Recovery Rebate for Individuals

Recovery Rebate for Individuals - What Is It?

The recovery rebate (aka relief check) for individuals is a single, cash-in-your-pocket payment of $1,200 per adult and $500 per child.  This benefit phases out at the rate of $5 for every $100 of annual income over $75,000 (or $150,000 for couples). 

What You Need to Do to Receive the Recovery Rebate:

Nothing.  That’s right.  The IRS will base this off your 2019 tax return.  If you haven’t done that yet (they are not due until July 15^th, 2020), then the IRS will use your 2018 return.  Haven’t done either of those yet?  No worries, they will base it on your SSA-1099, Social Security Benefit Statement. Example provided below:

• Sam is a single taxpayer. On his 2019 tax return, Sam had gross income of $50,000 and an income tax of $1,000. Despite the fact that Sam’s tax for 2019 was only $1,000, Sam is entitled to receive a check for $1,200.
• Bailey is a single taxpayer who has not yet filed a 2019 return. In 2018, he had a Social Security income of $10,000. As a result, Bailey did not file a tax return because hisincome was less than the $12,000 standard deduction. The IRS will access Bailey’s Social Security statement for 2018, and issue him a check for $1,200.
• Kelly and Parker are married with three children. On their 2019 tax return, they reported taxable income of $60,000 and had a tax liability of $5,000 before withholding. Credits fully eliminated the liability and gave them a $3,000 refund. Regardless, Tyler and Parker will receive a check for $3,900 from the government (1,200 for each adult and $500 per child).

Important Things About Rebates:

• You need to have a valid social security number for yourself, spouse, and qualifying children.
• Those claimed as a dependent on another’s tax return won’t receive a payment.
• For those whose income exceeds $75,000 if single, $150,000 if married, $5 of your $1,200 relief payment will be discounted for every $100 of your Adjusted Gross Income (AGI: total income minus a few deductions) with those making more than $99,000 not qualifying at all.

How it relates to your tax filings:

• If you haven’t filed your 2018 taxes yet, consider filing them immediately, because the relief funds’ distribution will be made based on either your 2018 or 2019 tax return filings, whichever is the most recent. This means that you will need to have filed (at least) your 2018 taxes.
• If you have filed your 2018 return but have yet to file your 2019 taxes, you will receive a check based on the information on your 2018 tax return.  But please note that if you have moved since you filed your 2018 return, you will need to update your address with the IRS immediately (for this, go to https://www.irs.gov/faqs/irs-procedures/address-changes/address-changes).
• Additionally, if you haven’t filed your taxes for 2019 yet, and plan on filing jointly with your spouse, consider talking with your tax preparer to see when you should file your 2019 return. The checks coming from the government, once approved, will be phased out at certain income levels, so timing your filing may make a difference.
• If you have already filed your 2019 taxes but have moved since filing them, you need to notify the IRS with your change or address ASAP (for this, go to https://www.irs.gov/faqs/irs-procedures/address-changes/address-changes)