The Affordable Care Act: Understanding the Individual Credit
The Individual Rebate: What It Is and How It Works
In response to the COVID-19 pandemic, the CARES Act introduced an individual rebate, commonly known as a tax credit, to provide financial assistance to Americans. This credit is not considered a loan and is based on your 2018 or 2019 tax return, whichever is available.
Eligibility and Credit Amount
To be eligible for the individual rebate, you must have a qualifying income of at least $2,500. The credit amount you receive varies based on your income:
If your income is less than $18,200 for individuals or $24,900 for joint filers, you will receive the full credit of $600 or $1,200, respectively.
If your income is between $18,200 and $23,900 for individuals or $24,900 and $31,900 for joint filers, your credit will gradually decrease.
If your income exceeds $23,900 for individuals or $31,900 for joint filers, you will receive a credit of $1,200.
This credit begins to phase out at $75,000 for individuals and $150,000 for joint filers, and it reaches zero at $99,000 and $198,000, respectively.
Calculating Your Credit
The amount of credit you are entitled to is based on your actual 2020 income. When you file your 2020 tax return, you will calculate the credit you earned and compare it to the advance credit you received. If you received too much, you will have to repay the difference. If you received too little, you will receive the remaining credit.
Receving the Credit
The individual rebate is being distributed in the form of direct deposits, checks, or debit cards. The timing of the distribution varies depending on the method of payment. If you do not receive your credit by the end of May, you should contact the IRS.
Impact of the Rebate on Health Insurance Coverage
The individual rebate is not a health insurance subsidy. It is a tax credit intended to provide financial relief during the COVID-19 pandemic. If you need health insurance coverage, you can apply for it through the Affordable Care Act marketplace, HealthCare.gov, or contact a licensed agent.
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