XY$ Radio

XY$ Radio


XY$ Radio 005 | CARES Act Economic Stimulus Case Study: Self-Employed Clinical Psychologist

April 04, 2020

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Client BackgroundRecovery RebateTax and Retirement ProvisionsUnemployment CompensationKey Business ProvisionsOther Notable ProvisionsNon-CARES Act Items

Perspective on the potential personal and business related financial benefits made available by the CARES Act…for this client it looks like the stimulus and other non-stimulus related relief will conservatively be worth over $30,000!

When it became evident that the Coronavirus was going to have a major impact on both the real economy and financial markets, the knee jerk response from the Federal Reserve was to slash interest rates and turn on the printing press. I had my pitch fork ready as I awaited the government’s stimulus package with concern that I would be solely focused on Wall Street and large corporations. To my pleasant surprise I am seeing some significant potential upside for Main Street. Let’s dive into my first client case study - a self-employed clinical psychologist that is married with one child under the age of 17.

I plan to do as many of these as I can (good, bad, and ugly) to help paint a clear picture, manage expectations, and hopefully open some potential eyeballs to the possibilities that exist here.  With that in mind I am going to keep the format consistent so that we can maintain good comparability across cases.

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Client Background

My client is a self-employed clinical psychologist.  She is married and has one child under the age of 17.  Her husband also works and earns an income.  We just recently starting working together and between the news of the pandemic itself and observations of unfavorable movement in stock prices, she was understandably worried about their investments and consequences of all of this on her family’s income going forward.2018 Adjusted Gross Income (AGI)~$153,0002019 Adjusted Gross Income (AGI)~$173,000 (tax return prepared but not yet filed)

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Recovery Rebate

If you do not have a good handle on how the recovery rebate is going to work, you can listen to my recent podcast episode on the topic (insert link).  As a quick recap, each taxpayer is scheduled to receive a $1,200 tax credit ($2,400 for married couples) and $500 for each child under the age of 17.  That is the maximum amount that will be received before taking into consideration income phaseouts.  The phaseout for married couples begins at $150,000 of AGI and the credit is reduced by $5 for each additional $100 of income over the AGI limit.This is a credit against the 2020 tax return but because the government wants to create an immediate impact, they are sending out the checks in the near future and will use the most recently filed return to calculate eligibility.  My client did file their 2018 return and had an AGI of ~$153,000.  They would have been eligible for a $2,900 credit, but since they are $3,000 over the AGI threshold, they will receive $150 less for a total of $2,750.  They have not yet filed the 2019 return and this is a good thing because at ~$173,