Corona – Benefits for US Citizens (updated)

On March 27, 2020 the president signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARE). The unprecedented act funds two trillion dollars of spending in response to the current Covid-19 pandemic and resultant economic hardships. 500 billion dollars of this spending will be distributed directly to American citizens in the coming weeks.Summary of features of this benefit:

1. The benefit applies to all US citizens. There is no requirement to reside in the United States.
2. The amount is $1,200 per person or $2,400 for a married couple plus an additional $500 per child age 16 or younger.
3. To qualify, the citizen must have at least $2,500 of qualifying income such as wages, self employment, social security, or pensions.
4. The benefits are reduced for Adjusted Gross Income in excess of $75,000 ($150,000 for a joint return).
5. The benefits will be based on your 2019 or 2018 tax filing. As long as you have filed your 1040 for one of these tax years, no additional action is required.
6. Payments will be deposited directly to your US bank account if you received your last refund by direct deposit – probably in the next 30 days. Otherwise, a paper check will be delivered in the next few months.

If you would like to receive your benefit but have not yet filed your 2018 or 2019 tax return, then please contact us today to get started.

FAQ

1. I have not yet filed the 1040 for 2018 or 2019. What is the deadline?
   • Answer – By law, all benefit checks must be cut by the IRS no later than December 31, 2020. Your 2018 or 2019 tax filing must be submitted well ahead of this deadline. The exact date is unknown, but suggested to be no later than September 01, 2020.
2. If I haven’t filed the 2019 1040 yet and have additional children to claim, how and when will I receive the $500 benefit for these children? 
   • Answer – additional children will need to be reported on the 2019 tax filing well ahead of December 31, 2020.  If the social security numbers are delayed, then they will not qualify.
3. Do couples with 6013(g) election qualify filing MFJ?
   • Answer –  No, unless both spouses have a social security number (ITIN will kill it).  Mixed couples with SSN + ITIN might consider filing 2019 separately.
4. If my income met the threshold in 2018 but not in 2019, should I hold off from filing 2019 taxes?
   • Answer – yes, 2019 filing should be delayed if it might cause the client to lose out on the benefit.
     
     
5. Does the AGI threshold include income excluded by form 2555? 
   • Answer – No.  The legisltation looks at “AGI” and not “modified AGI”, so the excluded income is not added back when calculating the taper.
6. If I excluded ALL of my income via form 2555, do I qualify? – To be determined
7. I’m a green card holder – do I qualify
   • Answer – yes.  NRA’s do not qualify.  Dependents do not qualify.  Green card holders are not “non resident aliens” but are considered citizens for tax purposes, as long as they have a social security number.

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