Mobility: tax alert

April 2020

United States
Coronavirus Aid, Relief, and Economic Security (CARES) Act –
The economic impact payment to individuals
Executive summary  Individuals (single or married filing separately)
The President signed the $2 trillion Coronavirus Aid, o Recovery rebate: $1,200
Relief, and Economic Security (CARES) Act on Friday, o Adjusted gross income (AGI): $75,000
27 March 2020. An item of immediate interest for many o Completely phased out: $99,000
individuals included in the package is the direct relief  Head of household (HOH)
provided to qualifying individuals and families that fall o Recovery rebate: $1,200
within certain income levels. o Recovery rebate:
(per child): $500
Additional guidelines regarding the delivery mechanism o Adjusted gross income (AGI): $112,500
of the stimulus payments will be forthcoming. o Completely phased out if 1 child: $146,500
 Married filing jointly
Key issues o Recovery rebate: $2,400
 The eligibility of certain employees may be affected o Recovery rebate:
due to the inflated wage levels that assignments or (per child): $500
moves generally produce. o Adjusted gross income (AGI): $150,000
 These may be international or domestic o Completely phased out if 1 child: $208,000
assignments or moves.  Note
 An employee who otherwise would have been o Advance rebate payments are based on the
eligible for the relief package may no longer be above-mentioned thresholds per the taxpayer’s
eligible due to assignment allowances, relocation 2018 adjusted gross income (unless a 2019
costs and gross-ups which are imputed into their
return has already been filed).
overall compensation.
 Please note - While the stimulus payment is
based on the AGI of the latest filed tax
Overview of the recovery rebate provision return, the payment will be taken into
The most well-publicized provision of significant interest consideration for a potential additional
to individuals includes individual tax recovery rebates benefit (credit) on the 2020 tax return.
for US taxpayers who are within the below income o The stimulus payments will either be direct
thresholds: deposited to bank accounts that the IRS has on
file or via paper checks, to the address on file
on the most recent tax filing for the taxpayer.
 o The amount of each rebate is phased out by $5 for every $100 in EY | Assurance | Tax | Transactions | Advisory
excess of the respective threshold amounts. The phase out varies
with number of children. About EY
o To be eligible for a recovery rebate, the individual: EY is a global leader in assurance, tax,
transaction and advisory services. The insights
 Must not be a nonresident alien; and
and quality services we deliver help build trust
 Must have included a SSN for both taxpayer, spouse and eligible
and confidence in the capital markets and in
children (or an adoption TIN). economies the world over. We develop
outstanding leaders who team to deliver on our
Other considerations promises to all of our stakeholders. In so doing,
 Taxpayers not eligible for advance payment: we play a critical role in building a better
o In instances where the taxpayers would not be considered eligible for working world for our people, for our clients and
advance payments based on their 2018 or 2019 returns, they may for our communities.
be eligible based on their 2020 AGI. While they will not be able to
obtain the benefit of advance payments in the near term, they will be EY refers to the global organization, and may
able to obtain the benefit of the credit on the 2020 return filed in refer to one or more, of the member firms of
2021 Ernst & Young Global Limited, each of which is a
 Advance payment is less than the credit calculated on the 2020 separate legal entity. Ernst & Young Global
return: Limited, a UK company limited by guarantee,
o If the advance payment based on a prior year return results in a does not provide services to clients. For more
lower benefit than the credit calculated based on the 2020 AGI, the information about our organization, please visit
additional benefit will be received via the 2020 tax return filing. ey.com.
 Advance payment is greater than the credit calculated on the 2020
return: Ernst & Young LLP is a client-serving member
o If the advance payment was based on a prior return resulting in an firm of Ernst & Young Global Limited operating
advance payment that is higher than that based upon the 2020 AGI in the US.
the credit is reduced by the amount of the advance payment
received but not below zero. In other words, the taxpayer does not © 2020 EYGM Limited.
pay back the excess amount received. All Rights Reserved.
 Taxpayers not eligible for credit on the 2020 return: EYG no. 001805-20Gbl
o There is no clear guidance yet for situations where a taxpayer ED None
receives an advance payment based on prior year AGI amounts and
then are not eligible for any credit on the 2020 return (e.g. someone
This material has been prepared for general
who was a resident in 2019 but a nonresident alien in 2020). EY will
informational purposes only and is not intended
monitor any developments.
to be relied upon as accounting, tax, or other
professional advice. Please refer to your
Program considerations advisors for specific advice.
 Determine how your organization will respond to the evolving effects of
the COVID-19 stimulus/relief package from both a domestic and global
ey.com
perspective.
o The approach applied for the US may set the precedent for how your
organization handles other country stimulus packages.
 Develop and/or refresh your current tax equalization, relocation, and
other move policies and directives to address the individual recovery
rebates as proposed.
o Consider how your organization will handle rebates for your inbound
population where the organization is covering the tax and when the
check is sent directly to the organization.
o There may be issues where individuals may have left the US and the
check is mailed directly to the employer’s address based on what
was used on the returns.
 Prepare for the impact on future assignments which may fall within the
2020 tax year.

Allyson Stoll
Tel: +1 732 516-4695
Email: Allyson.Stoll1@ey.com

Katalin Brown
Tel: +1 617 585-0970
Email: Katalin.Brown@ey.com

Scott Sheehan
Tel: +1 401 457-3736
Email: Scott.Sheehan@ey.com

2 Mobility: tax alert