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The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) provides emergency relief measures in response to the Coronavirus Disease 2019 (COVID-19) pandemic. Section 2201 of the CARES Act provides recovery rebates, also known as Economic Impact Payments, for most individuals, structured as automatically advanced tax credits to be disbursed by the Treasury Department. The Internal Revenue Service (IRS) refers to the payments made in 2020 as economic impact payments. (These payments are also known as "stimulus checks" or "stimulus payments.") This Insight addresses the economic impact paymentsThis Insight addresses the recovery rebates from the perspective of Social Security and Supplemental Security Income (SSI) beneficiariesbeneficiaries.
Eligible individuals can receive a recovery rebatean economic impact payment of $1,200 per person ($2,400 for married joint filers) as an automatically advanced credit against their 2020 federal income tax liability via direct deposit or a check by mail. Eligible individuals can also receive an additional $500 for each eligible child under 17 years old who qualifies for the child tax credit.
The recovery rebateeconomic impact payment is reduced by $5 for every $100 of adjusted gross income (AGI) above $75,000 for individuals, $112,500 for heads of households, and $150,000 for married joint filers. Consequently, the rebateit is not payable to individuals (with no eligible children) with AGI above $99,000 or married joint filers (with no eligible children) with AGI above $198,000. A married couple with two eligible children is ineligible for the rebatean economic impact payment with AGI above $218,000.
The recovery rebate is to beNonresident aliens, individuals who could be claimed as a dependent by another taxpayer, and estates or trusts are ineligible for the economic impact payment. Taxpayers must provide a Social Security number (SSN) for themselves, their spouse (if married filing jointly), and any child for whom they claim the $500 child payment, with some exceptions for adopted children and military families.
The economic impact payment is automatically advanced to eligible individuals in 2020 based on their 2019 federal income tax return. For eligible individuals who did not file a 2019 return, the rebate is to be payment is automatically advanced based on 2018 return information. For eligible individuals who were Social Security or Railroad Retirement beneficiaries in 2019 and who were not required to file a federal tax return because their incomes were below the filing threshold, the law permits the Internal Revenue Service (IRS)IRS to automatically advance the rebate$1,200 payment using the information from their 2019 Social Security Benefit Statement or Railroad Retirement Benefit Statement (discussed below).
Nonresident aliens, individuals who could be claimed as a dependent by another taxpayer, and estates or trusts are ineligible for the recovery rebate. Taxpayers must provide a Social Security number (SSN) for themselves, their spouse (if married filing jointly), and any child for whom they claim the $500 child credit, with some exceptions for adopted children and military families.
The recovery rebate is not subject to federal income tax. As with any tax refund under current law, the rebate.
The economic impact payment is not subject to federal income tax. The payment is not treated as income, or as a resource for a 12-month period, in determining an individual's eligibility or assistance amount under any federally funded public program.
All Social Security beneficiaries—retired workers, disabled workers, eligible family members, and survivors—and SSI recipients are eligible for the recovery rebateeconomic impact payment unless they are claimed as a dependent on a taxpayer's return or do not meet the other eligibility requirements. (The term Social Security beneficiaries includes Social Security Disability Insurance [SSDI] beneficiaries.)
For eligible Social Security beneficiaries who filed a federal income tax return for 2018 or 2019, the rebate is to be automatically advanced to them in 2020 using the information from their last return.
Some Social Security beneficiaries are not required to file a federal income tax return because their gross income is less than the filing requirement (generally, the standard deduction amount). A 2017 study found that 34% of nonfilers in 2006 were aged 65 or older and 90% of nonfilers aged 65 or older had Social Security income. For those eligible Social Security beneficiaries who did not file a tax return for 2018 or 2019 and who received Social Security benefits in 2019, the CARES Act permits the IRS to automatically advance the rebate using the information from their 2019 Social Security Benefit Statement (Form SSA-1099). All Social Security beneficiaries receive Form SSA-1099, including those who concurrently receive Social Security and SSI benefits. It shows the total amount of Social Security benefits received in the previous year.
Eligible Social Security beneficiaries who did not file a 2018 or 2019 tax return and who do not qualify for the 2019 Form SSA-1099 option (e.g., they became entitled to Social Security benefits in 2020) would need to subsequently file a tax return to receive the rebate.
All SSI recipients are eligible for the recovery rebate unless they are claimed as a dependent on a taxpayer's return or do not meet the other eligibility requirements. The rebate is not counted as income, or as a resource for a 12-month period, in determining an individual's eligibility for SSI or the amount of the SSI payment.
For eligible SSI recipients who filed a federal income tax return for 2018 or 2019, the rebate is to be automatically advanced to them in 2020.
