Rebates or “Stimulus Checks”
This is probably the most commonly misunderstood portion of the CARES Act due to the vast amount of misinformation circulating.
Under the CARES Act individuals will be allowed a refundable credit against 2020 income taxes, up to:
- $1,200.00 for individuals, or
- $2,400.00for couples filing jointly; plus an additional
- $500.00 for each qualifying child.
This tax credit phases out as income increases. For individuals, the income cap is $75,000 and the income cap $150,000 for those filing jointly.
The IRS will “refund” the credited amount to taxpayers “as rapidly as possible” by using the amount allowed based on the 2019 tax filings if already filed, or 2018 if not. For taxpayers that have not filed in 2018 or 2019, the IRS can use information pulled from the Social Security Benefits Statements. The IRS may deposit the rebate directly into a bank account as designated by taxpayers since January 1, 2018.
For taxpayers that do not itemize deductions, there will be an “above the line” deduction allowed of up to $300 for cash contributions.