The storm of financial news behind the COVID-19 pandemic included approval, just over a week ago, of the $2.2 trillion federal relief package known as the CARES Act.
The massive economic rescue plan included $1,200 payments for most adults in the U.S., and an extra $600 weekly for displaced workers who are collecting unemployment. The checks can't arrive soon enough, but they will come later than many had hoped.
As details of the nearly 900-page relief act keep trickling out there's one detail that will be of particular interest to the Class of 2020 at colleges and universities in South Carolina and across the nation.
This year, anyone listed as a dependent on someone else's 2019 tax return (or 2018 if a 2019 return hasn't been filed yet) won't be getting one of those checks. However, the checks are advances of a tax credit for 2020 tax returns.
What that means is, 2020 college graduates who were classified as dependents on a return this year but won't be a dependent next year can claim the $1,200 when they file their own taxes for 2020.
Stephanie Pritchett, a certified public accountant and senior tax adviser in the Charleston area with Moore Beauston Woodham, confirmed that's how the legislation was written.
I'll add one small note of caution: Details of how the CARES Act will be implemented are coming out slowly, as different parts of the federal government work to create rules.
For example, less than a week ago the Internal Revenue Service said Social Security recipients would need to file a tax return to claim the relief money. Then on Wednesday, following much criticism, the Treasury Department announced that's not necessary and Social Security recipients will get the money automatically, multiple news outlets reported.
So, not just college students but anyone who doesn't qualify for a check right now could qualify for $1,200 later, if they meet the qualifications, based on 2020 tax returns.
Those who don't get a check this year could qualify for the full $1,200 as a tax credit on their 2020 return if they aren't a dependent for tax purposes, have a Social Security number and earn less than $75,000 this year.
That's covered in the CARES Act, though not clearly detailed, in Subtitle B, Sec. 6428 "Recovery rebates for individuals" Pritchett said.
Some of this can be confusing but remember that most people will get the relief funds automatically, this year, either as a direct deposit from the IRS in mid-April or as a check in the mail weeks later.
Those who won't be able to claim the credit until they file 2020 returns have plenty of time, and by then it will all be clearer and the rules will have been incorporated into tax-filing software.
The delays between the passage of the CARES Act and the arrival of the money is a disheartening disconnect, and hopefully federal and state officials are doing what they can to speed the process along. The ranks of the suddenly unemployed need that extra $600 a week right now, and aid checks provide more relief when people don't have to wait weeks or months for them.
The good news is, under current rules people who do get checks based on prior returns won't have to repay the money if it turns out when they file 2020 taxes that they didn't qualify. And those who don't qualify now based, on prior returns, can claim the money later if their 2020 returns show that they did qualify.