On December 21, 2020, the U.S. Senate and House of Representatives voted to approve the Consolidated Appropriations Act of 2021.
Sec 272 of Subtitle B – COVID-related Tax Relief Act of 2020 in the Act confirms the payment of $600 for each taxpayer ($1,200 if married filing jointly) and qualifying child. There will be a reduction of the payment if the taxpayer’s adjusted gross income (AGI) exceeds:
- $150,000 in the case of a joint return or a surviving spouse,
- $112,500 in the case of a head of household
- $75,000 in the case of a taxpayer not described in (1) or (2)
The additional 2020 recovery rebate is an advance of a tax credit that for tax year 2020’s tax liability. The recovery rebate amount will be calculated based on 2019’s AGI. When completing your 2020 tax return the credit will be calculated based on your 2020 AGI. If the amount received is less than what is calculated, you will receive a credit against your 2020 tax liability for the amount you were entitled to but did not receive. If you received more than you were entitled to you will not have to pay back the overpaid amount.
There has been mention that taxpayers could see direct deposit payments as soon as the week of December 28, 2020.
If you have any questions, please reach out to your personal Sciarabba Walker contact or email us at info@swcllp.com.