It is three years since the COVID-19 pandemic wreaked havoc around the world. America was particularly affected and the US economy felt the full brunt of the worldwide crisis. The federal government’s response was ample in the first two years though there was much delay in implementing measures to halt the spread of the virus. But the successive stimulus checks brought ample financial relief during the two years.
But the end of 2021 marked the end of most federal financial relief even as rising prices created another acute crisis, especially for low- and moderate-income families. Over twenty states stepped in to help out residents cope with the record rise in prices that affected all products and services.
From groceries to gasoline, the process increased by fifty percent at one stage before easing marginally at the end of 2022. But prices continue to be high, well above the pre-pandemic rates. The state stimulus checks pegged as inflation relief tax rebates in most cases, eased the burden to a certain extent for households.
There was also initial speculation among taxpayers that the state inflation relief stimulus checks would be taxed by the IRS. This apprehension was increased when the IRS instructed filers to delay filing their income tax returns till the agency issued a clarification.
But the biggest update finally came to form the IRS in the form of late guidance in February. After prolonged speculation and debate, the IRS finally declared that most beneficiaries of state stimulus checks in the t twenty-one states that issued them would not have to report their stimulus checks as income. This effectively made the inflation relief stimulus checks tax-free in most states.
Under normal circumstances, taxpayers are required to report income tax refunds. But the IRS ruled that most stimulus checks would be considered disaster relief or general welfare. Neither of these two payments is taxable at the federal level. The ruling by the IRS applies to most of the twenty-one states that issued stimulus checks.
They include Colorado, California, Connecticut, Delaware, Florida, Illinois,s Indiana, Idaho, Hawaii, Maine, New Jersey, New Mexico, Oregon, New York, Rhode Island, and Pennsylvania.
Alaska too is on the list but there is still a question mark over federal income tax on the stimulus check issued by the Alaska administration. Nearly all Alaskans receive a Permanent Fund Dividend (PFD) that is generally taxable and is a share of the income the state makes from its massive oil reserves. But the Special Energy Payment distributed by the state in addition to the regular PFD payment in 2022 will not be subject to income tax, the IRS has clarified.
Further, residents in the following states will also be waived from declaring the state stimulus checks if they meet certain criteria. They must have received refunds from state income tax paid or itemized their deduction. They must also have claimed the standard deduction without receiving tax benefits. These states are Georgia, Massachusetts, and South Carolina.
Stimulus Checks Continue Into 2023 For A Handful Of States
Several states continue to have stimulus check payments as part of the 2023 schedules. While some have opted to distribute the outstanding payments to residents who applied for them before the deadline. Others are still accepting applications for new schemes.
The fresh schemes envisage by some of the states have targeted low and moderate-income residents and are not as widespread in their scope as the federal stimulus checks.
Alaska has been among the more generous of the states and was off the mark early in 2022 with its inflation relief stimulus check. While the state’s Permanent Fund Dividend filing season remains open for 2023, residents can file their applications online through March or pay a visit to one of the numerous PFD offices and apply in person. The applications for PFD from 2022 and earlier years that are listed as eligible but not paid on March 8 will be now distributed. Application in this category on April 12 will be distributed a week later on April 20.
Eligible residents of Massachusetts can continue to b claim their share of the 62F Taxpayer Refund Program. The state has reported a massive trade surplus and qualified residents will get more than 14% of their state income tax liability for the 2021 tax year. This will be as long as they file the 2021 income tax returns before September 15. Residents can expect their refunds a month after they file.
Residents of New Jersey were required to submit their ANCHOR property tax relief application before the end of February this year. Qualifying renters are to receive $450 while homeowners who qualify will receive $1,500. The stimulus check will go out through paper checks or direct bank transfers before the end of May 2023.
While New Mexico has already given out two rounds of stimulus checks spread out over four months, with a total of around $1,500. But residents are in for another windfall as those who do not normally have to file income tax returns owing to their low earnings will receive a rebate worth between $500 and $1,000. It depends on their filing status. They should have filed their income tax returns for 2021 by May 31 last year to get the maximum benefit.
Residents of South Carolina who have filed their income tax returns for 2021 and received their income tax rebates for 2022 by October 17 are set to receive another stimulus check. Residents who took the Hurricane Ian disaster relief extension had until February 15, 2023, to file and claim a rebate worth $800 in March.
But there is also disquieting news as the requirement that states keep people on Medicaid during the coronavirus pandemic has come to an end. As a result, fifteen million people could end up losing their medical coverage.
Starting in April, state officials across America could start removing people from Medicaid who no longer qualify. This was something that was prohibited since a provision in the pandemic relief package was passed by Congress in 2020, the year the pandemic struck America.
The federal government estimates that around 15 million people will be without health coverage in the coming months. This includes close to 7 million people who are expected to be dropped from the rolls even though they may be eligible. And nearly fifty percent of those who lose coverage with being either Hispanic or Black, reveal federal figures.
