RECOVERY REBATE CHECK

Here is what I understand about the new check that will soon be sent to Americans.

The newly passed CARES Act to provide economic assistance during the pandemic will give many Americans a “2020 recovery rebate” check - $1,200 for single Americans and $2,400 for couples, with an additional $500 per dependent child under age 17.  The check will be based on your 2019 tax return, or if not filed your 2018 return or your 2019 SSA-1099.  It is administered via new Internal Revenue Code Section 6428.

The payment phases out once your Adjusted Gross Income (AGI) exceeds $75,000 if single or $150,000 if married. Once over those thresholds, you’ll lose $5 of your payment for every $100 your AGI exceeds those thresholds.

It will be treated as an “advance credit”, like the Obamacare advance premium credit, and must be reconciled, again like the advance premium credit, based on 2020 information when preparing your 2020 tax return next year.  If you are entitled to more of a credit than you received you can claim the additional credit on your 2020 return.  If you received more than you should have it is unclear at this point what you would do.   

TTFN