The $2.2 trillion national relief package is nearly here.
The Senate passed the 883-page Coronavirus Aid, Relief, and Economic Security (CARES) Act late Wednesday. The House will vote Friday. Among numerous other provisions, the bill provides direct payments for most Americans. But the government could hit some bumps in its efforts to distribute the payments, according to planner Jeff Levine.
Working in some jokes, memes and plenty of details, Levine — lead “financial planning nerd” for Kitces.com and director of advanced planning for Buckingham Wealth Partners — tweeted away on what’s in the mammoth legislation, including details on how the payments would work and the waiver of required minimum distributions from retirement accounts for 2020.
“OK, buckle your seatbelts, because this is about to be a wild ride!” Levine said at the start of his 56-tweet thread.
Levine, who processed a huge amount of text in the hours after the bill’s release, may revise an interpretation (or two) as the package gets updated or he reassesses its details.
“ ‘How much money is Uncle Sam going to be sending me?’ The answer, of course, is it depends,” the CPA said.
Overall, individuals are entitled to get $1,200 and joint tax filers $2,400. Taxpayers can also receive $500 for each qualifying child, 16 or younger.
“High-income taxpayers will have those rebate amounts reduced and/or eliminated as income exceeds: $150k – Joint filers $112.5k – HOH $75k – Everyone else For every $100 over the applicable threshold, you lose $5 of the rebate, until you get nothing…,” Levine explained.
At these levels, taxpayers get no rebates: joint filers, $198,000; heads of households, $136,500; others, $99,000.
Where do these income figures come from?
“In what I believe to be a totally asinine way of going about this, the numbers above are based on the AGI from the 2019 return, or if that return hasn’t been filed (which will apply in MANY cases), the 2018 return,” Levine said. (AGI stands for adjusted gross income.)
Why doesn’t this make sense?
“There are probably an awful lot of people who did very well in 2018 — or even 2019 — who are now experiencing some significant financial hardship!” he pointed out.
“Congress should have based this on 2020 income, paid everyone, and settled up on next year’s tax return,” the CPA tweeted.
Isn’t that complicated?
“It’s not. In fact, we ALREADY DO IT for the premium assistance tax credits for healthcare (‘Obamacare credits’),” he added.
Looking at how the government is going to get this relief into taxpayers’ pockets, Levine said: “In many instances, they are going to Direct Deposit this payment to the account that was authorized for a 2018 refund!! Did it not occur to anyone that people may have closed those accounts?”