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Thursday, February 9, 2023

Stimulus Check Dried Up In 2022 After 2 Years Of Bonanza For Tax Filers: Will The Situation Change In 2023?

For millions of filers, 2022 was economically tougher than the previous two years despite the pandemic. The COVID-19 pandemic that hit the American people in the first quarter of 2020 led to a severe economic downturn. But the successive stimulus checks and other economic measures that were taken by the federal administration ensured that Americans remained largely invulnerable to the recession that ravaged the world economy.

The three rounds of the stimulus checks, or the Economic Impact Payments, were followed by many other parallel economic measures including the extension of the weekly unemployment checks, which were extended through September 6, and the expanded Child Tax Credit stimulus check. the payments ended in December 2021, along with all other major stimulus payments initiated by the federal administration.

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During the two years during and after the pandemic, Americans were amply supported by various forms of economic support that were both direct, such as the economic impact payments and the CHildTax Credit payments, and also indirect. This was seen in the generous support that the federal administration gave states, local, and tribal bodies.

Businesses and other organizations that are indispensable for the smooth running of the economy were given ample support. This enabled companies and other entities to continue paying their workers despite a total stoppage in revenues caused to a breakdown in services and products.

The year 2022 saw a total halt in fresh federal stimulus checks even as inflation took a toll on prices. The spike in all-around prices was unrelenting throughout 2022 and led to record inflation that beat a 4-decade-old record.

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For the first time since November 1981, the inflation rate climbed above the 9% mark to touch 9.1% in June 2022. The rate has consistently stayed above the 8% mark throughout the year and the new year is not expected to change the situation much.

But though states have stepped in, most reliefs on federal support came from the American Rescue Plan Act funds allocated to states and other local bodies. The funds were thus naturally limited and one-time payments, though California was able to do better. The Golden State reported a huge budget surplus of close to $93 billion.

Republicans Warn That Continued Stimulus Checks Will Aggravate The Price Situation

Why multiple reasons led to the present inflation, experts have weighed heavily on a combination of at least 3 factors, with some more harmful than others. Inflation is in simple terms the increase in the general level of prices and is not limited to the price of any one product or service.

Inflation has also been linked to a surfeit of money without any match growth of the economy, also referred to as monetary inflation.

It has also been linked to greater demand for services and goods buoyed by excess money pumped into the economy through the three economic impact payments.

Inflation can be either cost-push or demand-pull. Thus it is linked to either an excessive amount of money to meet the demand without a corresponding increase in price or too few goods to meet demand.

But economists point out that this should not be applied to states as they in the first place do not print currency or have any control over the money supply. So states cannot be blamed for an excess of money chasing too few goods or services.

Further, the cost-push dimension or the supply chain issue faced in inflationary economies is not linked to payouts by states. The government services that are provided by states in America to the economies come at a nil price and only user fees are charged in the bargain. And such fees are insignificant and immaterial in the bigger scheme of things. Thus inflation can’t exist where the price is finally zero.

So the only type of inflation that can be linked to states is the demand and pull form of inflation. And if one sets aside that, it was mostly posturing by the Republicans before the midterms, though it has not yielded the sort of results that they had expected. The Senate continued to elude them and they ended the midterms with one less seat in the Senate. But they have gained control of the lower House.

State stimulus checks continue to support residents into the last quarter of 2022 as several states have timed their payments to coincide with the festive season. It is not curtains yet for the stimulus checks as states continue to send more stimulus funds to the mailbox and bank account of residents that will spill over into the first quarter of 2023.

The California stimulus checks that started in October have continued during the festive season. The initial round of payments was through direct deposit to the bank account of residents of the Golden State. the last round of payments goes out to residents who have filed their income tax returns physically and not online.

Residents will be getting their payments through debit cards. Residents who changed their bank or their bank account number after they filed their 2020 state income tax returns by October 15, 2021, will also be paid through debit cards drawn on a New York bank, Money Network.

The Colorado stimulus check is different from other state stimulus checks as it has been made possible through an amendment to the state Taxpayer Bill of Rights (TABOR), which requires the Colorado government to return excess state revenues.

Originally the refunds were slated to be around $400 per filer but the strong economic performance of the Centennial State boosted the amount of the payments to $750 for each taxpayer and double that amount for married couples filing jointly.

While most states have placed limits on income or other forms of restrictions on state stimulus checks, TABOR payments have no strings attached. Filers do not even have to have dependents to get a supporting stimulus check.

All the payments stimulus is that the beneficiary must be 18 years as on December 31, 2021, and should have been a resident of the state for the whole of 2021. They must also have filed their 2021 state income tax return or should have applied for a PTC Rebate (property tax, rent, and heat credit rebate).

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