On Friday, March 27, 2020, the Federal government enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide economic relief for the devastation resulting from the current COVID-19 pandemic. The largest spending law in US history, the CARES Act includes provisions that directly impact individuals and businesses on numerous levels. This overview presents our interpretation of the Act’s provision providing direct economic stimulus payments to individuals.


The CARES Act adds the new Internal Revenue Code Section 6428, pursuant to which lower and middle-income individuals will receive direct payments to assist them during the pandemic.


To be eligible for the 2020 Recovery Rebate, a single individual with no children must have adjusted gross income (“AGI”) of $99,000 or less for 2019. A married couple with no children must have AGI less than $198,000.

The amount of the payment for a single individual is $1,200; for a married couple filing jointly it is $2,400.  Those with children who can be claimed as dependents receive an additional $500 per child.

Single filers whose AGI was above $75,000 in 2019, and joint filers with AGI above $150,000 in 2019, will have their tax rebate (including the $500 per child credit) reduced by 5% of the excess over those amounts.  Single filers are phased out at $99,000 of AGI and joint filers are phased out at $198,000 of AGI.

If you have not yet filed your 2019 tax return, the AGI amounts from your 2018 tax return will be used to determine the amount of the rebate. Any payment sent will not be reduced or offset by additional tax if your 2019 AGI exceeds that of 2018. You will be eligible for an additional rebate if your 2019 AGI is lower than your 2018 AGI.


The payment will be made via direct deposit if you used direct deposit/debit for your 2018 or 2019 tax return. Initial guidance suggested that if you did not use direct deposit for your 2018 or 2019 tax return, you would receive a paper check and a separate letter detailing the amount and date the check was mailed will be sent to the last taxpayer address on file with the IRS. However, the U.S. Treasury Department announced on April 2, 2020, that a website will be made available through which individual taxpayers not previously established with direct deposit for IRS payments can register their bank account information in order to facilitate direct deposit.

Nonresident aliens, individuals who can be claimed as dependents on another taxpayer’s return, estates and trusts are not eligible for the stimulus payment.