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Summary of the 2020 Recovery Rebates for Individuals Summary of the 2020 Recovery Rebates for Individuals

Summary of the 2020 Recovery Rebates for Individuals

Below is a summary of one of the provisions of Title II - Rebates and Other Individual Provisions and Business Provisions from the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
 
Summary
  • Provides for a tax credit (which will be in the form of an advanced refund) for an individual's 2020 tax year. 
  • Phases out the tax credit for higher incomes.   
Detailed Analysis
Timing
An eligible individual receives the tax credit for the 2020 tax year. The Department of Treasury must issue the refund or credit no later than December 31, 2020.

Eligibility
An eligible individual means any individual other than either of the following:
 
  1. Any nonresident alien individual; or
  2. Any individual who is claimed as a dependent by another taxpayer.
An eligible individual must have included a valid identification number on the individual's tax return for the individual, the individual's spouse (on a joint return), and any qualifying child. A valid identification number is a social security number or the taxpayer identification number of an adopted child.;

Amount
An individual receives $1,200 ($2,400 for joint returns) plus $500 for each qualifying child (as defined by IRC § 24(c)). The amount of the credit is reduced (but not below zero) by 5% of the taxpayer's Adjusted Gross Income (AGI) that exceeds:
 
  1. $150,000 for a joint return;
  2. $112,500 for a head of household; and
  3. $75,000 for any other individual taxpayer.
Accordingly, the credit is completely phased-out for single taxpayers with no children and with incomes exceeding $99,000; $146,500 for head of household filers with one child; and $198,000 for joint filers with no children.

AGI is based on a taxpayer's 2019 tax return if the individual has filed for that year. If an individual has not yet filed for 2019, AGI is based on the 2018 return. For a taxpayer who did not file in either 2018 or 2019, other methods may be used. 
 
Payment
The Secretary of the Treasury may make payments electronically to any account to which the taxpayer authorized refund claims to be delivered on or after January 1, 2018. 
 
U.S. Possessions
Special rules apply for possessions of the United States, which include the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands. 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
 
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