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Reader Question Of The Week
If you have a retirement question, send it to . In the subject line, put Question of the Week.
The answers for this weeks reader questions come from Lynn Ballou and Erin Voisin, both certified financial planners and partners with California-based EP Wealth Advisors.
Q: I am not directly impacted by any layoff or furlough at this point, but my wife got laid off last month. Does the Cares Act allow me to take a hardship withdrawal from my 401?
Ballou: I am not aware of anything that would keep you from qualifying for a hardship withdrawal since the family is experiencing hardship. Its not my favorite way of accessing liquidity, however, as the reader might be selling low to create the liquidity to withdraw funds and then repaying that money and reinvesting in the future when the market recovers and prices are higher.
Voisin: He would qualify. But as Lynn indicates, I would see what other options they have for liquidity.
Q: If my stimulus payment was less than the $1,200 because I earned too much for 2019, can I get the rest of the money when I file next year? My income will drop below $75,000 this year.
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Democrats Appear To Have Ditched A Previous Plan To Lower The Salary Cap On Checks
News of the new timeline comes as Democrats appear to have smoothed out details of their own proposal, dropping a previously considered plan to limit full payments of $1,400 to individuals earning up to $50,000 per year and for $2,800 to be sent to married couples earning up to $100,000 per year. Now, the official proposal would see full stimulus payments for anyone making up to $75,000 annually and couples earning $150,000, The Washington Post reports.ae0fcc31ae342fd3a1346ebb1f342fcb
And while those earning up to $75,000 will still be entitled to full checks as they were for previous stimulus payments, the new proposal does affect those at higher salary tiers. According to the new plan, individuals making more than $75,000 will still be entitled to smaller checks, but those making $100,000 or more will not receive any stimulus payments. And for more on what could be next in the pandemic, check out Dr. Fauci Just Gave This Scary Update on the New COVID Strain.
Stimulus Check 2022 Update: These States Set To Receive Payments In May
Residents of four U.S. states may be in line for upcoming stimulus payments that should begin to be paid in May as the country continues to grapple with high inflation.
Three states – California, Delaware and Indiana – are expected to make payments this month, while the city of Chicago is set to provide prepaid gas cards and transit cards.
Here is a breakdown of the upcoming payments by state.
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The latest payments are $1,400 per household member, including adults, children and adult dependents.
WASHINGTONAnother round of stimulus checks is heading to bank accounts now that President Biden has signed the coronavirus relief legislation into law, and money is starting to reach people this weekend.
When are the payments coming?
Officials from the Treasury Department and the Internal Revenue Service said the government sent the first batch of direct deposits on Friday. Some households may see the money over the weekend. The official payment date is March 17, and it may take that long for the payments to clear at some banks. Subsequent batches of direct deposits will happen over the coming weeks.
The IRS has recent experience sending out payments, and that is a good guide for what to expect now. Last year, when former President Donald Trump signed the first big relief bill in March, the bulk of direct deposits arrived within about two weeks. The second round of payments, approved in December, hit bank accounts within a few days after Mr. Trump signed them into law.
How big are the payments?
The latest payments are $1,400 per household member, including adults, children and adult dependents such as college students and elderly relatives. Adult dependents were ineligible for prior rounds of payments.
How will the payments arrive?
Can I check the status of my payment?
Yes. The IRS now has the Get My Payment tool up and running for this round of payments.
Impact On Child Tax Credit
The expanded Child Tax Credit eliminates the earnings requirement starting in 2021. This change makes the child tax credit fully refundable and the amount received is not related to the childs earnings. The credit has long been associated with racist rhetoric and divisive politics, which have led to its widespread opposition. The expanded Child Tax Credit is a significant step forward, but many questions remain about its future. Lets examine some of the key factors that may affect its future.
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Million Recipients Of One
The IRS has begun disbursing the one-time payments of the federal stimulus program. So far, 159 million checks have been disbursed to eligible individuals. Of this total, two-thirds of California residents are expected to receive the Golden State Stimulus check, which will provide them with $600 to file their 2020 taxes. Parts of Texas and Florida have also authorized bonuses for teachers.
When Could The Stimulus Payments Start
Following approval of the bill on March 11th, millions of Americans will start seeing the third stimulus payments by mid-to-late March 2021 per the estimated IRS payment schedule and official Biden administration guidance. Comments below confirm these are going out now. You can also check the IRS Get May Payment tool for the latest status of your payment. See payment FAQs from the second round of payments, which will also apply for the most part this time around.
Due to the fact that payments are going out in the middle of tax season it may be very hard to get a hold of someone in the IRS to help with payment issues and you will likely have to wait until after April 15th to follow up on issues.
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Who Is Eligible For A Third Stimulus Check
Some people may or may not be eligible for receiving a stimulus check. Among people that can expect this check include:
- Individuals with an $80,000 AGI or less
- Head of household with a $120,000 AGI or less
- Couples filing jointly with a $150,000 AGI or less
- Dependents of every age, if the guardian qualifies
- Families with mixed US citizenship
- US citizens who live abroad
- Citizens living on US territories
- VISA holders
- Incarcerated people
- Non-citizens that pay taxes
Most people living in the US can indeed be expected to receive a stimulus check, provided they have US citizenship, have a visa, or at least pay U.S. taxes. With that in mind, certain categories are disqualified from receiving a stimulus check and this will precisely help you determine whether you are eligible for receiving it as well or not.
Eligibility is based on your adjusted gross income, and the amount of money that you receive will be calculated on the same basis.
Theres Still Time To Get Payments
If you havent yet filed your tax return, you still have time to file to get your missed 2021 stimulus payments.
Visit ChildTaxCredit.gov for details.
The IRS has issued all first, second and third Economic Impact Payments. You can no longer use the Get My Payment application to check your payment status.
