Are you getting a rebate and where will it be sent?
Now that Congress and the President have authorized the payment of Tax Credit Rebates to many taxpayers, the questions we have been hearing the most are: Am I eligible and where will the payment be sent?
Fortunately, the IRS and the Treasury Department just announced their process for making these payments. Before we look at that process, though, let’s review who is eligible to receive a rebate.
The rebate is an advance refund of a newly created 2020 tax credit. The rebate amounts are:
- $1,200 for an individual
- $2,400 for a married couple
- $500 for children under the age of 17
However, not everyone is entitled to a rebate. The amount of each check is phased out by $5 for every $100 in excess of a “threshold amount”. To determine if you are over the threshold amount or not, the IRS will look at your 2018 adjusted gross income (AGI) unless you have already filed your 2019 return—then it will be based on 2019 AGI. The threshold amounts are:
- $75,000 for single filers
- $150,000 for joint filers
- $115,500 for heads of households
Based on the phase out formula, the rebates will be completely phased out for single filers at $99,000 of AGI, $198,000 of AGI for joint filers and $136,500 for heads of households. However, if you have children, the amount of income you may have before the rebate is completely phased out will be higher.
If you are entitled to a rebate, you will automatically receive it. However, how will the IRS know where to send the payment? According to the recently published Internal Revenue Bulletin IR-2020-61, the payments will be deposited directly into the bank account reflected on your most recently filed tax return for tax years 2019 or 2018. If the IRS does not have your banking information, they will mail a check to your last known address. The Treasury is developing a website where you will be able to provide banking information to the IRS online. If your banking information is out-of-date or you have not previously provided it, using the website will ensure you receive your payment immediately, rather than waiting for a check to be mailed.
If you don’t typically file a tax return, you will need to do so in order to receive this payment. In the near future, https://www.irs.gov/coronavirus will provide information on how to file a return with the minimum amount of information needed to get a Recovery Refund.
If you are receiving Social Security benefits, your rebate payment will be sent to that bank account.
Following the above guidance will ensure you will receive your payment in a timely fashion if you are eligible.