Recovery Rebates to Individuals
On March 27, 2020, Congress passed The CARES Act that would provide Recovery Rebates to Individuals.
It provides $1,200 for single filers and heads of households ($2,400 for married couples filing joints returns). It also provides $500 per qualifying child dependent under age 17 (using the rules under the Child Tax Credit). A family of four would receive $3,400.
Rebates phase out at a 5% rate above adjusted gross incomes of $75,000 for single filers, $122,500 for heads of household, and $150,000 joint filers. There is no income floor or phase-in – all recipients will receive the same amounts, provided they are under the phaseout threshold.
As the U.S. Treasury Department develops guidelines, updates can be found here.
Why is Congress proposing to pay rebates to individuals?
The public health and economic consequences of COVID-19 are significant. These rebates help Americans afford what they need during this public health crisis, as many are experiencing a significant cash crunch.
When will the rebates be distributed?
The Internal Revenue Service (IRS) will work to deliver rebates quickly in the form of advance payments. For people who filed a federal income tax return in 2018 or 2019, payment processing will be based on payment or address information already on file with the IRS. Electronic distributions will be automatic to an account the payee authorized January 1, 2018 or later.
How large are the rebates?
The amount of the rebate depends on family size. The payment is $1,200 for each adult individual ($2,400 for joint filers), and $500 per qualifying child under age 17. The advance payment of rebates is reduced by $5 for every $100 of income to the extent a taxpayer’s income exceeds $150,000 for a joint filer, $112,500 for a head of a household filer, and $75,000 for anyone else (including single filers).
Do rebates need to be repaid?
No, rebates do not need to be repaid. If an individual experienced an income loss in 2020 or if they have an increase in family size, they may be able to claim an additional credit of the difference when the individual files their 2020 tax federal income tax return in 2021.
How will rebates be delivered?
It depends. Rebates will be delivered automatically—by the IRS—to most Americans who file individual federal income tax returns. When available, an electronic direct deposit will be used in place of mailing a physical check.
Many individuals don't need to file a tax return. Are non-filers eligible for rebates?
Yes. There is no earned income requirement to be eligible for a rebate, but non-filers may need to take additional steps to receive their rebates. The Social Security Administration will share information for Social Security (Old-Age, Survivors, and Disability Insurance) beneficiaries with IRS to help ensure these beneficiaries receive an automatic advance payment. The IRS will conduct a public awareness campaign to reach other non-filers and provide them with information on how they can access rebates.
How will a person who has recently moved access rebates?
The IRS will determine payment delivery systems for everyone entitled to rebates.
Will the rebates affect my eligibility for federal income-targeted programs?
No, the rebate is considered a tax refund and is not counted towards eligibility for federal programs.
What identification requirements apply to receive rebates?
Taxpayers must have Social Security Numbers for themselves and their qualifying children in order to receive rebates.
How does this impact Social Security and SSI recipients?
- Social Security and SSI recipients are eligible for the rebate payments.
- Everyone is eligible for the full rebate payments as long as they have an SSN and their household incomes are not too high. Rebate payments start to phase out at the thresholds of $75,000 for single filers, $112,500 for head of household, and $150,000 for married filing jointly.
- This includes Social Security beneficiaries (retirement, disability, survivor) and Supplemental Security Income (SSI) recipients.
- The full rebate amounts are $1,200 per adult and $500 per child under age 17.
- Many people will be paid automatically by IRS, if they filed a 2019 or 2018 tax return.
- Social Security beneficiaries and SSI recipients who did not file a tax return may need to take additional action, such as filing an abbreviated tax return, to receive a rebate. This process is still evolving, and IRS is posting specific guidance at www.irs.gov/coronavirus.
- Like other tax credits, these payments do not count as income or resources for means-tested programs. So receiving a rebate will not interfere with someone’s eligibility for SSI, SNAP, Medicaid, ACA premium credits, TANF, housing assistance, or other income-related federal programs.
- These rebates do not affect receipt of state or federal unemployment compensation.
- The bill also requires Treasury, in conjunction with SSA and other federal agencies, to conduct a “public awareness campaign” about the rebates, especially targeting those who do not file tax returns.
- The bill gives the Social Security Administration $38 million for its role in helping carry out the rebates, in addition to $300 million to bolster its overall service delivery in light of the significant challenges posed by COVID-19.