Additional 2020 Recovery Rebates

An additional round of economic impact payments (EIPs) is included in the legislation but the amount is substantially less than the first round, which was $1,200 per eligible adult and $500 per dependent child under age 17. This new round will be $600 per eligible adult and $600 per dependent child under 17. Also, eligible this time are the so-called mixed-status households, for example where one of the spouses is a noncitizen, which were previously excluded from receiving payments.

Maximum Payment Amounts:

· Each eligible adult: $600

· Married couple (both eligible) filing jointly: $1,200

· Each dependent child under age 17: $600

Payment Phaseout – The payment is phased out by 5% of the taxpayer’s 2019 AGI that exceeds the filing status threshold. These thresholds are noted below:

Unmarried Taxpayers (as well as Married Filing Separately): $75,000

Head of Household: $112,500

Married Taxpayers Filing Joint & SS: $150,000

Payment Due Date - Although the Act includes a January 15, 2021 deadline for advance payments to be made, President Trump’s delay in signing the bill may delay the payments.

No Social Security Number - In general, taxpayers without an eligible Social Security number are not eligible for the payment. However, married taxpayers filing jointly, and otherwise eligible, where one spouse has a Social Security Number and one spouse does not are eligible for a payment of $600, in addition to $600 per child under age 17 with a Social Security Number.

Deceased Taxpayers – There was considerable confusion related to the first round when the IRS issued EIPs to deceased individuals. This time around they have specified that anyone that was deceased before January 1, 2020 is not eligible for an EIP.

The payments will be treated as a refundable 2020 tax credit and reconciled to the correct amount on the 2020 return. Any excess payment will not be required to be repaid and if the payment was less than qualified for, the difference will be paid as a refundable credit when the 2020 return is filed.

Please contact us if you have any question about this EIP or how it will affect your 2020 tax return.