By the beginning of 2022, the federal stimulus checks began to dry up, and the final installment of the first part of enhanced Child Tax Credit payments ended in December 2021. The third stimulus checks have been mostly sent to recipients as the federal administration began to concentrate more on infrastructure projects rather than on direct stimulus support.
It did not help that the Republican opposition thwarted every move by the ruling Democrats to continue with some form of stimulus sustenance. The advance Child Tax Credit payments have been around for decades and were established as part of the 1997 Taxpayer Relief Act. Eligible recipients subtract the credit amount for the federal income tax they owe.
The original tax credit was $400 per child under 17 years and non-refundable for most families. It was increased to $500 per child under 17. It was finally increased to $2,000 under the Tax Cuts and Jobs Act of 2017,
the American Rescue Plan Act signed by President Joe Biden in Mach 2021 temporarily expanded the CTC for the tax year 2021 to a $3,600 stimulus check for children under 6 years, and $3,000 for children between 6 and 17 years.
The amount of the stimulus checks gradually diminished for individual filers earning over $75,000 and married couples earning over $150,000. The Rescue Plan temporarily made the tax credit fully refundable and gave out 50% of the full amount in monthly payments between July and December 2022.
Over 36 million households benefitted from the CTC stimulus checks helping 61 million children. The funds primarily went into child care, housing, food, and other essential needs. The federal CTC has reverted to the previous payment level of $2,000 a year for the tax year 2022.
Child Credit Tax Payments Initiated By Nine States
In addition to the federal credit, 9 states have endorsed a CTC stimulus check. 6 of the 9 states have even made the CTC stimulus checks refundable (California, Colorado, Massachusetts, Maryland, New York, and New Mexico. Idaho, Maryland, Maine, and California have gone for a fixed limit for the CTC that ranges from $205 to $1,000 for each qualifying child.
Colorado has developed a tiered system that is linked to income levels and is a percentage of the federal CTC stimulus check. All 8 states allow tax filers to avail themselves of both the federal and state CTC stimulus checks.
Efforts to renew the more generous enhanced CTC stimulus check stalled in 2022 in Congress despite strong efforts by the ruling Democrats. Independent Senator Bernie Sanders decried the strange priorities of the Senate that passed a $5 billion blank check in support of the microchip sector but has turned away from other initiatives that could help individual citizens.
The legislation also made the credit fully refundable to families with little or no income. Estimates show that the legislation of the enhanced CTC stimulus check helped reduce the incidence of child poverty by over 40%.
Data revealed that the CTC payments helped families pay for food and education for their children and pay their rent and utility bills. It prevented the children from going hungry to bed. Then the government suddenly pulled the rug out right from underneath them, even as food and energy prices shot through the roof.
While the administration has used inflation as an excuse not to continue with federal support, in reality, it was another reason to continue with more stimulus checks for low-income people. For now, the enhanced CTC payments have been put on hold.
End Of Federal Stimulus Checks Lead States To Pour In Resources For Its Residents
The end of direct federal support has led to states getting into the act and several states have already passed legislation that enables them to send stimulus checks to their residents by June 2022.
Stimulus checks have continued in various forms through state initiatives. Thousands of Californians are set to benefit from a total of $5,000 spread over 5 months. These universal basic income payments would go out to needy students in California who suffer from homelessness under a new bill passed in the state Senate.
Residents eligible would stand to get $1,000 each month over five months. Senator Dave Cortes of San Jose said that the students have been empowered to take actionable steps to reach their goals and make vital financial decisions regarding their future. Children who have enrolled in the 12th grade and are homeless, qualify for this payment.
The payments will not be considered income or affect eligibility for any other state assistance or benefit programs.
UBI Schemes Similar To The Initiative By California Being Offered In Other States
The Universal Basic Income stimulus checks are being offered in various other states and cities. These government programs provide people with a fixed amount of money regularly. It helps to mitigate poverty and can be implemented statewide and even federally.
Other than California, Minneapolis, Minnesota is set to send a $500 stimulus check every month for two ears to people who have suffered financial hardship during the pandemic and with an annual income of 50% of the median in the area.
Under Ithaca, New York’s guaranteed income initiative, stimulus checks worth $450 are set to go to residents for 12 months. These payments are meant for caregivers whose annual income is 80% or less than the median income of the area.
State Stimulus Checks Going Out In June
Residents of New Mexico and Maine are eligible for a stimulus check in June thanks to their government which has made it possible to counter the record inflation in the first quarter of 2022.
The initial round of stimulus checks worth $850 will be for residents of Maine who have already filed their tax returns for 2021. Residents who file their returns later will see their checks delayed, with October 31 being the last date to file the returns. To qualify for the stimulus check, individuals must reveal a gross income below $100,000 while the maximum is $200,000 for couples who file jointly.
An estimated 858,000 Maine residents will benefit from a total expenditure of $729.3M.
New Mexico Tax rebates are also likely this month. The state legislature has approved stimulus measures early in 2022 that will give $250 stimulus checks to individual residents and double that amount to joint filers. The second payment of an identical amount is expected to be given in August 2022.