While it has been over three years since the pandemic hit the US, the economic aftereffects continue to this day. The rise in prices post-pandemic has proved to be particularly debilitating for the American economy. While the federal stimulus check saved the day for the first two years, Americans were left to fend for themselves in 2022 and were only supported by state inflation relief stimulus checks to a certain extent.
The federal administration started three rounds of stimulus checks alone and a vast majority of Americans received them. Only the rich were excluded from the payments. But this also led to a loss of focus as millions of deserving Americans missed out on payments.
On the other hand, millions of stimulus checks went to people who did not face any disruption in income during the pandemic. The most affected were the Hispanic and Black communities as a large section of them were not on any of the federal government lists including in the data of the Internal Revenue Service (IRS).
This was rectified to a certain extent after Joe Biden came to power in 2021. The American Rescue Plan Act that he signed within weeks in March 2021 was way more comprehensive and inclusive. The IRS reached out to the most deprived of the communities and made filing easier through a series of measures.
This included sourcing data from other government agencies to reach out to these communities. At the end of 2022, the IRS still had a list of close to 10 million individuals and households who had not collected their stimulus checks and other pandemic relief measures including the Earned Income Tax Credit and the expanded version of the Child Tax Credit stimulus check.
While the latter was perhaps the most important financial decision under the Resceu Plan, the Earned Income Tax Credit has also been a lifesaver for many Americans. The EITC helps low and moderate-income workers and their families get a tax break. And those who qualify can use the credit to reduce the taxes they owe, and perhaps also increase their refund.
You can claim the Earned Income Tax Credit if your income is between low and moderate. The amount of the credit changes if you declare children, dependents, and disabled, or qualify under other criteria.
The clergy and the military can review their Special EITC rules as availing of this credit may lead to changes in other government benefits. For those who claim this credit, the refund may be subject to a certain delay. Legally filers might have to wait until the third week of February to issue refunds to taxpayers who claim the EITC.
To qualify for the EITC, a filer must have worked and earned income under $59,187. Their total investment should also be below $10,300 for the tax year 2022, to be filed in 2023. They must also be an American citizen or a resident alien and have a valid Social Security number by the due date of their income tax return for the 2022 financial year, including the extension period.
They must not have filed Form 2555, which is Foreign Earned Income Exclusion and allows a filer to exclude up to $112,000 of foreign-earned income for the 2022 tax year. FEIE forms help prevent double taxation.
Child Tax Credit Stimulus Check Reverts To Pre-Pandemic Levels
Unlike in 2022, taxpayers this year will be eligible for a credit of only up to $2,000. And of that $1,500 may be refundable. For income tax returns that have been filed in 2023 or are in the process of being filed.
For income tax returns filed this year, the qualifying age is seventeen maximum. The credit amount decreases once the modified adjusted gross income crosses $400,000 for married couples filing jointly. For individual filers, the maximum amount against which they will get the full stimulus check is $200,000 and will decrease once it crosses that number.
The Child Tax Credit is fully controlled by the federal government and plays an important role in providing financial support for families with children. Even stepchildren and others who are dependent on the taxpayers qualify as a child.
To claim the credit, the taxpayer must prove to the IRS that both the parent and the child meet the specific criteria for claiming the substantial credit.
They will also need to show that their income comes under a certain threshold as specified. The credit phases out in increments after the upper limit is hit. If the modified AGI crosses the ceiling, the credit amount of the CTC stimulus check begins to shrink and after a stage, you will be considered ineligible altogether.
Fresh State Stimulus Checks In The Second Quarter Of 2023
Other than the spillover from the 2022 inflation relief stimulus checks, there is a fresh announcement of payments in the second quarter and later in the new year. While the federal administration appears pinned down by the opposition, more states are planning to send stimulus checks to residents in 2023.
The Middle-Class Inflation refund stimulus checks from the Golden State are on their way to an end with the $200 to $1,050 payments reaching all of the 26 million beneficiaries.
Other states that are sending out stimulus checks include Idaho which is giving out between $300 to $600 for individuals and married couples filing joint up to 112% of the tax liability before credits, payments, donations, and additional taxes.
While the calculations are a bit complicated in this case, the amount works out to be a substantial sum for Idahoans. Last year the state issued 2 tax rebates for full-time residents who filed the state returns for both 2020 and 2021 by end-2022. Rebate payments will go out this year and will be linked to when the residents filed the state income tax returns last year.
While Maine has already sent out a generous amount by way of inflation relief at the beginning of 2022, there is a new payment awaiting residents in 2023 called the Winter Energy Relief Payment. The payment goes out to those whose federal AGI comes to less than $100,000 for individuals and couples filing separately. For married couples filing jointly the amount is $200,000.
