Recovery Rebate checks for seniors collecting RMD Income
Quick question. I know that seniors are in fact eligible to participate in the Recovery Rebate Checks based upon the required AGI thresholds that have been created, but I wanted to confirm if Required Minimum Distribution income is considered qualifying income for the AGI income calculation. Another advisor heard that it was exempt from the calculation and not counted. So bottom line, is RMD income included in the AGI calculation? I’m assuming that it is, but I wanted to double check before I get back to all of my clients that happen to have RMD amounts that would be too large and bring them over the outside income threshold for qualification, but who WOULD qualify if the RMD amount was not included. Thank you!
Bill
Permalink Submitted by Alan - IRA critic on Thu, 2020-03-26 23:16
As proposed in Sec 2201 of the CARES Act, the rebate is based on AGI with no modifications. For most people this would be 2018 AGI, which is already locked in. Further, 2020 RMDs will be waived per Sec 2203. This should be signed into law within a couple days, at which time comprehensive professional analysis should be promptly released.
Permalink Submitted by David Mertz on Fri, 2020-03-27 14:09
As I read the current text of the bill, it’s based on 2018 AGI only if the individual has not already filed their 2019 tax return, otherwise it’s based on 2019 AGI. See SEC. 6428(f)(5) in SEC. 2201. I think that roughly half of individual 2019 tax returns have already been filed.
Permalink Submitted by Alan - IRA critic on Fri, 2020-03-27 14:35
I agree. That means certain taxpayers with higher AGI in 2019 than 2018 should not file anytime soon. The “determination” date will probably be between 3 and 6 weeks from now, so generally these taxpayers would benefit by planning to file in July. Conversely, those with lower AGI in 2019 that would increase their rebate may want to file ASAP.