PROPOSED RECOVERY REBATES

[Lee B]

"Section 2101. 2020 recovery rebates for individuals

Recovery checks of up to $1,200 will be put into the hands of most taxpayers, providing cash immediately to individuals and families. Married couples who file a joint return are eligible for up to $2,400. Those amounts increase by $500 for every child. These checks are reduced for higher income taxpayers and begin phasing out after a single taxpayer has $75,000 in adjusted gross income and $150,000 for joint filers. The IRS will base these amounts on the taxpayer’s 2018 tax return. The rebate amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single taxpayers with incomes exceeding $99,000 and $198,000 for joint filers. The IRS will base these amounts on the taxpayer’s 2018 tax return.

 

Taxpayers with little or no income tax liability, but at least $2,500 of qualifying income, would be eligible for a minimum rebate check of $600 ($1,200 married). Qualifying income includes earned income, as well as Social Security retirement benefits and certain compensation and pension benefits paid to veterans. This ensures relief gets to low-income seniors and disabled veterans."

[Terry D EA]

This will be good news for a lot of folks. I wonder if we will all get 1099 MISC forms from the IRS next year?? I'm not trying to rain on a good thing here that is very much needed. Just sayin.

[TAXMAN]

I just picked up 5 returns from 2018. I guess the push is on to get those out quick. Anyone heard when? What happens to those that meet the rules of not required to file? Any body heard yet.

[Pacun]

George W Bush did something similar. Sent a check but at the time of doing your taxes, you had to reconcile. If you didn't get a check but you deserved one based on your income, you would request that amount on your return. So, the IRS needs to know names and address to send the checks to people and since not everybody has filed for 2019, they are using 2018 to get that information.  Of course they don't want give the benefit to those who had a bad year in 2018 but rather to those who have or will have a bad 2020.  Rushing the 2018 return at this time, might make little or no difference since the IRS will send out checks quickly and your return will not be processed in time. If I am not mistaken, the IRS will run the report soon and tag those people as "send this person a check" based on 2018 income.

Another thing that you have to consider, I have people that in 2018 had ITINs and for 2019 they are green card holders with SS#s.  Let's say in 2018 they made $200K, but in 2020, they will make only $50K, I am sure they will not receive a check but when I prepare their 2020 return, I will request them their $2,400.

There is no way they will do differently since it worked perfectly under W's administration. 

[Pacun]

Another thing to keep in mind is:

If you have a couple who will make $170K in 2020, ask they to deposit 21K on their 401k so that their salary for 2020 is $149k.  IRAs will be another way to reduce their income if they qualify.

[Gail in Virginia]

I am curious about the extra $500 per child.  Is that based on children age 17 and under?  Dependent child as defined for purposes of what used to be the dependent exemption, so that students under 24 qualify?  Will they use the number of children claimed in 2018, even though they may have grown up and gotten off mom and dad's return by now?  Or more children might have been added by now?  

[Lion EA]

With each announcement, we know less and less!

[Pacun]

3 minutes ago, Lion EA said:

With each announcement, we know less and less!

The good thing is that we don't need to know until we file 2020.  If people get the check, they get the check.... if people moved after they filed 2018 and have not updated the address or filed for 2019, too bad. Nothing we can do.

All I tell my people when they say "Pacun when will I get my stimulus check and for how much?"... my answer is ... "this is my phone number 202-999-3333, call me when you get the check and tell me how much they sent you". I also tell them, if you don't receive the check by October, let me know when you come and prepare your taxes next April.

Gail,

I think we will need to reconcile but if I recall correctly, payers didn't have to return money last time if their children were no longer their dependents, but they could claim extra stimulus if a child was born. I don't remember for unmarried taxpayer in the case the mother claimed their 4 year old child in 2018 and the father will claim it in 2020... but again, I have a whole year to worry about that situation and be ready to answer when they come to file 2020.

[Gail in Virginia]

It does raise some questions though.  What happens to a couple that was MFJ in 2018, but has a restraining order now?  I think they get one check made payable to both of them.  The only thing I know for sure is I am not getting in the middle of that. 

[Pacun]

I guess it has been too long that one corrected me. I was Obama in 2009 that sent the stimulus.

[Sara EA]

I don't want a check!  I don't have a mortgage and can afford my living expenses.  Give the money to self-employed people whose businesses are ordered closed, or to school bus drivers who make so little and won't work for months, to waitstaff, to people who can't work because their child care centers closed.  The money should go into enhanced unemployment benefits and relief for small business owners.  Instead of thinking of creative ways to get people money they might not need, let's convince the powers that be in DC to get it into the hands of those who need it most.

[JohnH]

Anyone who doesn't want or need the money should make plans to use it to buy food, medicine, or necessaries for someone they know who is in need.  That's what my wife and I are going to do.  Targeted help directly to someone it can help, and no bureaucracy dragging a big chunk of it for administration.  Anyone who doesn't know someone in need can always donate the full amount to a trusted church or charity for the same purposes. 

I've already posted a Facebook challenge to people on my friends list urging them to do this. Not for personal recognition, but to suggest a way to achieve a tangible positive outcome with something they disagree with on principle.

[Lion EA]

Hubby and I have been tipping well (better than well) minimum wage workers, food service workers, etc. And, giving earlier to our church and two local food pantries; food pantries are overwhelmed providing food to families whose children are home and not receiving free breakfasts and lunches at school. We on the ground can often see who in our community needs help better than a distant government can. Turn your check over to your town social worker for her to disburse. You can put it to good use.

[Yardley CPA]

Art they doing whats best for the American People??

https://www.politico.com/news/2020/03/20/senate-coronavirus-emergency-stimulus-deal-friday-138788