Many SSI recipients are not required to file a federal income tax return. SSI payments, as well as payments from analogous social benefit programs (i.e., programs based on need), are not considered gross income for federal tax purposes under a limited general welfare exclusion. A 2017 study found that 11% of nonfilers in 2006 had SSI income, compared with 1% of filers. For those eligible SSI recipients who did not file a federal income tax return for 2018 or 2019 and who concurrently received Social Security benefits in 2019, the CARES Act permits the IRS to automatically advance the rebate using the information from their 2019 Form SSA-1099. (Form SSA-1099 is not provided to SSI-only recipients.)
Eligible SSI recipients who did not file a tax return for 2018 or 2019 and who do not qualify for the 2019 Form SSA-1099 option (e.g., they did not receive Social Security benefits in 2019) would need to subsequently file a tax return to receive the rebate.
Initially, IRS guidance stated that people who do not normally file a tax return "will need to file a simple tax return" to receive the recovery rebate. This language suggested that Social Security beneficiaries who did not file a recent tax return and who received a 2019 Form SSA-1099 would need to subsequently file a tax return to receive the rebate.
After some lawmakers expressed concern that this approach would disadvantage certain vulnerable groups, the Treasury Department later announced that it would use the information from the Form SSA-1099 to automatically issue the rebate to Social Security beneficiaries who did not file a tax return for 2018 or 2019. However, IRS will not be able to make payments for dependents (eligible children) at this time based on the Form SSA-1099. IRS guidance issued on April 1 states,
The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2019 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return.
Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time.
In addition, the CARES Act requires the Treasury Department and the Social Security Administration (SSA) to provide information to the public regarding the availability of the recovery rebate, including information for individuals who may not have filed a tax return for 2018 or 2019. SSA announced that it would share data on SSI recipients who do not receive a Form SSA-1099 with the Treasury Department "to notify potentially eligible individuals and provide necessary materials to apply for the payment."
In general, the IRS is encouraging anyone who has not yet filed a tax return for 2018 or 2019 to file a simple tax return as soon as possible and to include direct deposit banking information on the return.
Eligible individuals who filed an income tax return for 2018 or 2019, including Social Security and SSI beneficiaries, do not need to take any further action to receive the $1,200 economic impact payment and the $500 payment per qualifying child on the applicable tax return. Social Security and SSI beneficiaries who do not have dependent children, and who did not file a tax return for 2018 or 2019, also are not required to take any further action and are to receive their $1,200 payment by direct deposit, Direct Express debit card, or paper check, just as they would normally receive their monthly benefits. However, beneficiaries with qualifying children, as well as new beneficiaries since January 1, 2020, who did not file an income tax return for 2018 or 2019 will need to take further action to automatically receive all payments for which they are eligible.
Social Security and SSI beneficiaries who do not have qualifying children under 17 years old are not required to take any action to receive the economic impact payment. The Treasury Department, Social Security Administration (SSA), IRS, and Bureau of the Fiscal Service have arranged for these beneficiaries to automatically receive the $1,200 economic impact payment. This includes all beneficiaries without qualifying children, regardless of whether or not they filed a tax return for 2018 or 2019.
Social Security Beneficiaries. Social Security beneficiaries who did not file an income tax return for 2018 or 2019 and who have qualifying children under 17 years old are to automatically receive the $1,200 economic impact payment no later than the end of April. However, those beneficiaries need to take further action to automatically receive the $500 payment per qualifying child. On April 20, 2020, the IRS and SSA announced that these beneficiaries need to provide dependent information by noon Eastern time on April 22, 2020, using the special IRS Non-Filers: Enter Payment Info Here tool. Beneficiaries who miss the April 22 deadline would be required to file a 2020 income tax return (in early 2021) to receive the $500 payment per qualifying child. In general, some Social Security beneficiaries are not required to file a federal income tax return because their gross income is less than the filing requirement (generally, the standard deduction amount).
SSI Recipients. SSI recipients who did not file an income tax return for 2018 or 2019 and who have qualifying children under 17 years old also need to provide dependent information through the special IRS Non-Filers: Enter Payment Info Here tool. However, those recipients have some additional time beyond April 22 to enter their information. Economic impact payments are expected to be issued to SSI recipients by early May. Nonetheless, IRS recommends providing dependent information as soon as possible. Otherwise, SSI recipients would be required to file a 2020 income tax return (in early 2021) to receive the $500 payment per qualifying child. In general, many SSI recipients are not required to file a federal income tax return. SSI payments are not considered gross income for federal tax purposes under a limited general welfare exclusion.
Social Security and SSI beneficiaries who first started receiving benefits since January 1, 2020, and who did not file an income tax return for 2018 or 2019 will need to use the special IRS Non-Filers: Enter Payment Info Here tool to automatically receive their economic impact payment. Otherwise, those beneficiaries will be required to file a 2020 income tax return (in early 2021) to receive their payment.
For additional guidance, see the following resources: