Economic Impact Rebate 2020
By now, you’ve likely heard about the $2 trillion stimulus bill that the President signed recently. Most Americans, after initial excitement and relief, will ask the following questions – we know, because we did, too.
How much will I/ my family get?
Am I/ are we eligible?
Do I/ we have to do anything to receive the stimulus money?
Am I/ are we responsible for taxes on this money, or do I/ we have to pay it back?
Let’s quickly break down this rebate so that you will know what to expect in the next few weeks (the beginning through mid-April). As far as the timeline for the payouts, no one knows exactly when they will arrive yet; what we do know is that the IRS will be using last year’s tax return information to disperse funds. If you haven’t filed 2019’s return yet, don’t fear – the IRS will use your 2018 return information if available.
Each eligible American who is not a dependent will receive up to $1200. Households or individuals that claim a child dependent (under 17) will also receive up to $500 per child. The total rebate is calculated based on income – see eligibility. For example, a married filing jointly household making 125,000 with three children for the tax year 2019 will receive $3,900. Dollar amounts for the total rebate decrease for families or individuals who make more than the decided values below.
All Americans who filed single or married but separate will receive the full stimulus rebate amount as long as they made $75,000 or less in 2019 (or 2018 if this year’s return is yet to be received). Married filing jointly couples will receive the full rebate if the total income was equal to or less than $150,000 for the same time period. “Head of household” filers must have earned $112,500 or less to get the full rebate.
For those who fall above the brackets listed previously, the total rebate amount decreases by $5 for every $100 over the income levels. For example, an individual who made $80,000 in 2019 will receive $250 less than his friend who made $75,000 for the same year. Rebates based on children are essentially unaffected unless an individual approaches the upper limit for stimulus eligibility.
Since this bill is targeted to assist those who may be struggling during this uncertain time, there is a portion of the American population that will not receive stimulus money. Individuals who made more than $99,000, married couples (filing jointly) who made more than $198,000, and “head of households” that made more than $146,500 for 2019 will receive $0 in rebate funds.
If you have already completed your 2019 tax return and used direct deposit transfer for your rebate, you need only wait. For those who received their 2019 tax rebate by mail, you are also in the system and should receive your stimulus check without additional steps; however, direct deposit transfers are expected to take place much sooner than snail mail recipients will receive their dollar amounts.
If you have not yet filed your 2019 return and would like your rebate amount calculated for this past tax year (whether you had a child or had your pay significantly reduced), you will need to complete your 2019 return as soon as possible. You can do this online or with a tax professional that offers remote services during this quarantine time.
If you did not file your 2019 return but have a similar status as was on your 2018 return, your stimulus rebate will be calculated based on 2018’s tax year. Again, if in 2018 you used direct deposit for your rebate, you will also receive the stimulus check through direct deposit. The same goes for Americans who requested their 2018 return to be mailed to them – the stimulus check will be mailed to you, but likely arrive later than your friends who used direct deposit.
For Americans who do not file tax returns, like those who are retired or did not receive income for 2018 or 2019, keep an eye out for forms through the IRS. Please be cautious during this time; this is an unfortunate opportunity for criminals to reach for information and commit fraud.
Americans will not be responsible for taxes on this rebate money. Since it is classified as a rebate, it is not taxable income. Neither is it a loan, so you don’t need to worry about paying it back. We will see how this plays out in time, as federal income taxes might be adjusted in the future to recover the stimulus money; for right now though, we can all breathe a sigh of relief, no matter how big or small, and await our cash gift from the government.