Early Wednesday morning, the United States Senate (working in conjunction with White House officials and House Speaker Nancy Pelosi) reached a compromise on the Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”.
The massive bill weights in at just over $2 trillion, or nearly half of what the federal government would normally spend in a fiscal year. It is clear that the “compromise” came from including almost every priority and pet project both parties favored into the final legislation.
The massive bill includes a $500 billion fund to help hard-hit industries (with the oversight demanded by Democrats) and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families.
It will also include $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $100 billion for hospitals and related health systems.
But you know how things go in Washington.
If something sounds too good to be true, it probably is.
The proposed legislation would issue payouts of $1,200 to individuals, $2,400 to married couples and $500 per dependent child. The Republicans conceded to Democratic demands that the payments not be income-based and not phase-out for low or higher earners.
But here’s the part that most Americans did not see coming, although it was a warning issued in a previous article here.
The CARES Act calls for giving Americans money as an advance on a future tax refund.
In other words, this is not a free-money giveaway, or socialism run wild, or some act of generosity on the part of those controlling the purse in Washington.
The government is not giving you money, no matter how badly you are hurting financially.
The government is giving you an advance on the tax refund you would be expecting in 2021.
For example, say you’re a married couple with one child, and you receive a check for $2,900 now ($1,200 each and $500 for child).
Next year, when it comes time to do your taxes, and you’re supposed to get a refund for $3,500, the tax form would have a line where you list the stimulus payout you received in 2020.
The $2,900 advance would be deducted from your expected refund, leaving a net refund of $600.
This is the way the payments in the Economic Stimulus Act of 2008 were also handled.
Hers is the opening to Section 101 of that 2008 Economic Stimulus Bill, a section headed 2008 RECOVERY REBATES FOR INDIVIDUALS.
In General.–In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2008 an amount equal to the lesser of–
A full text of the 2008 Economic Stimulus Bill can be found here.
Here is the opening to Section 2101 of the 2020 CARES Act, a section headed 2020 RECOVERY REBATES FOR INDIVIDUALS.
In General.—In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the lesser of—
A full text of the 2020 Coronavirus Aid, Relief, and Economic Security Act can be found here.
Folks, the process in 2020 is going to be the same as it was in 2008.
They copied and pasted it WORD FOR WORD.
Americans will get checks now (or, electronic deposits) and come next spring will get a gut-punch when they do their taxes and realize most are not getting a refund in 2021…because they already got it in April of 2020.
The legislation is due for a Senate vote on Wednesday afternoon with a House vote expected in coming days. If it passes both chambers and is signed by President Trump, direct deposits could start hitting accounts as early as April 15th, with paper checks taking a few weeks longer.
Information about when to expect your rebate check can be found here.