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Child Tax Credit Stimulus Update
If youll recall from all our child tax credit coverage in 2021, Congress got a bit creative in how it structured the payout of that expanded benefit. Lawmakers essentially sliced it in half. Recipients got the first half up front, in 2021, spread out over six monthly checks.
The second half, however, is still coming later this year.
All of those recipients who got six child tax credit checks in 2021? Theyre also getting that same cumulative amount in the form of a tax credit. One that they can use when they file their federal taxes this year. For millions of Americans, theyll either be taking a $1,500 or $1,800 credit per child. Thats what those six checks added up to .
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.
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Second Round Of Direct Payments: December 2020
The second round of aid, a $900 billion package which was part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed off by Trump on 27 December 2020. It provided a one-off check of up to $600, but this time, households were also able to claim an additional $600 for child dependents aged 16 or under. Those who earned under $75,000 in the 2019 tax year received the full stimulus check, while a steadily smaller figure was given to those on a higher annual income, up to a maximum phase-out limit of $87,000. The first payments, through direct deposit and paper checks with some later payments made by EIP 2 Cards, were issued between 29 December 2020 and 15 January 2021.
Those who didnt receive a stimulus payment either through the CARES Act or the December Covid-19 Relief bill were able to claim for it retroactively when they filed their federal tax returns for 2020 through the IRS Recovery Rebate Credit.
Back Taxes Child Support And Other Debts
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Question: Can the IRS or other creditors take my third stimulus check if I owe back taxes, child support or other debts?
Answer: Your third stimulus check is not subject to reduction or offset to pay child support, federal taxes, state income taxes, debts owed to federal agencies, or unemployment compensation debts.
However, the American Rescue Plan doesn’t include additional protections that were included in the legislation authorizing the second round of stimulus checks. For example, second-round stimulus checks weren’t subject to garnishment by creditors or debt collectors. They couldn’t be lost in bankruptcy proceedings, either. The IRS also had to encode direct deposit payments so that banks knew they couldn’t be garnished.
Question: Can a dead person get a third stimulus check?
Answer: For the third round of stimulus checks, anyone who died before January 1, 2021, is not eligible to receive a payment. Essentially, they’re treated as if they don’t have a Social Security number.
There is an exception for military personnel. If a person who died before 2021 was married and a member of the U.S. military, the surviving spouse can still receive a third stimulus check even if he or she doesn’t have a Social Security number.
The extra $1,400 per dependent is also off the table if the parent died before 2021 or, in the case of a joint return, both parents died before then.
Question: Will I receive a notice from the IRS about my payment?
Read Also: Irs.org Stimulus Check Status
Taxation Of Third Stimulus Checks
Question: Will my third stimulus check be taxed later?
Answer: No. As with the first two rounds of payments, your third stimulus check is actually just an advanced payment of the Recovery Rebate tax credit for the 2021 tax year. As such, it won’t be included in your taxable income.
You also won’t be required to repay any stimulus check payment when filing your 2021 tax return even if your third stimulus check is greater than your 2021 credit. If your third stimulus check is less than your 2021 credit, you’ll get the difference when you file your 2021 return next year. So, it’s a win-win situation for you!
Irs Has Sent $6 Billion In Stimulus Payments Just In June Heres How To Track Your Money
Your stimulus check could be on its way, along with child tax credit money and unemployment tax refunds. Well explain the state of the payments today.
Stimulus check payments arent over yet for everyone.
Dont think that the child tax credit payments going out in just over two weeks are all the IRS is focused on. The tax agency continues to send weekly batches of the third stimulus checks, with more than $6 billion in stimulus payments going out just in June. Some of that money includes plus-up adjustments for people who received less money than they were supposed to get in earlier checks.
Even though many of us got our stimulus money in the earlier batches in spring, some have had to wait weeks or months for their checks. The IRS sent money first to people whod already filed their 2019 or 2020 tax returns because those were the easiest to verify. So if youre still waiting for your stimulus check up to $1,400 or think you might be due a plus-up payment well tell you what to do next.
In the meantime, many experts say a fourth stimulus check is unlikely, but millions of families will be getting a good chunk of money with Julys first child tax credit payment. We can tell you how to know if you qualify and how much money you could expect over the course of the year. The IRS is also issuing unemployment tax refunds to millions of people who received jobless benefits last year, though payments are taking longer than expected. This story was updated recently.
Read Also: What To Do If You Didn’t Receive Your Stimulus Check
Why Is The Irs Sending Me Letter 6475
The Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return,the IRS said in a January release, including personal information like your name and address and the total amount sent in your third stimulus payment.
This could include plus-up payments, the additional funds the IRS sent to people who were eligible for a larger amount based on their 2019 or 2020 tax returns, or information received from the Social Security Administration, Department of Veterans Affairs or the Railroad Retirement Board.
You may have already received a Letter 1444-C, which showed the amount you were paid and how it was delivered, but thats not what you want to use to prepare your 2021 return.
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Fourth Stimulus Check: Are More Payments Coming
A fourth stimulus check from the government could take one of two forms: monthly checks in fairly small amounts, or one-time payments of up to $2,000.
Both options have been put forward by legislators in Congress as follow-ups to the third round of pandemic relief payments, which were made possible by the American Rescue Plan Act of March 2021.
The U.S. economy is still recovering, with slow but steady job growth even as unemployment numbers hold steady and the Delta variant of COVID-19 causes hospitalization rates to soar.
The federal moratorium on evictions ended Aug. 26 with a Supreme Court ruling, and millions now face losing their homes. Inflation, however, appears to be on the rise, contributing to fears among economists and lawmakers that further stimulus payments could only fuel more price hikes.
