On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act for short. This Act provides many different forms of relief, including a temporary expansion of unemployment insurance benefits for those who qualify, a Paycheck Protection Program for small businesses, and a “recovery rebate” for individual taxpayers.
The provision that is of interest to many Americans is the recovery rebate that qualifying Americans will be receiving. Qualifying adults will receive $1,200.00 ($2,400.00 for married couples who file taxes jointly), plus $500.00 per dependent. However, there is a phasing-out will occur with regard to the amount a person will receive. For a single adult, the $1,200.00 will be reduced by $5.00 for every $100 over $75,000.00, with a complete phase-out occurring at an adjusted gross income of $99,000.00 for an adult filing taxes as single. For married couples filing jointly, the $2,400.00 will be reduced by $5.00 for every $100 over $150,000.00 and a complete phase-out occurring at an adjusted gross income of $198,000.00.
How are the recovery rebates sent?
The government will utilize information received from the filing of your 2019 federal income tax return (or your 2018 federal income tax return if you have not yet filed your 2019 income tax return). This information may be the bank account you utilized in order to receive a tax refund, or the address listed on your tax return. However, just because you qualify to receive a recovery rebate due to your income that does not mean that you will receive the money. Although most tax intercepts (or other intercepts for federal money) will not apply, there is one exception.
Child Support Arrearage
If you owe a child support arrearage that has been reported to the Treasury (i.e., your federal tax refund is intercepted and applied towards past-due child support), your recovery refund may be reduced or completely taken to be applied to that arrearage.
How does a child support arrearage get reported to the Treasury? A state child support agency submits information through the Office of Child Support Enforcement about individuals who are behind in support payments, including their name, social security number, and amount of past-due support. If the amount of the past-due support meets the criteria for “federal offset,” then the parent owing the arrearage will receive a pre-offset notice laying out the amount of the debt and actions that may be taken. If a parent’s past-due support qualifies for federal offset, then his or her recover refund may be reduced or completely taken to be applied towards their arrearage.
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We are aware that everyone has been affected by the recent response to COVID-19 but we hope that you find some comfort in knowing that we are still operational and here to assist you.
Whether you are a current client or if you are looking for family law or estate planning assistance, our team is here for you and will continue to be available to address your concerns.
To the extent possible, we will offer remote consultations and provide services from a distance.
You may message us here, email our office at info@sterkfamilylaw.com, or call 815-600-8950 and one of our team members will be able to assist you.
This is a legal advertisement from Sterk Family Law Group. It does not constitute legal advice and should not be construed as such. This article is for informational and educational purposes only.