The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed and signed into law on March 27, 2020. It includes a so-called “recovery rebate”. The recovery rebate would provide a one-time non-taxable cash payment to all U.S. residents or citizens with adjusted gross income under U.S.$75,000 (or U.S.$112,500 for head of household and U.S.$150,000 for married couple), who are not the dependent of another taxpayer and who have a valid Social Security Number. The full rebate is U.S.$1,200 (U.S.$2,400 for married couple). All eligible U.S. residents or citizens are also eligible for an additional U.S.$500 for each child who is the eligible dependent of the U.S. residents or citizens. There is no requirement that the recipient actually live in the United States, and therefore it can be received by U.S. citizens living in Canada.
For taxpayers with adjusted gross income over U.S.$75,000 (U.S.$112,500 for head of household and U.S.$150,000 for married couple), the rebate is reduced by U.S.$5 for each U.S.$100 that a taxpayer’s income exceeds the phase-out threshold. Therefore, the rebate is completely phased-out for single filers with income exceeding U.S.$99,000, U.S.$146,500 for head of household filers with one child, U.S.$198,000 for jointly filers with no children, and U.S.$218,000 for jointly filers with two children)
No application is required for the recovery rebate. IRS will determine the eligibility of the recovery rebate of a taxpayer with the taxpayer’s 2019 tax return (if filed) or their 2018 tax return (if they have not filed their 2019 tax). Payment will be issued either by electronic deposit or by mail with the information provided in the taxpayer’s latest tax return. Therefore, the best way to ensure you receive the recovery rebate is to file a 2019 tax return if you have not already done so (especially for those who need to update their direct deposit or mailing address information with the IRS).