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Friday, January 27, 2023

States Sending Out Stimulus Checks In Festive Season: IRS Warns Of Delay In 2023 Tax Refunds

2022 has been a tough one for low and moderate-income citizens as they have been pushed to the economic desperation that they faced immediately after the pandemic. right from January 2022 record inflation surge has pushed people to rely on their credit card debt and cut back on many essential expenses to just stay afloat.

The federal administration stepped back after the third stimulus check, the Economic Impact Payment that was part of the American Rescue Plan Act of March 2021. Unfortunately, that was the last of the direct stimulus checks though it was followed by the extended unemployment payments that were continued till September 6, 2021, and the expanded Child Tax Credit stimulus checks, which ended its monthly stimulus payments in December 2021 after 6 installments.

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But federal support was not forthcoming when Americans needed it the most when prices increased by double figures in 2022 and have continued through the year and are poised to continue into 2023.

Despite unemployment levels revealing lower figures in 2022, people have been struggling due to negative wages. Post-pandemic wages have seen a healthy upward trend but it has not been able to match the inflation figure that has outpaced it. So despite a 3 to 3.5% average growth in wages, people have seen negative wage growth as 8% and above inflation figures have resulted in less purchasing power for citizens than before the pandemic.

Close to 50% of American states have stepped in to help out residents in the absence of federal stimulus checks. While the amount and the frequency have not matched the federal payments, they have been a great support for residents who continue to battle rising prices that have affected every product and service from gasoline to groceries.

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Maine and New Mexico stimulus checks were dispatched in the first two quarters of 2022 but while Maine payments were one-time stimulus checks, New Mexico sent out its payments in multiple checks spanning 4 months in the second and third quarters of this year.

The unemployment level in 2022 has been manageable and the economy registered strong growth despite inflation. That has led some to argue that inflation is a sign of a healthy economy, as it demonstrated a continuing strong demand for goods and proves that consumers have more money to spend to a stage when supply cannot keep up with demand.

Higher Demand Than Supply Fueled Republican Claim That Too Many Stimulus Checks Caused Inflation

The Republicans have consistently maintained that the major reason for inflation that has assailed Americans in 2022 and continues into the next year was caused by too much money being pumped directly into the economy.

The third Economic Impact Payments under the American Rescue Plan Act alone pumped hundreds of billions into the economy. Of the $1.9 trillion pumped into the economy under the Rescue Plan, the major part went into direct payments to Americans.

Jen Psaki, the White House Press Secretary had stated at a briefing that close to 90% of the stimulus checks went directly to the bank account of beneficiaries. With such huge amounts hitting the bank accounts of households across America, it was natural that people would have excess money in their hands.

While most Americans spent their first two stimulus check amounts in paying off credit cards and other debts, the third stimulus check came immediately after the second and people could afford to spend it on products that could not be deemed essential. Some even saved a considerable part of the stimulus checks.

But for most people, this was the first time that they had excess money in their hands, and they spent majorly on products as services were affected in 2020 and 2021 including the travel and tourism sector, one segment where American spend a substantial part of their earnings. this high demand for goods led to a spurt in demand that was not matched by supply as the pandemic had already affected the supply chains.

With some regions of the world more affected than others, the supply of spare parts for many items was affected severely, including car parts. This led to a demand-supply imbalance and the prices were naturally affected leading to a spike in all-around prices.

State Stimulus Checks To Continue Into The New Year

Although most of the states who have gone for stimulus checks for their residents have already done so, some states have gone for the last quarter of 2022 to send out relief payments for their residents.

Massachusetts for one began sending out stimulus checks only in November 2022 and the payments continued through December 2022. So residents of Massachusetts can expect the stimulus checks issued by the state administration by the end of December or in the initial weeks of January next year.

South Carolina also has planned to continue their payments through the end of 2022 and has been sending out stimulus checks as debit cards, physical paper checks, and direct bank deposits.

Residents of Colorado, Hawaii, and California should also get their stimulus checks within weeks as the payment process continues in these states.

There has been no respite in prices despite the inflation figures eased in the last quarter of 2022. Living costs are just as high and residents who have not collected their stimulus check should apply immediately and claim what is rightfully theirs.

But the whole process will depend on the state that you live in. many residents of the Golden State are yet to receive their stimulus checks and it is expected given that 23 million residents or roughly 60% of the population in line for the payments.

The payments went out to Californians with an Adjusted Gross Income of up to $250,000 as individual filers and up to $500,000 as joint filers for the 2020 financial year. residents should have filed their income tax returns by October 15, 2021, to avail of the Middle-Class Tax Rebate.

The stimulus check amount ranges from $200 for higher-income households and goes up to $1,050 for residents whose joint 2020 AGI is less than $150,000 and who have included dependents in their income tax returns.

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