Most eligible people already received their Economic Impact Payments. However, people who are missing stimulus payments should review the information below to determine their eligibility to claim a Recovery Rebate Credit for tax year 2020 or 2021.
Securely access your IRS online account to view the total of your first, second and third Economic Impact Payment amounts under the Tax Records page.
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Stimulus Spending Can Stabilize Demand
In the end, stimulus checks made the pandemic-era recession less severe, said Zachary Parolin, a research scientist at the Center on Poverty & Social Policy at Columbia University. The first two payments alone were found to lift more than 11.7 million Americans out of poverty, including more than 2 million seniors and 3 million children.
“In their absence, consumer demand would have likely been lower, threatening larger declines in employment,” Parolin said. Families spent the cash mostly on food and utilities.
As a result, he expects to see the checks again, too.
“If economic shocks put the economy at risk, then stimulus checks will certainly be a tool that the federal government considers applying,” he said.
Stimulus Checks Aren’t A New Recession Tool
In economic downturns, the U.S. government has a number of levers it can pull to keep families spending and shielded from the most dire situations. Continued spending is key, because if people’s buying slows or dries up, companies respond to lowering profits by laying off even more workers, which only deepens and prolongs the hard times.
Relief strategies include enhancing unemployment benefits, boosting food stamps, temporarily slashing taxes and sending out stimulus checks.
The government deployed stimulus checks in the 2001 and 2008 recessions, but the pandemic prompted payments on an unprecedented scale, Sahm said: “This Covid recession was the first time that multiple rounds were sent out.”
There were three rounds of the checks: Those who were eligible received up to $1,200 in April 2020, up to $600 in December 2020 or January 2021, and up to $1,400 in March 2021.
Here are some reasons Sahm and other economists cite as making it likely stimulus checks will be sent out again in the event of another recession.
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Fourth Stimulus Check Approval: Here’s What It’ll Take
The White House hasn’t responded to any of the proposals for additional stimulus checks, and the general sentiment is that a fourth stimulus check isn’t likely. Economists have suggested we’ve already moved past the pandemic’s worst financial woes, although there are signs that Americans could still use relief.
Experts certainly seem in agreement that there won’t be a fourth stimulus check. The latest stimulus package, the American Rescue Plan, is “gonna be the last on that front,” Deutsche Bank senior U.S. economist Brett Ryan told Fortune . “No more checks.”
Ed Mills, Washington policy analyst at Raymond James, agreed, telling CNBC recently “I think its unlikely at this time. D.C. has largely started to pivot towards the recovery and an infrastructure bill.”
Many economists and financial experts are worried that the third stimulus checks have contributed to a growing inflation rate. In June 2021, the core inflation rate, stripped of energy and food prices, rose 4.5% at an annual rate vs. the Dow Jones estimate of 3.8%. The overall consumer price index rose at an annualized 5.4% rate in June.
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.
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This Will Likely Be The Last Covid Stimulus Check You’ll Receive
Even though the package has also lost some original elements in negotiationsincluding a proposed hike in the national minimum wage from $7.50 to $15 an hourPresident Biden has said he would push for such policies down the line in stand-alone bills.
But when it comes to direct stimulus payments, experts believe it’s unlikely that more will follow. “For individual assistance, this is very likely the last major package,” Mills told CNBC. And for more on things that won’t be back, check out Dr. Fauci Just Said We’ll Never Be Able to Do This Again.
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Question: Will I Have To Pay Taxes On It
If youre wondering when you can expect your stimulus funds, please This will take you directly to the IRS website where you can check your payment status.
To check your credit union account, for online banking or view your account info in our mobile app.
Hawaii First Federal Credit Union
Routing Number: 321379753
I Get Ssi Should I Spend The Stimulus Money Within A Year What Can I Spend It On
Spend down your CARES Act EIP money before 12 months have passed since receiving the payment. You are not limited in what you can spend the money on. You can spend down on whatever you wish, including on gifts and charitable contributions. If you don’t spend it within 12 months, the Social Security Administration will count the money as a resource.
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Stimulus Check Eligibility: Do You Get One
Stimulus check eligibility depends on how much you earn on the books each year. If you are a U.S. taxpayer that earned less than $75,000 a year according to your most recent tax return, you qualify for the full $1,200 payment.
Note that people on Social Security support dont need to apply for the payment. Unfortunately, in the rush to get out stimulus checks as quickly as possible, some have been sent to people who have died, according to CNN. And the IRS says those payments need to be returned.
Keep in mind that you must file your taxes to quality for the stimulus check. The IRS has extended the usual April 15 deadline to July 15, but the sooner the government has your 2018-2019 tax information the sooner you can get your payment.
Second $600 Stimulus Check Details
While the CAA legislation, under which the stimulus payments were funded, required that the second round of payments be issued by Jan. 15, 2021, some second round Economic Impact Payments may still be in the mail and delivered by the end of February. The IRS however has confirmed has issued all first and second Economic Impact Payments it is legally permitted to issue, based on information on file for eligible people.
Get My Payment was last updated on Jan. 29, 2021, to reflect the final payments and will not update again for first or second Economic Impact Payments.
If you havent yet received your payment and GMP is not showing payment details then the IRS is recommending you claim this via a recovery rebate credit in your 2020 tax return that you will file this year. Major tax software providers like Turbo Tax and Tax Act have updated their software to allow tax payers to claim their missing first or second stimulus payment as a recovery rebate with their 2020 tax filing.
Under the COVID-related Tax Relief Act of 2020, the IRS has delivered more than 147 million EIPs totaling over $142 billion. Due to the lower income qualification thresholds and smaller payments this was lower than the 160 million payments made via the first stimulus check.
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