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Sunday, December 4, 2022

More Stimulus Checks Going Out This Quarter: Could A Looming Recession Lead To More Federal Support?

The federal stimulus check stopped with the Economic Impact Payment, part of the American Rescue Plan Act, this third round of payment was part of the $1.9 trillion package signed by President Biden soon after he assumed office after Trump was forced out of office despite triggering a riot to stay in power.

The Rescue Plan was way more comprehensive and addressed many issues that were ignored in the past stimulus checks. For the first time, the money reached the low and moderate-income groups, especially the Black and Latino community.

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The immigrant community also benefitted for the first time. Resident and non-resident aliens, their spouses, and dependents who could not get a Social Security Number and hold on to an Individual Taxpayer Identification Number also benefitted in this round of payments.

Another important aspect of the Rescue Plan was the support it gave to businesses and local, tribal, and state governments. The support to small and medium businesses enabled them to survive the pandemic and continue to retain workers despite a severe downturn in business in the initial months of the pandemic.

This enabled the economy to recover faster and prevented a long recession like on previous occasions. This injection of money into the economy even fueled a boom in the last two quarters of 2021 and most states managed to report a healthy budget surplus.

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The support to local and state governments also helped states and cities help residents in specific areas linked to the economic downturn caused by the pandemic. And it was the funds from the Rescue Plan and the budget surplus that ultimately helped the states to plan for the state stimulus check, with 21 states coming forward to help its residents in the absence of any fresh federal backing in 2022.

California Stimulus Check Begin Reaching Residents

While California was the first state to announce pandemic relief to its citizens, its inflation-linked payment was delayed as the state legislature and Gov. Gavin Newson mulled greater support than the initial plan to give gas and transit cards to residents.

The governor had initially planned on a $400 gas card for each vehicle registered in California, with families eligible for a maximum of two cards. The transit cards were planned for residents who did not own a vehicle. But persuaded by Democratic legislators, Newsom dipped into the state’s huge budget surplus of $97 billion and announced a Middle-Class Tax Rebate that covers 23 million of its 39 million plus residents, close to 60 %.

The present round of payments comes after lawmakers in California approved the Middle-Class Tax Refund in June 2022 as a direct response to inflation that has taken a heavy toll on the finances of low and moderate-income citizens.

Gasoline prices in California are the highest in the US, with end-September prices at $6.38 a gallon and have reached $7.4 a gallon in some areas in October. But the national average continues to remain below the $4 mark.

The payments will go to residents who filed their 2020 state income tax returns before October 15, 2021. They must also have been a resident of the state for at least 6 months in 2020 and also a resident on the day the payment is sent.

The payment has been divided along three income levels for both individuals and married couples who filed jointly. The presence of dependents will increase the amount, though the amount will be restricted to the amount given to the individual filer, irrespective of their numbers.

The maximum income allowed is $1,050 for joint filers in the lowest income range. Individual residents earning above $250,000 and joint filers above $500,000 are not eligible for any support under the MCTR.

Individual residents with a state Adjusted Gross Income less than $75,000 for the 2020 tax year, will receive a $350 stimulus check plus the same amount if they declare any dependent. For joint filers earning below $150,000, the amount comes to $350 for each filer and another $350 if they declared any dependent.

So a joint filer in this earning tier with a dependent stand to earn the maximum possible of $1,050 under the Middle-Class Tax Rebate.

For individual filers with an AGI between $75,001 and $125,000, the Stimulus Check comes to $250 for the filers plus another $250 for any dependent. For joint filers earning between $150,001 and $250,000, it is $250 for each filer plus the same amount for a dependent. The maximum under this tier comes to $750 for a family of three or more.

The highest tier is for individual earnings in 2020 between $125,001 and $250,000 and for joint filers earning between $250,001 and $500,000. The amount comes to $200 for each filer plus the same amount for a dependent. The maximum amount comes to $600 for joint filers with a dependent.

The administration has started sending out payments starting October 7, 2022. The initial payments will go out through direct deposits to the bank accounts of filers. Residents who received their Golden State stimulus check I or II through direct transfers will be the first to receive their payment. For those who have not entered their bank details in their tax file, the authorities will send debit cards to the address entered in their records.

Middle-Class Payment Schedule

No paper Stimulus Checks are being given in this round of payments. Most payments, almost 95% of them, will be paid out in 2022. The rest of the payments will be completed by January 14, 2023.

People have complained of delays in Stimulus Checks expecting payments immediately. Residents who logged in expecting it to be credited were disappointed with reports that only 18% of residents have reported receiving the amount.

But the authorities informed us earlier that the payment would be made in phases. The payments for residents who received the earlier rounds of state stimulus checks through direct transfers will be between October 7 and October 25, 2022.

For others, the direct deposits will be between October 28 and November 14, 2022. The Golden State stimulus checks went out only to those earning less than $75,000. So the majority who earn above the amount will receive their payments sometime in November in the second round of payments.

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