Individual Rebates from H.R. 478

By: Chase Collum

This post was written at 3:00 PM on Friday, March 27, 2020. We believe that it was accurate and up to date as of that time. However, because of the rapid, daily changes in the political, business, and legal climates, we cannot guarantee the post’s currentness.

On Friday, March 27, 2020, the United States House of Representatives voted to approve H.R. 748, the CARES Act, in an effort to stimulate our economy by equipping individuals and small businesses with tools to aid them through this difficult, unprecedented time in America’s history. The bill had previously passed in the United States Senate and now only awaits the President’s signature before being made into law. The most viral of these measures, which has spread like wildfire throughout the internet, is Section 2201, 2020 Recovery Rebates for Individuals. Through memes and misinformation aplenty, these rebates have become colloquially known as “Trump Checks”. Because this has become a sensationalized topic, we at Smith, Welch, Webb & White decided to review the text of the bill itself to inform our clients and community members about what to expect from these individual rebates.

The bill provides for tax credits in the sum of $1,200 for individuals who file their own tax returns and $2,400 for individuals who file joint returns. Additionally, individuals with children are provided an extra $500 for each of their children. In order to be eligible to receive the full amount of these rebates, single people must have an annual income below $75,000. For individuals filing joint returns, their combined income must be less than $150,000 or $112,500 in the case of a head of household to receive the full amount of these rebates. If your income is above these thresholds, the rebate amount is reduced by five percent of the amount of your adjusted gross income that exceeds the threshold amount. For example, if you are an individual with no children who makes $100,000 per year, you make $25,000 over the threshold amount. If you take five percent of that $25,000 it leaves you with $1,250, meaning you would exceed the $1,200 individual rebate amount by $50 and, as such, you would not receive any individual rebate.

This begs the burning question that is on everyone’s mind: how and when will I get the money? Unfortunately, the bill is pretty vague on the timing and manner of payments. NPR recently reported that the payments could take up to three to four months and that those who have set up direct deposit authorization with the IRS would be more likely to receive the rebate faster than those who receive their refund check in the mail, comparing these rebates to the economic stimulus relief checks that were issued in 2008 under George W. Bush’s administration. There are also other complications to work through as the IRS, like many other businesses in America, is having to work while maintaining social distancing guidelines.

While the terms and timing of these individual rebates may seem underwhelming, there are a lot of aspects of H.R. 478 that create cause for celebration. There are now more loan options for small businesses to take advantage of to sustain their operations. State and local governments have been given additional funding to help with their respective responses to the virus. Schools and hospitals have been allocated more funding and more tools to help them navigate through this time of uncertainty. At a time where everything feels overwhelmingly negative, today’s bill seems to take a step towards our assuredly brighter tomorrow.

We are making this post to inform as much as possible. It is not our intent to give legal advice or to create an attorney/client relationship. If you need legal advice, please consult an attorney. If you have questions about your particular situation, please give us a call, send us an email, or request a video conference. We’ll be happy to assist. The text of H.R. 748 may be found at https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rSVHQuPeCB_g/v0.