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Thursday, February 9, 2023

Federal Stimulus Checks Still Available For Millions: Fresh Input From The IRS

A stimulus check could go out to millions of Americans in 2023 from the federal administration. States too are sending out tax rebates and stimulus checks in time for the festive season with California Middle-Class Tax Rebates expected to continue into the first quarter of 2023.

2022 has been a tough year for Americans, more so than the period immediately after the pandemic as they did not have the backing of the federal stimulus checks to see them through the economic downturn. This time around it is the record inflation that has affected the prices of everything from gasoline to groceries.

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Even services and home rental rates are up, and it has messed up the budget of low and moderate-income households. People were faced with the unprecedented prospect of facing negative growth in wages despite an increase in wages after the pandemic.

With federal support not forthcoming, states had to fall back on their resources which included the budget surplus and also funds from the American Rescue Plan Act that were sent to states to cope with post-pandemic expenses.

For many Americans, 2022 was the toughest of the three years as they had no cover now as they had in the past two years from the federal administration. Right after the pandemic was declared in the first quarter of 2020, federal support was coming in regularly right from the first round of the stimulus check.

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The regular stimulus check helped people put food on the table, pay off their debts, and protected them from defaulting on their payments. Households even managed to save a part of the funds that helped them stave off expenses arising out of rising prices due to inflation.

Stimulus check
Stimulus Check

Though states have stepped in to help out residents in around 21 states, their support is limited to a one-off stimulus check or tax rebate. But federal stimulus check remains unpaid to around 9 million individuals and families who, in the normal course, even qualify for various benefits but have failed to claim them for various reasons.

All they have to do is fill out their income tax returns for 2021 and claim part or the whole of the EITC (Earned Income Tax Credit), Recovery Rebate Credit, and the expanded Child Tax Credit. The IRS has been sending out special reminders to close to 10 million residents reminding them to file their returns and claim the amount.

Such individuals and households have been left out of the list of the revenue department as they did not earn enough to file an income tax return. And to remind them and reach out to the 9 million individuals and families who did not claim the amount by filing their 2021 returns, the IRS sent out letters in Spanish and English to notify them of the three credits. 

The credits mentioned above were expanded under the Rescue Plan in 2021 and also various other legislations. The IRS also left Free File open for an extra month until November 17, 2022, to enable eligible taxpayers to claim their share of the benefits.

The IRS urged eligible people to file their returns and for those who have missed the date, they have by law a three-year statute of limitation for filing a return and claiming their refund for the 2021 return, which indicates that in normal cases the window will remain open until April 15, 2025.

Households and individuals are eligible for expanded tax benefits even if they have little or no income. So people who are outside the ambit of tax filers should do it just to claim the credit that adds up to a substantial amount and could even reach up to $10,000 in the case of families with dependents.

Details Of The Three Credits That Are Eligible For The Stimulus Checks As Provided By The IRS

The IRS has provided the detail of the three credits that are up for claim by these 9 million households and individuals who have not claimed them.

The first is the expanded Child Tax Credit stimulus check. Parents can claim this credit in full if they have not claimed even the monthly credits during the last half of 2021. The total credit comes to $3,000 for each child between 6 and 17 years and $3,600 for a child below 6 years.

Families that have claimed the 6 monthly CTC stimulus checks between July and December 2021 are eligible for 50% of the credit amount.

Stimulus Check
Stimulus Check

The law has also boosted the Earned Income Tax Credit for childless families. Some changes will provide support to even low and moderate-income families with children. That credits can extend up to $1,502 for workers without children. For families with one child, the stimulus check amount is $3,618, for two children it is $5,980, and for those with three or more children, the amount comes to $6,728.

The third credit is the Recover Rebate Credit. Individuals and households who missed out on the third stimulus check given under the Rescue Plan starting the second week of March 2021 are eligible for the Recovery Rebate Credit. Also known as the Third Economic Impact Payment, this credit can e claimed in full. The maximum amount allowed under this scheme is $1,400 for each qualifying adult, and also the same amount for each eligible adult or child dependent.

Income Tax filers can also be eligible for two additional benefits if they file their 2021 income tax returns. One is the enhanced Child and Dependent Care Credit. Families who spend on daycare to enable them to work or search for work are eligible for a $4,000 tax credit for a single qualifying person and $8,000 for at least two qualifying individuals.

There is also a deduction allowed for gifts made to charity. Tax filers who opt for standard deduction can deduct eligible cash contributions that they made in 2021. While married couples who file their return jointly are allowed a deduction of $600 in donations made in cash, individuals are allowed a deduction of $300 in cash donations. Further, itemizers making large donations in cash are qualified to deduct 100% of the amount for 2021.

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