Local CPA has Clarification on Recovery Rebate Credits from Feds

All of America is anxiously awaiting the arrival of $1,200 per adult and $500 per child from the recently passed CARES Act from the U.S. Congress.

There have been lots of questions about whether the funds are taxable, or if they are merely borrowing from a possible future 2021 income tax refund.

Walt Kero with Kero Byington and Associates has dome research through the IRS to get to the bottom of the situation, but he says the ground is constantly shifting regarding the coming funds.

“The clarification has to do with what this check is all about, the $1200 for adults and $500 for qualified dependents,” said Kero. “It’s all about stimulating the economy, but you have to be careful of the wording because even though this is a check and a recovery rebate, it’s really an advance payment.”

Kero asks the big question on taxpayers’’ minds. “Now, are you going to have to pay it back?” he asked. “The answer is ‘no’, but you will have to claim having received it on your 2020 income tax return, because if you don’t there’s a chance you could be paid twice, and you don’t want to get caught up with the IRS trying to claim the same credit twice.”

Kero said among the many strings attached to the Recovery Rebate Credits are eligibility.

“Not everybody is going to qualify for this credit,” he said. “If you are an illegal alien and don’t have a valid Social Security number and are not authorized to be in this country and you’re working, you will not qualify for this rebate credit. Also, for dependents on parents’ tax return and if they try to claim the credit on their own income tax return, then they won’t qualify either.”

Kero said there are still some gray areas for those receiving supplement security income who do not currently file an IRS income tax return, they may have to file a return, but at this point we just don’t know if they’ll have to file or not.”

Kero said he will keep our KGVO audience apprised of any new information coming out of the IRS regarding the Recovery Rebate Credits in the CARES Act.