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Sunday, September 25, 2022

False Claims Of A Fourth Stimulus Check Abounds: A Few Salient Points About Stimulus Checks In 2022 And After

Despite false alarms from social media and a section of mainstream media, there are no plans for a 4th stimulus check of $2,000 on the horizon, or for that matter any amount. With the tax season in full swing, experts have predicted that the 2022 season will face several of the issues faced a year earlier in 2021 as multiple rounds of stimulus checks led to severe gridlocks in the filing system of the Internal Revenue Service.

It has been more than a year since the last stimulus checks were passed by President Biden. But there continue to be false claims on social media that a 4th stimulus check is around the corner. And this virus is most prevalent on social media as every day there are fresh claims of a federal stimulus check just around the corner.

A Fourth Federal Stimulus Is Highly Unlikely At This Stage

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But these false alarms were not backed by evidence or proof of any upcoming payments, for the very reason that there wasn’t one. The IRS and other administrative departments have confirmed that there are no plans for further stimulus checks, at least not shortly.

While there have been calls and online petitions for additional stimulus checks, people have to realize that no further stimulus check is around the corner. Over 3 million citizens signed in the Change.org petition that called for a recurring monthly stimulus check of $2,000 for adults and half that for children.

But no such payment was considered or stands to be sent for consideration to the President. Instead, the Biden administration remains focused on developing the national infrastructure to spur economic and social growth.

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There are also the nagging issues that the previous stimulus check contributed to the record inflation. But the administration has laid the blame on the production and supply issues following the pandemic and the war in Europe.

Previous Stimulus Check Timelines

It is more than two years that the first of the pandemic stimulus check payments started. The first round was deposited in the spring of 2020 even as COVID-19 was at its virulent peak. Businesses were completely shut down across sectors, and it drove up the unemployment rate, causing acute financial hardship for many. 

Individuals with an income of $75,000 and below received a $1,200 stimulus check while married couples who filed jointly and earned $150,000 or below received a $2,400 payment.

A second payment came at the very end of December when Trump authorized a 2nd round of stimulus checks of $600 per individual and double that for married couples. There was also an additional check of $600 for children below 17 years.

The third round came even as the Biden administration assumed power in March 2021. The $1,400 stimulus check was a sort of top-up to the $600 payment to make it even $2,000. An equal amount was given to dependents.

But it is clear at this stage that it was the last of the federal stimulus checks, at least for the time being.

Only Those Who Did Not Receive Their Third Stimulus Check Could Get One In 2022

Many Americans will get their third stimulus check after they file their 2021 returns. The Economic Impact Payment was part of the $1.9T aid package that President Biden signed into law in March 2021.

Parents of newborns in 2021 will get a stimulus check. As the third stimulus checks were sent out based on the last tax returns on file, most 2021 returns did not get included in the records. The payments were mostly sent out based on the 2019 or 2020 returns.

Many filers also recorded a drop in income in 2021. So while they did not receive a stimulus check, or received a lesser amount based on their previous returns, a fresh calculation based on the 2021 returns made many filers eligible for the full stimulus amount of $1,400.

The Stimulus Check Affected The American Economy

Direct payments to citizens certainly affected the economy in several ways, both negative and positive.

A study by researchers of the University of Michigan found that the stimulus payments coincided with a fall in financial instability amount recipients. For the first time, many families did not have to worry about putting food on the table or paying their utility bills or rent.

Many families even cleared high-interest debts like credit card payments. But for both the Republicans and the Democrats, it is not the economic benefits that make the stimulus checks popular and an instrument for lasting policy creation. For them, it is the political clout and the popularity of this mode of payment.

This is one factor that ensures that stimulus payments are here to stay for the long term. Every time there is a crisis such as a recession or even a natural calamity, lawmakers will be under pressure from voters to issue direct stimulus payments.

State Stimulus Checks Too Come Into The Picture, Are Here To Stay

The record inflation that began to rear its head starting in the second quarter of 2021 has assumed unmanageable proportions. For the first time in 4 decades, inflation has consistently stayed above the 8.5% mark for almost the last three quarters.

As the federal government remains gridlocked both in the Senate and the House, some states have moved in and taken steps to help out residents, especially in the low and moderate-income categories.

14 states will send inflation relief payments or are in various stages of dispatching them to their residents. Unlike the federal payments, the state inflation relief measures are much more targeted and have a smaller price tag. The measures are mostly one-off and will help Americans face the onslaught of rising prices of gas, other essential items, utility bills, and home rent.

The state is sitting on a huge amount of surplus funds as the 2021 financial years were an excellent one. The states are also sitting on a huge fund received under the American Rescue Plan Act, signed by President Biden in March 2021.

Several states have already initiated legislative processes and have begun sending out stimulus payments to their residents. New Mexico and Maine are the first two states who have already sent out inflation relief measures.

While Maine is sending out an $850 stimulus check to individuals and double that for married couples, New Mexico will send a $250 stimulus payment in July and two $500 stimulus checks in June and August.

California’s residents could receive a stimulus check of up to $1,050 for a family of three.

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