The first quarter of 2020 was a watershed year for Americans, and for the first time in recent decades, the federal government gave massive financial support to Americans to tide over the economic crisis caused by the pandemic. While the three rounds of federal stimulus checks were the mainstay of the support over the two years, there were other support measures including the enhancement of the Child Tax Credit under the American Rescue Plan Act.
The Rescue Plan was signed by President Joe Biden in March 2021 within weeks of coming to power in January of that year. The third stimulus check was part of the Rescue Plan and was the more generous of the three economic impact payments.
But the federal economic support dried up completely in 2022, and it was left to the states to come up with stimulus checks, tax rebates, and other tax waivers to help residents tide over the unrelenting rise in all-around prices. The rise in prices affected every segment from groceries to gasoline and both products and services were affected by this spike in prices.
Over 20 states sent out one-time stimulus checks to residents to help them with an inflation-related rise in prices. The lack of federal payments in 2022 has also affected the tax refunds for the 2022 tax year that is being filed in the first quarter of 2023. Taxpayers who file early before the April 18 deadline for the 2022 tax year will get their tax refunds earlier if they are eligible for them.
Filers who require extra time to file their returns can ask for an extension for around 6 months. But the filer will still need to pay any outstanding taxes owed by Tax Day. Millions of citizens have already filed their declarations and tax refunds are going out in their millions.
Refunds are naturally expected to be smaller this year due to the absence of any stimulus checks in 2022. Even the enhanced Child Tax Credit stimulus check was discontinued after only one year of successful implementation. In that brief period, the Child Tax Credit tax brought about a massive change in the levels of poverty.
This stimulus check alone led to poverty levels dropping admirably in millions of homes. For the first time, the enhanced version of the payments was given out in advance in the tax year 2022.
While the tax refunds are expected to be much smaller this year due to the end of the covid-era financial assistance, there remain millions of Americans who have not received their federal stimulus checks, including the enhanced child tax credit of the last financial year.
Claiming The CTC Stimulus Check In 2023
Billions of dollars will go out even this tax season and will help reduce the tax burden of low and moderate-income Americans. Many will also get tax refunds against the child tax credit, the Earned Income Tax Credit, and other federal schemes to help economically disadvantaged groups.
Americans who do not normally file tax returns as they do not earn enough to be obligated to file returns might still have to file an income tax return. Filing will help e them claim tax refunds under federal schemes to help low and moderate-income groups.
Through the IRS, filers will be eligible to use the Free File program in most instances and send in tax returns electronically at no cost. And if they want their tax returns to be processed quicker, the agency encourages filers to go for electronic filing and also use the direct deposit facility to enable them to get the stimulus check within days.
Other federal credit schemes that could result in a lower tax burden or even a tax refund include the Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit.
Changes In The Child Tax Credit Stimulus Check
The federal administration has initiated some changes to the CTC stimulus check for the fiscal year 2022. The expansion under the American Rescue Plan Act of 2021, including the advance payments that were initiated between July and December 2021, is no longer in effect. but that should also make claiming the credit payments much less complicated this year.
The amount of the stimulus check to be given out in 2023 is bound to be smaller with a maximum of $2,000, the amount that has been around for years, for every qualifying child. Eligibility is also restricted with the rules reverting to prior eligibility rules that were established through the 2017 Tax Cuts and Jobs Act (TCJA).
The changes are effective through the fiscal year 2025 and there are no signs that Congress will modify the child tax credit before then. The credits this year are partly refundable and there is also an earning threshold to start claiming that portion that is known as the Additional Child Tax Credit. This ACTC is worth a stimulus check of $1,500. But for the 2023 income tax year the amount has been increased by $100.
Taxpayers owing less in income tax than the refundable amount will have this amount added to their income tax refund and the non-refundable portion will reduce the tax the filer owes dollar-for-dollar.
The filer must complete Schedule 8812 to claim the refund. Parents with dependents under seventeen years of age as of December 31, 2022, and who meet certain requirements for eligibility for the Child Tax Credit stimulus check for the 2022 fiscal year will get the payment.
For the tax year 2022 to 2025, the child must be eligible to be claimed as a dependent on the income tax return of the taxpayer and live at the same residence as the filer for over half the claimed year. the child should also not provide over half of their financial support during the tax year in question.
The child for whom the Child Tax Credit amount is being claimed must also have a valid taxpayer identification number in the form of a work-authorized Social Security number (SSN).
One of the changes initiated in the 2021 expanded child tax credit stimulus check was made permanent. Through it, Puerto Ricans with one or more children have access to the credit amount. And for those who missed out on the enhanced amount in 2021 can still claim the $3,600 stimulus check for the year through April 15, 2025. They should contact the IRS for the missing amount.