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Child Tax Credit Will Nearly Halve Childhood Poverty In America
The IRS is set to begin making monthly payments next month as part of the new-look Child Tax Credit. The reformed programme will see parents receive up to $300 per child in the form of a monthly direct deposit, with payments to start from 15 July. Democrats in Congress have spoken of it as a vital response to the pandemic’s economic instability.
What a critical opportunity to talk about all of the strategies that we can use to reduce poverty and increase equity and especially focusing on children, Sen. Tammy Baldwin said during a roundtable discussion earlier this month.
Lack Of Child Care Hinders Job Seeking
There has been a lot of talk about stimulus checks and generous unemployment benefits causing a shortage of people willing to go out and look for a job. Some states are trying to combat the problem by ending participation in federal unemployment insurance programs, 23 states have decided to do so.
However, for many a much more pressing issue is holding them back from seeking a job, a lack of child care. The industry was devastated by the pandemic and is just beginning to claw its way back. This is the first of four major reasons Best Buy CEO Corie Barry told CNN her company is see a dip in job applications.
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How Was The Third Stimulus Check Spent
We’re now over two months since the third round of stimulus checks began distribution and we can now see how that money was spent. It appears that the cash influx spurred a dramatic increase in consumer spending, coming around the same time that covid-19 restrictions were loosened in many states. Consumer spending represents over half of the US’ economic activity so the marked increase may strengthen calls for a fourth stimulus check.
There was no mention of a fourth stimulus check in Biden’s new budget proposal, but that does not mean that there are no plans to implement another round of the direct payments. In Congress there are a number of Democratic lawmakers who have publically given their support to another stimulus check.
Some want another single round of direct payments, but many are in favour of a new system which would see payments go out on a monthly basis. These ‘recurring stimulus checks’ would be costly, but there is a clear appetite for them in Congress.
What Can You Do If You Did Not Get The First Or Second Stimulus Payments
If you did not receive payment for the first or second round of economic impact payments or believe you did not receive the full amount to which you were entitled there is a way to resolve it. You must file a 2020 tax return and claim the 2020 recovery rebate credit for the amount you are owed.
Lost payments from any of the three rounds can be traced by the IRS. If you find that the IRS records indicate payment being made to you, you can request that it trace the payment. Tracing takes time and will not begin immediately. Depending on how the payment was made to you by the IRS, the following waiting periods apply:
1). Five days from the date of a direct deposit that your bank did not receive.
2). Four weeks for mailed checks.
3). Six weeks for a check mailed but forwarded to another address because you moved.
4). Nine weeks when a check was mailed to a foreign address.
If you filed a tax return within the past three years, check with your tax preparer to verify the address on the return and the method you chose to receive any tax refund that may have been due before initiating a trace through the IRS.
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Child Or Dependent Qualification For The $500 Payment
Several readers have asked questions around the $500 child dependent additional stimulus payment. To get this payment you must have filed a 2018 or 2019 tax return and claimed the child as dependent ANDthe child must be younger than 17-years-old at the end of 2020. They must also be related to you by blood, marriage, or adoption . There is no limit to the number of dependents who can qualify for the additional $500 in one household.
This age limit is much younger than what is used by the IRS in the qualifying child test where a child must be younger than 19 years old or be a student younger than 24 years old as of the end of the calendar year. Hence the confusion being caused by this. So just remember if your child or eligible dependent is 17 or over you cannot claim the stimulus payment for them.
College Kids and High School Seniors
The younger than 17 yr old requirement has ruled out several thousand college students and high school kids who are older than 17, but still being claimed as a dependent by their parents on their federal tax return.
However if you are a college student AND filed a recent tax return you can qualify for a standard/adult stimulus check per the above eligibility rules. But note as soon as you file a return you cannot be claimed as a dependent by others, which means they lose certain other tax benefits and credits.
Trump Speaks Out About Vaccines To Right
Washington The federal government has sent out three rounds of stimulus checks to help people during the pandemic, but despite their political popularity, there’s no proposal on the table to deliver a fourth round.
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Stimulus Checks Could Spur ‘reopening Day’ Boom
Financial analysts at JP Morgan have announced that they foresee a huge influx in hospitality spending once the national restrictions on socialising and other covid-19 measures are removed. President Biden has set the target of July 4, Independence Day, for Americans to be able to gather in to celebrate the holiday.
