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Tuesday, February 7, 2023

Stimulus Checks Continue To Stoke Concern Of More Inflation: Bigger Paychecks Do Not Translate Into Real Gains As Inflation Negates Increases

Many American workers are getting bigger paychecks to post the pandemic, but there are concerns that the gains are not spread evenly. The pandemic reshaped the US labor market more than any single event since the Great Recession of 2007-2009 and the financial pain that was a part of it. The stimulus check did much to assuage the economic desperation but with no federal support forthcoming in 2022, people have despaired at rising prices that have touched record levels.

For the first time since the Great Recession workers have faced negative gains in wages. Despite an increase in money terms compared to the pre-pandemic era, inflation has ensured that people are making less in real terms post the pandemic.

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The period immediately after the pandemic and its immediate aftermath was marked by successive stimulus checks that helped stave off the economic downturn and the uncertainty.

The inflation rate was also at a manageable level at that stage. The rise in all round prices started with the issue of the third stimulus check in March 2021.

With the signing of the American Rescue Plan Act after Biden came to power, many measures were taken to help out Americans who continued to suffer as the economic downturn continued.

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The economic stimulus measures helped stave off poverty in 2021. Their stimulus check was followed by the extension of the weekly unemployment checks which was extended up to September 6, 2021. The last of the relief measures were the expanded Child Tax Credit stimulus checks. This relief was given as an advance against the 2021 income tax returns to be filed in 2022.

50% of the amount was paid in equally divided monthly stimulus checks between July and December 2021.

The stimulus checks payments coincided with the rise in prices across products and services. From gasoline to groceries, prices kept rising by the third quarter of 2021 and kept rising steadily before they touched record figures in 2020.

With inflation above the 8% mark by the first quarter of 2022, most people were left despairing as even the middle was back to living paycheck-to-paycheck as prices ate into savings and families were faced with negative earnings for the first time in decades.

The gridlock in Washington finally forced the states to declare their version of stimulus checks in the form of direct payments, debit cards, paper checks, tax rebates, and also sales tax holidays for multiple products including gasoline and diesel.

While the payments have been continuing for close to a year, the biggest of them all, the California Middle-Class Tax Relief payments, was signed in June by Democratic Governor Gavin Newsom, but the payments started going out only on October 7.

Gov. Newsom had initially planned a gas card, a prepaid debit card, and a transit card for those who do not own cars. The gas card was scheduled for car owners who registered their vehicles in California. Each gas card was planned at $400 and a family was entitled to two cards, bringing them around $800.

But Democratic legislators prevailed upon Gov. Newsom to change the relief payment to another round of stimulus checks after the two rounds of Golden State Stimulus Checks issued in 2021.

The stimulus checks were divided into three tiers with individuals and joint filers in the lowest tier receiving the highest stimulus check slab of $350. Individual filers with 2020 Adjusted Gross Income of $75,000 or less and joint filers with an AGI of $150,000 or less will get the highest stimulus check of $350 and $700 respectively. They will get another $350 if they include any dependent on the list.

The amount allocated for dependents is the same irrespective of the number. Filers in this tier will get the highest amount of $1,050 for joint filers.

The second tier is for individuals with a 2020 AGI between $75,001 and $125,000 and joint filers with an AGI between $150,001 and $250,000. They will each receive $250 with the same amount for a dependent. The highest stimulus check possible in this tier is $750.

The highest tier is for an AGI between $125,001 and $250,000 for individuals and $250,001 and $500,000 for joint filers. People in this tier will get a stimulus check of $200 plus another $200 for a dependent. The highest amount possible is $600 under this tier.

The initial payments were direct transfer to people who received any round of the Golden State Stimulus Check. which will be followed by those who have fielded their 2020 income tax return online. The debit cards will go out to residents who have filed their income tax returns through offline methods.

Despite the state stimulus checks, Americans continue to suffer as the prices of gasoline and other essential items continue to remain prohibitively high item, and this is especially true for Californians who continue to pay almost double the national average, present prices have eased somewhat but continues to be in the range of $5.5 a gallon.  

Last Week To File For Pending Federal Stimulus Checks

Close to 10 million Americans are in line for thousands of dollars in unclaimed stimulus checks and the last to for applying for the payments is fast approaching. November 15 is the cutoff date.

People who have not claimed the third stimulus check or the Child Tax Credit payment benefits can still do so. They need to apply by November 15 and they could be in line for up to $3,600 per child as Child Tax Credits and also the $1,400 economic impact payment declared under the American Rescue Plan Act.

Those who had a baby in 2020 or 2021 should also apply for the Child Tax Credit. You can be eligible even if you do not have any income to declare and do not file taxes. you are in line for the payments even if you do not have a job or a source of income to claim these federal credits.

The Internal Revenue Service has several sites that will enable online filers to go through a series of simple steps to file their returns.

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