April 6, 2020

The CARES Act Cash Rebate: Make Sure You are Ready for Your Refund

By Michael D’Addio, Principal, Tax & Business Services & Diane Giordano, Partner, Tax & Business Services

The CARES Act Cash Rebate: Make Sure You are Ready for Your Refund Tax & Business

The CARES Act provides for cash payments (rebate) of $1,200 to individuals with adjusted gross income (AGI) no greater than $75,000. Married couples are entitled to payments of $2,400 if their adjusted gross income is no greater than $150,000. Parents are also entitled to a $500 payment for each eligible child. The payments are subject to a reduction of $5 for each $100 that the taxpayer’s AGI exceeds the applicable limit. Rebates will be phased out as AGI exceed certain limits in according to filing status.

For most Americans, the refund will be automatic and based on the information included on the 2018 or 2019 tax return filed.

Initially, there was some confusion concerning Social Security recipients, as many are not required to file tax returns. In a recent Internal Revenue Service Release, the IRS has confirmed that it will use the information on Form SSA-1099 and will not require such recipients to file a simple return. The rebate payment will be received by direct deposit or physical check, however social security benefits are normally received by the taxpayer.

The IRS intends to direct-deposit the funds into the same bank account reflected on the 2018 or 2019 tax return previously filed. Taxpayers should verify that this account is still active and that the funds should be paid into this account.

Payments will begin in the next three weeks and will be distributed automatically. This generally will require no action by most people. Other than seniors and others who receive Social Security, if a person has not filed a tax return for 2018 or 2019, a “simple tax return” will need to be submitted in order to receive the stimulus payment. Instructions for filing these simple returns will be posted on IRS.gov/coronavirus.

If the IRS does not have direct deposit information, the checks will be mailed based on the last filing address known to IRS. (The Service has previously said that the process of writing and mailing the volume of checks under this program will cause a substantial delay in the timing of receipt).

If the IRS does not have direct deposit information, the Release states that Treasury plans to develop a web-based portal for individuals to provide their bank information to the IRS online. (This portal has not been developed as of this writing).

The IRS urges those who have not filed tax returns for 2018 (or 2019) to file as soon as possible in order to receive their payments.

If you have any questions, contact your Marcum tax professional or contact Michael D’Addio at 203.781.9665 or email Michael.

Coronavirus Resource Center

Have more questions about the impact of the coronavirus on your business? Visit Marcum’s Coronavirus Resource Center for up-to-date information.