So far just 13% of third stimulus check spending has gone on non-essential items, but experts predict that this could rocket once the hospitality sector is back. If the recently-mooted fourth stimulus check, possibly with recurring payments, were to materialise the effect on consumer spending could be even greater.
The US economy is beginning to feel the benefits of the third round of stimulus checks, coming as vaccination rates climb and the American public is finally able to venture out of their homes after a year of restrictions. But the road ahead is still uncertain, and many lawmakers are calling on the White House to introduce recurring stimulus checks until the pandemic is over.
President Joe Biden is rolling out the second part of his Build Back Better plan, and many want a fourth stimulus check to be part of the package. Many Democrats in Congress have signed a letter insisting that ongoing stimulus payments are provided to support Americans who are still struggling during the pandemic.
Didn’t Get The Full Third Payment Claim The 2021 Recovery Rebate Credit
You may be eligible to claim a Recovery Rebate Credit on your 2021 federal tax return if you didn’t get a third Economic Impact Payment or got less than the full amount.
In early 2022, we’ll send Letter 6475 to the address we have on file for you confirming the total amount of your third Economic Impact Payment and any plus-up payments you received for tax year 2021. You will need this information to accurately calculate your 2021 Recovery Rebate Credit when you file your 2021 federal tax return in 2022.
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Jeff Bezos Claims Child Tax Credits To Reduce Income Tax Bill
The explosive findings of a new report into America’s super-rich found that the richest man in the world pays an income tax rate less than most working Americans. But not only does Amazon founder Jeff Bezos pay a tiny amount of tax, in comparison with his total worth, he also reduces his tax bill further with the Child Tax Credit.
This means that Bezos will likely be expecting to receive the new monthly payments when then begin next month, leaving critics to scald him for making use of federal funding designed to help working families across the country.
Why Is The Fourth Stimulus For Seniors Needed
To receive these benefits, one cannot work, making their income fixed. During the pandemic, supply chains broke down, causing bottlenecks that limited the supply of goods, leading to an increase in price.
The prices for basic goods food, gas, clothing are all up significantly over their pre-pandemic levels and seniors are starting to feel the pain.
Consumer Price Index rose 5.3 percent over the year ending August 2021 #BLSdata
Earlier this month, the Bureau of Labor Statistics released a report showing that over the last year, the Consumer Price Index for all items index increased 5.3 percent before seasonal adjustment. For food, people are on average 3 percent more than they were a year ago, as for other goods, the trends are just as worrisome.
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Who Is Eligible For The Third Stimulus Check
For the last two stimulus payments, single taxpayers earning up to $75,000 a year and couples earning up to $150,000 a year were able to get the full amount. Parents also received stimulus payments for each dependent child under age 17.7,8
Those income limits wont change for the third stimulus payment, although it targets payments to lower income earners. Under the American Rescue Plan, payments will begin phasing out for single filers making between $75,000 and $80,000 and couples making between $150,000 and $160,000.9
Eligibility for the third stimulus check also expands to cover any non-child dependents. That means taxpayers who support certain eligible dependents age 17 and older might receive additional money as well.10
Enhanced Child Tax Credit Overpayments May Need To Be Paid Back
One of the key features that will help families with children in the American Rescue Plan passed in March is the revamping of the Child Tax Credit. Starting in July Americans would get up to $300 a month per child if all goes according to plan.
However, the advanced payments will be based on an IRS estimate, from available data like income, marital status, and number and age of qualifying kids. Outdated data may trigger an overpayment of the tax credit and the need to pay back any excess funds.
The agency has been tasked with creating an online portal where families can update their information and choose if they want the half the credit to come as monthly direct payments and the remainder in when they file in 2022. Or Families can choose to collect the credit as a lump sum tax refund, minus and taxes owed, in 2022.
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Fourth Stimulus Checks Are Coming From These States Is Yours On The List
Although an official fourth stimulus check from the federal government might seem unlikely at this point, states are doing their own part in making sure federal stimulus money gets distributed. As part of the American Rescue Plan stimulus relief bill, states were allotted over $200 billion dollars to spend towards their economic recovery from the COVID-19 pandemic.
