CARES Act – Checks to Individuals

On March 27, 2020, the House and Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under this massive bill, there will be $1,200 direct payments to individuals. Qualified dependents increase the payments to families by $500 per qualifying child.

There are multiple rules on the direct payments to individuals. The payments by the IRS will generally be based upon your 2018 or 2019 income tax returns.

  • Joint Return – A married couple will receive a payment of $2,400.
  • Children – Each dependent child qualifies for a $500 amount. There are no limits to the number of dependent children. The definition of a dependent follows the IRS guideline that you must provide one half of the support and the child must live with you for one half of the year. Adopted and foster children also qualify.
  • Limits on Individuals or Married Couples – The $1,200 check to individuals starts to be phased out at $75,000 of income for single filers and is completely eliminated for single filers with incomes over $99,000. For married couples, the $2,400 payment is phased out between incomes of $150,000 and $198,000.
  • Direct Deposit – The IRS will deposit the check in your bank account if you have provided the routing information and account number on your 2018 or 2019 tax return.
  • New Child in 2019 – If you added a new child in 2019, it is desirable to file your 2019 return to receive the $500 credit for the dependent. If you do not receive the credit this year, there will be a $500 credit when you file your 2020 tax return.
  • Payment Timing – The last time rebate checks were distributed was in 2009. It required two months for the IRS to process the checks after the passage of the bill. IRS Commissioner Chuck Rettig has stated his goal is to distribute the checks within three weeks. It is probable that the IRS will issue the checks within three to six weeks after March 27, 2020.

Senate Finance Committee Chairman Chuck Grassley (R–IA) was one of the principal drafters of the CARES Act. Grassley was supportive of the plan to send checks to Americans. He stated, “This bill would send a recovery check to most Americans for at least $1,200. A typical family of four would be eligible for $3,400. Seniors, veterans, the unemployed and low–income Americans would be eligible too. This would help workers, families and small businesses absorb some of the financial impact of the coronavirus.”

Editor’s Note: With millions of Americans in lockdown and rising unemployment, direct checks will help many individuals to continue their normal lifestyle. The federal government hopes to increase testing and tracing of the coronavirus with the goal of returning to a more normal existence in the near future. Center for Disease Control doctors on the Presidential Healthcare Panel caution that it is not easy to determine how long it will be before we return to normal.

 

 

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Published March 27, 2020, by Crescendo Interactive. This article is used under the permission of Crescendo Interactive, a business partner of Covenant Trust. This is the current understanding as researched and published by Crescendo. The timelines and figures presented in the text of the article could be subject to change.

The information provided is general in nature, educational and is not intended as either tax or legal advice. Consult your personal tax and/or legal advisor for specific information. Covenant Trust is incorporated in the State of Illinois and is supervised by the Illinois Department of Financial and Professional Regulation. Covenant Trust accounts are not federally insured by any government agency. Clients may lose principal as a result of investment losses.