CARES ACT STIMULUS PAYMENTS AND MEMBERS OF RELIGIOUS INSTITUTES

RCRI has received many inquiries from religious institutes concerning the recent Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), especially anticipated individual stimulus payments.

As is well known, individual stimulus payments – or rebates – are a significant centerpiece of the CARES Act. As it applies to members of religious institutes, an eligible taxpayer will receive up to $1,200.00. This applies whether or not the taxpayer has any income. Each individual must have a Social Security number.

Payments will generally be made by direct deposit to a taxpayer’s bank account if that information is on file with the IRS, otherwise by check. In either case, rebates are expected to be made as “rapidly as possible” and possibly as early as April 6 for electronic payments and two weeks later for paper checks. The IRS will notify taxpayers within 15 days of payments.

A full rebate will be available only for individuals whose income is below certain thresholds. The amount of rebate begins to phase-out at adjusted gross income (AGI) of $75,000 for a single filer. Above that amount, the rebate is reduced by $5 for each $100 over this limit. The rebate is fully phased out when AGI reaches $99,000.00 for a single filer.

The IRS will make an initial calculation of one’s rebate based on an individual’s 2019 federal tax return. If that return has not yet been filed, the initial calculation will be based on one’s 2018 federal tax return. If there is no 2018 federal tax return, the IRS can use information from the 2019 Social Security benefit statements (i.e., Form SSA-1099). Based on this information, the IRS will calculate and distribute the rebate without any action required by the recipients. (see https://www.irs.gov/coronavirus)

The stimulus check will more than likely be deposited electronically in the bank account on file with the IRS that is associated with the federal income tax return or on file with the Social Security Administration where benefit checks are deposited.

Obviously, by default the legislation requires that persons who do not typically file taxes because their income is very low – and do not receive Social Security benefits - would need to file a 2019 federal income tax zero-return in order to receive a stimulus check.

As such, if a member of a religious institute

·         did not file a federal income tax return Form 1040 for the years 2018 and 2019;

·         normally does not file a Form 1040; and,

·         does not receive Social Security benefits

that member will probably not receive a stimulus check.

However, at this point, RCRI is wary and does not encourage such a member to attempt filing a 2019 federal income tax zero-return in order to obtain a $1,200 stimulus check. To do so may result in the IRS looking for Form 1040 forms in future years.

Again, no sign-up is required to receive stimulus checks. Leadership and members should monitor their bank accounts in the weeks ahead to ascertain if a stimulus check has been received.

Please feel free to contact RCRI for more information or if you have any continuing questions or concerns.

Attribution: IRS Coronavirus Resources; Bank of America Tax Alert 2020-05.