States have until the end of 2021 to give their money out, and Governors have already begun doling out cash where they feel their states need it the most.
Us To Donate 500 Million Pfizer Vaccine Doses Globally
The Biden administration plans to donate 500 million Pfizer coronavirus vaccine doses to about 100 countries over the next two years, a person familiar with the matter told Reuters.
The United States will purchase 200 million shots this year and 300 million in the first half of next year, the person said. It will donate them to 92 lower-income countries and the African Union, the person added.
The donations will go through the COVAX vaccine facility that distributes covid-19 shots to low- and middle-income countries and is backed by the World Health Organization and the Global Alliance for Vaccines and Immunization .
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Why Did I Receive A 310 Tax Refund
The 310 code simply identifies the transaction as a refund from a filed tax return in the form of an electronic payment . This would also apply to those receiving an automatic adjustment on their tax return or a refund due to March legislation on tax-free unemployment benefits.
Direct Payments Reach People Who Need Immediate Aid
Direct payments, in particular, help those who do not qualify for unemployment insurance but have had their hours reduced or left their job to care for family members during the pandemic, economists have said.
Direct payments have helped alleviate poverty in the U.S., and a fourth stimulus check alone would lift 6.6 million people out poverty in 2021, according to a recent report from Elaine Maag and Kevin Werner at the Urban-Brookings Tax Policy Center.
“Housing instability and food insecurity remain concerns for many, and an additional payment could help with both,” Maag writes to CNBC Make It in an email, noting that Black and Hispanic families with children feel the pain more acutely than other households. “Studies on how other economic impact payments were spent indicate people spent the money on necessities like food, housing and bills.”
That said, with the vaccine rollout chugging along and more states lifting coronavirus restrictions, it is not clear if the progressive lawmakers will be able to sell the idea to their more moderate or conservative colleagues.
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Child Tax Credit Will Have Postive Health Benefits Too
The White House has billed the new-look Child Tax Credit as a generational change for American families, and further research is showing how far-reaching that support could prove to be. This Center on Budget and Policy Priorities report, shared here by Rep. Dwight Evans, makes clear that children’s health often reflects their economic circumstances.
The report reads: “People with higher incomes can more easily afford to meet the full range of their childrens needs, from nutritious food and quality housing to medicine, transportation to the pediatrician, and healthy recreational activities.”
Dont Wait For A 4th Stimulus Check To Take Control Of Your Money
Getting your hands on some extra cash when youre in a tough spot can feel like a breath of fresh air, but dont depend on a stimulus as your money plan. Weve said it before and well say it again and again dont wait around for the government to take care of you. Its never a good bet.
And truth be told, youll be waiting around for a long time. Sure, a fourth stimulus check can help you out, but it isnt going to be your lifeline. If you really want to take control of your money, you need a proven plan that you are in charge of.
Sooner or later, stimulus checks run out. But knowing how to budget, save, and make your money goals happen is something that keeps on giving. And we know just the thing to get you there. The premium version of our budgeting app EveryDollar, and Financial Peace University are the trusted tools you need to build habits that keep you on track with your money goals. Get your money working for you and start creating the life you wantwithout waiting on the government.
About the author
Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.
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Republican Opposition To Additional Stimulus Checks
Don’t expect Republicans to get behind another round of stimulus checks. Senate Minority Leader Mitch McConnell says he doesn’t think a fourth round of direct payments is needed. The economy is starting to recover, and jobs are coming back. Republicans say they don’t want to slow down the economic recovery with additional federal debt and more government spending that could trigger a sharp rise in inflation. The Boston Herald also reported that over 1.2 million first-round stimulus checks were either refused, paid back, or not cashed. Expect Republicans to use that information to support their argument that another round of stimulus payments isn’t needed if so many payments weren’t even used .
If a fourth round of stimulus checks is authorized, it will likely happen in the same way that third-round payments were enacted without any Republican votes. While some Republican lawmakers have supported stimulus checks in the past, they seem united against the sort of large and expensive plans that a stimulus check proposal would likely be part of, such as the president’s American Jobs Plan and American Families Plan. That means Democrats will probably have to use the reconciliation process again if they want more stimulus payments.