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Tuesday, November 29, 2022

The Stimulus Checks Move From The Federation To The States Through A Slew Of Measures For Residents

Even the most negative of predictions could not have fathomed how crazy things could get as they did over the past couple of years. It was a whirlwind of multiple disasters on multiple fronts. As people continued to die from the COVID-19 pandemic, other disasters soon followed on the economic front, with layoffs, unemployment, and disruption in education, all combined to hit citizens hard. And during this period, the federal stimulus check emerged as the savior.

The financial programs targeting all economic sectors from individuals to businesses had a calming effect on the economy and provided relief to millions of citizens who were on the verge of starvation.

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With the US in the throes of multiple waves of COVID-19 infections, the federal government stepped in with three successive stimulus checks within one year starting from March 2020.

Figures released by the Internal Revenue Service in its annual report highlighted the successful delivery of over $1.5T to citizens across the nation, through multiple acts and the Child Tax Credit payments.

The Three Stimulus Checks From The Federal Government

The relief measures started with the CARES Act of March 2020 which included provision for a round of stimulus checks. Eligible tax-filers received a payment of $1,200 max while qualifying dependents below 16 years of age received $500 each subject to a maximum of three dependents.

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The payments went out to all citizens earning below the stipulated income limits, which were set at an adjusted gross income of $75,000 for individuals and $150,000 for a married couple filing jointly.

The value of the stimulus checks is reduced in a tapered method up to a maximum of $99,000 for individuals and $198,000 for couples.

The stimulus checks were paid through the bank accounts of citizens or paper stimulus checks delivered through the US Postal Service. In many cases, payments were made through prepaid debit cards. The Economic Impact Payment Card was sent out in May and June 2020.

The second round of direct payments was between December 2020 and January the next year. it was made and was part of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021, and provided a one-time check of $600 plus an additional $600 for dependents aged 16 and below.

Citizens with $75,000 AGI in the tax year 2019 received the full amount of the stimulus check.

Within a week of the last of the second round of stimulus payments, incoming president Joe Biden unveiled the American Rescue Plan that proposed the third round of stimulus payments to all Americans, including many who missed out in the first and second rounds.

The $1.9T American Rescue Plan was signed in March 2021 with individuals and eligible dependents receiving a $1,400 stimulus check.

Fading Chances Of A Fourth Federal Stimulus Check Even As States Step In

Talks of a fourth stimulus check have disappeared from the corridors of power in Washington. The unemployment rates have marginally fallen, but the turn of the year saw a rise in inflation that went on to touch 8.5%, the highest in 40 years, in March 2021. It continues to be above 8% and has led to prices of gasoline doubling in a matter of months. Groceries and house rents have gone through the roof and low and middle-income individuals and families have come face to face with the prospect of starvation once again.

At this stage, the states have stepped in, albeit with support from the federal funds that were sent to states under the American Rescue Plan Act of 2021. They have also been helped by the excess funds in their budgets thanks to an economically buoyant 2021.

Thanks, to a historic surplus in their state budget, residents of Georgia who filed their past two income tax returns, (2020 and 2021), are eligible to receive rebate payments based on their tax filing status. While single filers will get a maximum of $250, married couples filing jointly will get double that amount. The Head of the household will get a maximum stimulus check of $375.

The Hawaiian Governor David Ige has proposed a tax rebate for every taxpayer in the state. While taxpayers earning below $100,000 will receive $300, those earning above that will receive $100.

The rebate stimulus check has already been approved by the state legislature in Hawaii, though details of the legislation are yet to be released.

The Governor of Idaho, Brad Little, has signed a bill that allocated $350M as tax rebates to residents. Beneficiaries have to be full-time residents of Idaho, and they should have filed their income tax returns for 2020 and 202 or should have filed their grocery credit refund returns.

Like Georgia, Indiana has also enjoyed a healthy surplus in its state budget at the end of 2021. In December last year, Governor Eric Holcomb announced a one-off tax refund worth $125 for residents after they file their 2021 income tax returns.

There are no income requirements and the payments are expected to start in May and will continue through summer.

Maine has been the most generous with its stimulus payments, with Governor Janet Mills signing a supplemental budget in April that authorizes direct relief measures worth $850 for taxpayers of the state.

Full-timers with federal AGI of less than $100,000 will receive the full amount. For married couples, the corresponding figure is $200,000.

The Economic Situation Could Get Worse Before It Improves

While the states and the federal administration have issued multiple stimulus checks, beneficiaries must use them judiciously and not splurge on unnecessary items. It is important to get your personal finance in order.

Most low and middle-income people have been eroding their savings to cover the rise in living costs as regular incomes are insufficient at this stage. It is better to replenish the funds that have been taken out and wait to splurge till the situation improves. And that could even take a whole year.

The cost of living costs is already up and could climb higher in the coming months. Gas prices will become more expensive in late spring and then into summer. So citizens who have managed to stay away from breaking the bank to pay for essentials could see a change for the worse before the situation improves.

The high inflation rate will taper off eventually and the cost of living will settle down. But till that takes place, it would be prudent to build a second level of savings even if the bills are being managed reasonably well at present.

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