Beginning this week, millions of Americans are expected to receive cash from the federal government. But there is a chance you might not be among them.
Some groups of people and entities do not qualify for the “recovery rebates” that were part of the recent federal Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
The rebates are intended to help people pay bills and to boost the overall economy at a time when the coronavirus pandemic has forced the closure of workplaces from coast to coast.
As we reported in “5 Ways the New Coronavirus Stimulus Law Will Help Your Wallet“:
“This payment is $ 1,200 per person plus $ 500 per child for taxpayers with an adjusted gross income (which is found on your tax return) of up to $ 75,000. For people whose tax-filing status is head of household, the ceiling is $ 112,500. For married couples who file a joint return, it’s $ 150,000.”
However, not everyone is eligible for the rebates.
According to the IRS, the following will not receive money.
1. High earners
The recovery rebate is reduced by $ 5 for every $ 100 by which your income exceeds the $ 75,000, $ 112,500 or $ 150,000 thresholds noted above.
That means your rebate will be reduced if your adjusted gross income is between:
- $ 75,000 and $ 99,000 for single and married separate filers
- $ 112,500 and $ 136,500 for head-of-household filers
- $ 150,000 and $ 198,000 for married joint filers
You will not get any rebate if your adjusted gross income exceeds:
- $ 99,000 for single and married separate filers
- $ 146,500 for head-of-household filers with one qualifying child
- $ 198,000 for married joint filers with no qualifying children
- $ 218,000 for married joint filers with two qualifying children
2. Dependents
The IRS says you are considered a dependent if someone else can claim you as such on a tax return.
A common example is when a parent claims a child, student or older dependent on the parent’s tax return. In such cases, the dependent will not receive a recovery rebate.
3. Those who are delinquent on child support
If you have fallen behind on child support payments and your state has reported that fact to the U.S. Treasury Department, your recovery rebate will be offset by those back payments.
The U.S. Senate Finance Committee explains:
“[The CARES Act] turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.”
4. Nonresident aliens
The CARES Act states, and the IRS echoes, that a “nonresident alien” is not to be considered an “eligible individual” for purposes of collecting a recovery rebate.
The IRS defines a nonresident alien as someone who is not a U.S. citizen or U.S. national and who has not passed what the IRS calls the green card test or the substantial presence test.
5. Estates and trusts
The CARES Act also excludes “an estate or trust” from its definition of an “eligible individual” for purposes of collecting a rebate.
If you are among the millions who will get a recovery rebate, it’s time to think about how you will use that money. For suggestions, check out:
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