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Thursday, October 6, 2022

The Impact Of The Enhanced Child Tax Credit Stimulus Check: States Chip In As The Ctc Payments Dry Up And Inflation Hits The Roof

The abrupt end of the expanded Child Tax Credit stimulus check marked the end of continual stimulus support to citizens in light of the COVID-19 pandemic. Those checks were merely temporary measures that were facilitated by Joe Biden’s signed $1.9T American Rescue Plan.

The economic aid package upped the child tax credit from $2,000 to $3,000 a year for children and other dependents aged 6 years to 17 years. For children aged 5 years or younger, it came to $3,600 a year. Unlike in previous years, 50% of the amount came through as advance between July and December 2021 as monthly stimulus checks.

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Eligible parents who received the monthly advance stimulus check will receive the remaining 50% of the amount once they file their 2021 income tax returns this year. But then there is a void for parents after the benefit lapses. As of now, the 2022 Child Tax Credit, which parents can get once they file their 2022 returns in 2023, is set to return to the old rate of $2,000 for each dependent aged 17 or less.

The benefit will be lessened as Congress could not agree on the continuation of the enhanced Child Tax Credit stimulus check, or the extension of the monthly payments.

The Internal Revenue Service has not yet released the cutoff in income to be eligible for the benefit in 2022. There is still a strong chance that Congress could still act before the CTC stimulus check reverts to its pre-American Rescue Plan revival.

Betrayal By Democratic Senator Joe Manchin Put Paid To Enhanced CTC Plans

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Democratic leadership was more concerned with passing the Build Back Better plan. They have been concentrating on the reconciliation bill for many months. In its latest version, the bill seeks to extend the 2021 enhanced child tax credit payment for another year. But moderate Democratic Senator Joe Manchin has opposed both the idea of extending the monthly Child Tax Credit stimulus checks. With the Senate split down the middle, the refusal of a Democratic leader to support will make it difficult to move ahead with the bill.

Manchin reportedly told the White House he would support the continuation of the monthly child tax credit payments only if a work requirement is included for parents and payments are capped to include only families earning under $60,000. If Manchin gets his way, millions of Americans would lose out on the benefits.

The enhanced child tax credit went out this year to single filers whose modified adjusted gross income was below $75,000 annually for individuals and double that amount for married couples filing jointly.

Families earning above that will get the original CTC amount of $2,000 which will be phased out at income of over $200,000 for individual filers and $400,000 for couples.

Child Tax Credit Stimulus Check Helped Families Better Plan For The Future Of Their Children

The Child Tax Credit was a source of financial security and well-being for families during the six months of CTC stimulus check payments. Families used their payments to cover routine expenses without any reduction in employment.

Benefiting families experienced an improvement in nutrition levels, and decreased dependence on credit card debts, and other high-risk financial services. They also were able to make long-term educational investments for parents and children.

It was found that the changes were especially pronounced for Hispanics, Blacks, and minorities, and also moderate and low-income families. It suggests that the expanded CTC stimulus check may turn out to be an important tool to address both the widening income gap and racial financial inequality in the US.

California Gets Ready For The $400 Gas Card Stimulus Check

The record inflation has made many American states consider stimulus checks for their residents. 11 states have already moved toward legislating for various relief measures that include direct stimulus checks, tax rebates, gas cards, and transit cards.

Governor Gavin Newsom of California has proposed a fresh piece of legislation that would give California residents inflation-related stimulus checks. This comes after the Golden State Stimulus checks I and II.

The Governor said that the state has enacted the most comprehensive economic stimulus initiative in the US in 2021. It sent immediate stimulus checks to millions of residents. But people continue to struggle as inflation went through the roof in the first quarter of 2022, touching a 40-year high of 8.5%.

Gov. Newsom said that the high cost of inflation has prompted the administration to leverage the historic surplus enjoyed by the state to give stimulus checks to its residents. He was referring to the current budget surplus.

One of the main ways Governor Newsom and his colleagues plan to help ordinary residents is through the $400 stimulus check for car owners. Every resident with a registered vehicle in their name will receive a relief card worth $400 under this plan with families claiming a maximum of two cards.

Though the legislation has yet to come, the Republicans and the Democrats are working towards an agreement. Though exact details of the date of issue are yet to be revealed. It is certain that Gov. Newsom is desperate for this to go through, and he usually finds a way.

Stimulus Check For Those Not Owning A Car

Even residents who do not own a car can expect some good news if they live in California. There are plans afoot along with the gas cards whereby transit cards will be issued to residents for three months to use for free public transport.

The idea behind the stimulus check for car owners is to combat rising gas costs, and $750M in grants will be allowed to transit agencies to allow free rides.

There is also a proposed freeze on gasoline tax and a part of the sales tax on diesel fuel, entailing a budget of over a billion dollars. BART spokesperson Alicia Trost said that the agency is delighted that there could be a new source of transit funds, even though the details remained unclear.

She said that based on the announcement, it appears to be a grant program. It would be an application, so funding is not yet guaranteed. She said that it was not clear if it would impact BART and BART riders.

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