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How to Claim 2020 Recovery Rebate Checks

by John Anthony Castro, J.D., LL.M.

Introduction

On Wednesday, March 25, 2020, the U.S. Senate approved (96-0) a massive $2 trillion package and sent it to the U.S. House of Representatives to address the COVID-19 pandemic, bailout airlines, expand jobless benefits and give families a quick infusion of cash.

On Friday, March 27, the House approved it and President Trump signed it into law later that afternoon.

HR 748, Coronavirus Aid, Relief, and Economic Security (CARES) Act, is now law. Part of the CARES Act is the new Internal Revenue Code, Section 6428.

Executive Summary

One of the most highly anticipated provisions of the CARES Act are the 2020 Recovery Rebate Checks. How much will I get? When will they be sent to U.S. taxpayers? Who’s eligible? We have all of the answers.

Let’s first start with an overly simplified response to those key questions.

First, on amounts, it depends how you filed your tax returns. For single or head of household, it’s $1,200. For married filing jointly, it’s $2,400. Then it’s $500 for each qualifying child.

Second, on timing, the law simply says that Secretary Mnuchin shall issue the checks “as rapidly as possible.” Thanks for the specificity, Congress.

Third, on eligibility, only U.S. taxpayers with social security numbers are eligible. If you file as a nonresident in 2019, you will not be eligible even if you have a social security number.

How Do I Claim My Money

On method of delivery, the law says that Secretary Mnuchin will “disburse refunds… electronically to any account to which the [taxpayer] authorized, on or after January 1, 2018.” Two key elements: (1) electronic delivery and (2) authorized accounts.

With regard to electronic delivery, this means the media is wrong; there will be no paper checks. It's direct deposit only. And that makes sense considering the risk of mailbox pirates stealing checks.

With regard to authorized accounts on or after January 1, 2018, this means the bank account listed, if any, on your 2017, 2018, or 2019 U.S. federal income tax return.

This all means the U.S. Treasury will direct deposit your refund into the most recent bank account used on your 2017, 2018, or 2019 U.S. federal income tax return.

Frequently Asked Questions (FAQs)

  1. Are you charging to claim the stimulus money? No, we are not charging. This article is a public service; informational only. Our firm donates millions to charity.
  2. I'm retired on social security income, and I have not filed a tax return for 2017, 2018, or 2019. Will I still get the stimulus money? If you receive your social security income by direct deposit, yes, it will be direct deposited into that account where you regularly receive your social security income. If not, you need to file a protective return to list a bank account. A protective return is a tax return showing only $1 of interest income. You file that with the IRS so that they have a bank account on file for you. Look up free filing options on the IRS website by clicking here.
  3. My child was born in 2020. Do I get the extra $500 for a 2020-born child? Good and bad news. Bad news is that the 2020-born child is not eligible for the advanced credit, which is the stimulus money they'll be sending out to everyone. The good news is that you'll get the $500 credit for the 2020-born child when you file your 2020 U.S. federal income tax return next year.
  4. Someone else claimed my child on their 2019 U.S. federal income tax return. Will they get the stimulus money for my child? Yes. Is there anything I can do to stop that? Maybe. The stimulus money is an advance on a refundable credit that must be claimed on your 2020 tax return. Therefore, the person that receives the $500 for your child will end up having to pay it back to the IRS if they don't legally claim the child on their 2020 tax return. We recommend using that as leverage to convince them to provide you with the money.
  5. I always receive my federal income tax refunds on those disposable debit cards. How will I get my stimulus money? Maybe. It depends whether the card was re-loadable. If re-loadable, it might technically be a bank account. If you already discarded the card, you'll have to contact the card issuer to get a replacement card in case the stimulus money gets delivered there. If you don't claim it, the card issuing company is required by law to forward the funds to your state's unclaimed property division. If they do not, they may be charged with embezzlement.
  6. My child is in college. Do I get an extra $500 for a college child? No, the child either has to be 16 years of age or younger or disabled.
  7. I have outstanding debts (e.g., unpaid child support, tax debt, defaulted student loans, etc.) that have always resulted in my tax refunds being seized. Will my stimulus money be seized? No, the stimulus money is exempt from creditors including the IRS itself. Whether it's exempt for child support is determined on a state-by-state basis. We expect all 50 states to seize checks for past-due unpaid child support; however, it is not certain yet. If you heard otherwise from the media, they are wrong. They are reporters; not lawyers.
  8. I've read this entire article and think I need help fixing my situation, what do I do; who can help? For more information, click here.

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Contact Our Firm

If you would like our firm to prepare your 2019 U.S. federal income tax return, please first contact our firm online by clicking here. We are not accepting calls at this time for stimulus check inquiries as there is nothing we can do.


About the Author

John Anthony Castro, J.D., LL.M., is the Managing Partner of Castro & Co., the author of International Taxation in Plain English as well as International Estate Planning in Plain English, an esteemed graduate of Georgetown University Law Center in Washington DC, an OPM Fellow at Harvard Business School, and an internationally recognized tax attorney with offices in New York, Los Angeles, Miami, Chicago, Dallas, and Washington DC.

To provide feedback on this article or suggest an idea for a future article, please contact Tiffany Michelle Hunt, J.D., LL.M., Director of Tax Planning at Castro & Co., at T.Hunt@CastroAndCo.com.


Bluebook Citation: John Anthony Castro, How to Claim 2020 Recovery Rebate Checks, Int’l Tax Online Law Journal (Mar. 27, 2020) url.

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