CARE ACT Review (Please Share, Especially with Someone You Know Who May Have Recently Moved) – “The Recovery Rebate!” – IMPORTANT *Update Your Address if You Recently Moved*

This is the first of a Multiple Part Series (4 or 5) on the CARE ACT … done in order of most touched by the bill. Due to the unique nature of the bill, (Far Reaching, Confusing, but needing expedited delivery and explanation), I am asking you share this with those that may be in need or find it helpful by pushing it forward to others via email.

The following is most fitting for someone you know that may have recently moved!

Over 90% of US tax payers will receive the following Recovery Rebate,making backlog and loss certain, the more streamlined we can be, the more help that will occur. 

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision called the Recovery Rebate.

Break In : If you have moved or changed your bank account since your most recent Tax filing you need to file FORM 8822 to notify the IRS of your correct address.

The Recovery Rebate – Estimated 90% of Tax Payer Participation

Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount.

This Rebate is NOT TAXABLE!

The payout is likely to be sent out end of April or early May!

Social Security recipients will receive theirs via their direct deposit account. Non Social Security recipients will receive their Rebate via the last known account on either your 2018 or 2019 tax return, whichever is more recent or directly to the address on file.

A letter will be sent to the last known address of your most recent tax return hopefully within two weeks of the bills signing with instructions on your calculation AND how the US Government intends to send you the rebate.

If you have moved recently or after you most recent tax filing date, YOU SHOULD FILE FORM 8822 ASAP for the IRS to update your address or you will likely not receive the notification letter, far complicating an already complicated situation.

Phase out

The applicable AGI phase out threshold amounts are as follows:

  • Married Joint: $150,000
  • Head of Household: $112,500
  • All Other Filers: $75,000

This phase out is based on either your 2018 or 2019 tax return, whichever is most recent. If your income exceeds the threshold and you are phased out completely, and your 2020 income is below the threshold when you file your 2020 tax return, you will receive your Recovery Rebate at the time of your 2020 filing.

Should your 2020 income rise above the thresholds but based on your prior years income you received the Rebate, YOU GET TO KEEP THE REBATE WITHOUT PENALTY OR TAX!

Planning Tip for those near or in the Phase Out Thresholds

If you have not filed your 2019 return, check to see which is lower, your 2018 or 2019, and if your 2018 is lower, do not file your 2019. Conversely, if your 2019 is lower file it immediately! You likely will not have to pay until the extended deadline of July 15, 2020 (Double check with your Tax Professional!)


Have a Great “Recovery Rebate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

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