act (March 18th). This expanded sick leave and family leave provisions. You can read about these provisions on our blog site referenced above.

Back to C.A.R.E.S.: While it seemed as if the two-trillion-dollar bill might get stalled and debates would drag into another week, the house was able to come together and pass the bill with President Trump signing it into law later that day. But what is contained in this 880-page bill and how does it pertain to you? The next several posts will break down the important elements of the Act as well as how they may apply to you. This series consists these five topic-focused summaries:

  • Part I - The Recovery Rebates - aka "The Checks"
  • Part II - Unemployment Provisions
  • Part III - Retirement Account and Retirement Plan Distributions
  • Part IV - Small Business Benefits
  • Part V - Other Provisions

The Recovery Rebates are a direct payment to American citizens who meet the criteria. The government will issue these checks based on 2019 tax returns (or 2018 if 2019 is not filed).

How much is it?

Individual taxpayers will receive $1,200 and married couples filing jointly will receive $2,400. In addition, taxpayers will receive an additional $500 per child under 17.

Who gets it?

Any taxpayer receives the rebate unless they are phased out. The phase out limits are based on one’s adjusted gross income and number of qualifying children.

Phase outs begin at $75,000 and $99,000 for individuals, $112,500 and $146,500 for heads of household, and $150,000 and $198,000 for married couples filing jointly. The rebate amount is reduced by $5 for every $100 of income between the phase out amounts.

When do I get it?

As soon as possible, but no date has been given as of Monday 3/30/2020. Reports have listed distribution dates between April and May. The rebates will be received via direct deposit or a check sent to the address last on file. What if you moved? The IRS will provide a phone number for lost Recovery Rebate payments.

What if I had high income in 2018 or 2019 but 2020 income will drop below the phase out range?

You will get the credit, however, not until you file your 2020 tax return. Helpful, but not at all helpful at the moment.

What if I had a low income in 2018 or 2019 but 2020 income will be above the phase out range?

It's your lucky day. There is no claw-back provision. You get to keep the credit.

Please remember that these summaries are intended to provide general guidance and should not be interpreted as individualized planning, investment or tax advice. Please contact your tax preparer for advice specific to your situation.