The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020, providing immediate assistance for millions of taxpayers. One of the most publicized provisions of this Act is the Individual Recovery Rebate/Credit. Eligible individuals will receive a refundable tax credit for 2020 equal to the sum of $1,200 ($2,400 for eligible individuals filing a joint return) plus $500 for each qualifying child.
An eligible individual is any individual other than a nonresident alien or someone who can be claimed as a dependent of another taxpayer. If your adjusted gross income (AGI) is less than $150,000 for a joint return, $112,500 for a head of household return, or $75,000 for a single return, you will receive a full credit. The amount of the credit is reduced by 5% of the AGI that exceeds these amounts. The credit is completely phased-out for a single filer with AGI exceeding $99,000 and for joint filers with no children with AGI exceeding $198,000.
Most people will not need to do anything to receive this rebate. If you haven’t filed a 2019 income tax return yet, the IRS will determine the amount of the rebate from your 2018 return. If you’ve requested direct deposit of past refunds, your rebate will be directly deposited, otherwise you will receive a check. Contact your Wegner CPAs tax professional for more information.
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