Dr. Boozman's Check-up
Frequently Asked Questions and Myths about the Coronavirus Aid, Relief and Economic Security (CARES) Act
Mar 30 2020
The CARES Act legislation that was signed into law on March 27, 2020 is a sweeping package of relief and economic support for Arkansans and all Americans.
Large bills like this one, negotiated under urgent circumstances, are often complex because of their broad scope. The aim of the CARES Act legislation is to provide relief to workers through direct cash payments and enhanced unemployment insurance, support for small businesses and state and local governments, targeted assistance to industry leaders, and aid to America’s medical and public health professionals to combat the virus.
Frequently Asked Questions
- What are recovery rebates? A one-time tax rebate check of $1,200 to every American whose 2018 tax return, or 2019 if filed, showed income at or below $75,000. That’s $2,400 per married couple, with an extra $500 per child. There’s no minimum threshold, so all working people benefit.
- Who is eligible for a recovery rebate? All U.S. residents with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for the full $1,200 ($2,400 married) rebate. They are also eligible for an additional $500 per child.
- What if my income was above the threshold in 2019, but I’ve lost my job due to the coronavirus? Can I still get a rebate check? If your income in 2019 was in the phase-out range you would still receive a partial rebate based on your 2019 tax return. However, the rebate is actually an advance on a tax credit that you may claim on your 2020 tax return. If your income is lower in 2020 than in 2019, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year.
- Are individuals with little to no income or those on means-tested federal benefits, such as SSI, eligible for a recovery rebate? Yes, there is no qualifying income requirement. Even individuals with $0 of income are eligible for a rebate so long as they are not the dependent of another taxpayer and have a work-eligible SSN.
- Are seniors whose only income is from Social Security or a veteran whose only income is a veterans’ disability payment eligible? Yes, as long as they are not the dependent of another taxpayer. The bill also provides the IRS with additional tools to locate and provide rebates to low-income seniors who normally do not file a tax return by allowing them to base a rebate on Form SSA-1099, Social Security Benefit Statement or Form RRB-1099, which is the equivalent of the Social Security statement for Railroad Employees. However, seniors are still encouraged to file their 2019 tax return to ensure they receive their recovery rebate as quickly as possible.
- Do I have to apply to receive a payment? No. The IRS will transfer the funds to your bank account via direct deposit using your 2019 or 2018 tax filing information. Treasury Secretary Steve Mnuchin has also announced there will be a web-based application for those who don't receive direct deposit to give the IRS the necessary information.
- Is the rebate taxable or will I have to pay it back? No. The check is a rebate, not a loan. These rebates do not need to be paid back in next year’s filings. The rebate is treated like other refundable tax credits and not considered income. Additionally, if the rebate amount you qualify for based on your 2020 income is less than what you qualify for based on your 2019 tax return, it does not have to be paid back.
(The above information was prepared by the Senate Finance Committee for informational purposes and should not be relied on for legal advice. Individuals should consult the IRS or a tax advisor to address questions related to their individual circumstances.)
*For more FAQs about the tax rebate for individuals and families, click here.
- Are gig workers, freelancers and independent contractors eligible to receive the enhanced Unemployment Insurance benefit? Yes. Benefit amounts will be calculated based on a previous income using a formula from the Disaster Unemployment Assistance program, and these workers will also be eligible for the $600 weekly benefit (extended for four months). Are they eligible for the Paycheck Protection Program? Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.
*Arkansans needing more information regarding unemployment insurance should click here.
*Small Business Owners, Contractors, Gig Economy Workers and Self-Employed Individuals seeking more information about the Paycheck Protection Program should click here.
*Small Business Owners Seeking to Learn More about Assistance Available through the Small Business Administration can visit: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Unfortunately, some misconceptions and falsehoods about this bill have already begun circulating.
- Bailout? Slush Fund? The $500 billion in loans to support important national industry like airlines, cargo airlines and businesses important to maintaining national security are required to be paid back, and funds dispensed to these industries in the form of direct grants will allow investment options for the Treasury Department. These loans are not bailouts or no-strings-attached funding. To qualify for loans, these companies will be barred from stock buybacks until 12 months after the loan is no longer outstanding, have limits placed on officer and employee compensation, and/or are required to maintain certain employment levels. For more, click here.
- Congressional Pay Raise? No, Congress did not vote to give itself a pay raise in this bill. While there were appropriations made to the Legislative Branch under the category of "Salaries & Expenses," those funds are aimed at expanding access to telework capability and reimbursing childcare workers and food-service contracts. The Constitution prohibits "varying the compensation for the services of the Senators and Representatives" from taking effect "until an election of Representatives shall have intervened," and furthermore, Congress has denied any adjustments to member salaries every year since 2009 despite a 1989 law allowing for automatic adjustment based on private sector wages and salaries as measured by the Employment Cost Index. (See here for more information.)
- Voting Requirements/Nationalized Elections? $400 million is provided to the Election Assistance Commission and is intended to help states "prevent, prepare for, and respond to coronavirus, domestically or internationally, for the 2020 Federal election cycle." This does not nationalize elections or make any changes to state-by-state voting requirements. It does not institute mandatory nationwide early voting, a universal mail-in voting option, or same-day voter registration. Grant money has been allocated to the EAC over the past several years to enhance election security, so this falls into line with that previous action. (For more, see this Washington Post story.)
- Green New Deal and Other Progressive Wish-List Items Included? House Democrats proposed including provisions from the so-called “Green New Deal” and other far-left agenda items in this package, including requiring airlines to go carbon-neutral by 2025, mandatory diversity reports for corporate boards, public sector union protections, a $15 minimum wage increase, and student-loan debt forgiveness. These were NOT included in the final version of the CARES Act.