As a result, there’s no legislation in Congress that’s likely to pass that would create a fourth round of stimulus payments, even though some Democratic lawmakers have called on President Joe Biden to consider recurring payments.
The White House has passed back the buck, stating that the president would consider whatever Congress comes up with.
At the end of July, Rep. Ilhan Omar , introduced a bill that would send $1,200 to each American making less than $75,000 per year, forever. But it has not moved forward in the House of Representatives and has little chance of passing.
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Number Of Third Stimulus Checks
Question: How many third-round stimulus checks will I get?
Answer: As with the first two round of checks, the legislation authorizing the third round of payments only calls for one payment. This is not a “recurring” payment situation.
However, some people will receive a supplemental payment if their 2020 tax return is filed and/or processed after the IRS sends them their regular third stimulus check. The IRS is calling these “plus-up” payments, and they’ll only be sent if your regular stimulus check would have been higher if it was based on your 2020 tax return . So, for example, if you received a $700 third stimulus check based on the information found on your 2019 return, filed your 2020 tax return later, and your third stimulus check would have been for $800 if it was based on information from your 2020 return, then the IRS will send you a second payment for the $100 difference.
Some married couples could also get two payments. If a joint tax return is filed, a married couple could get two separate third stimulus payments. Half may come as a direct deposit and the other half will be mailed to the address the IRS has on file. Each spouse should check the IRS’s “Get My Payment” tool separately using their own Social Security number to see the status of their payments.
Dont Throw Away The Irs Letter About Your Stimulus Payment
Hold on to that IRS letter that confirms your stimulus payment, including giving the amount and how the IRS sent your money. That letter from the IRS Notice 1444-C is your proof that the IRS sent a payment in case you dont actually receive it or if you received less than you qualify for and need to claim the missing amount later. Heres more on what to do with that IRS letter.
Also Check: Wells Fargo Stimulus Check Not Pending
Are $2000 Monthly Stimulus Checks Possible
In response to President Biden’s American Jobs Plan proposal, a group of 21 senators on March 30 sent a letter urging the inclusion of stimulus checks in the legislation. The group called for recurring payments as long as the pandemic lockdown continued, meaning people would get monthly checks from the government. No amount for the payments was specified.
We urge you to include recurring direct payments and automatic unemployment insurance extensions tied to economic conditions in your Build Back Better long-term economic plan, wrote the group, which consisted of Sen. Elizabeth Warren, D-Massachusetts, Sen. Bernie Sanders, I-Vermont, and others.
An earlier stimulus check proposal, put forward during the early days of the American Rescue Plan in late January, also suggested monthly payments until the pandemic is over, but did not mention an amount. However, Rep. Ilhan Omar, D-Minnesota, tweeted earlier in January that she wanted to see $2,000 per month.
If that amount sounds familiar, it’s because now-Vice President Kamala Harris threw her support behind $2,000 recurring checks during the negotiations for the second stimulus check legislation in the summer of 2020.
The proposal has also gained plenty of support outside of Congress: Six online petitions calling for $2,000 monthly stimulus checks until the end of the pandemic have been posted. The biggest petition, on Change.org, has been signed by more than 2.8 million people and has a stated goal of reaching 3 million.
Don’t Throw Away The Irs Letter About Your Stimulus Payment
Hold on to that IRS letter that confirms your stimulus payment, including giving the amount and how the IRS sent your money. That letter from the IRS — Notice 1444-C — is your proof that the IRS sent a payment in case you don’t actually receive it or if you received less than you qualify for and need to claim the missing amount later. Here’s more on what to do with that IRS letter.
Also Check: How Will I Get My Stimulus
First Round Of Economic Stimulus Checks: April 2020
The CAREs Act included a provision for a round of stimulus payments eligible tax-paying adults received a check of up to $1,200 while eligible dependents under 16 years of age received $500 each .
The payments were made to everyone earning under the income limits, which were set at Adjusted Gross Income of $75,000 with the stimulus check value reducing in a tapered fashion up to a maximum of $99,000 . The very first stimulus checks were paid into people’s bank accounts over the weekend of the 11 and 12 of April, either via direct deposit into individuals bank accounts, paper checks sent through the post or in some cases, through a prepaid debit card, the Economic Impact Payment Card which were sent out in late May/early June last year.
How Will Child Support Arrears And Payments Be Impacted With Stimulus Check
I seem to be getting a lot of comments on this question around child support. The IRS has confirmed that the stimulus check payment will NOT be offset or intercepted for those owe tax, have a payment agreement or owe other federal or state debts. It will however be OFFSET for past-due child support. This is because a court order for child support continues until it is modified or terminated. Similarly with unemployment compensation stimulus increases, your child support may be withheld from the UI payments. You will get a notice from BFS if this happens.
Also Check: Whos Getting A Second Stimulus Check
Did Not File In 2018 Or 2019
Another reason why you havent received your stimulus check is because you did not file your taxes in 2018 or 2019. If you did file in 2018 and are not planning on filing in 2019, then the IRS needs updated information.
However, if you did not file taxes in 2018 or 2019, the IRS developed a web page where you can enter in information to make sure you receive your stimulus check.
Please note: If you receive disability, social security, railroad retiree or survivor benefits, the IRS will be sending you a check. You do not need to enter in your information on the web page or take action, as checks will be issued soon.
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What About People With Itins
You still need a work-authorizing Social Security Number to be eligible for this stimulus. However, there are important changes since the first round of stimulus checks.
- In the first stimulus rollout, any non-SSN holder on a joint return made everyone on that return ineligible. Big change: The new rounds of stimulus has corrected this problem. If you filed a joint return with a non-SSN holder, you are still eligible for the stimulus. See the below hypotheticals.
- Situation: A single tax filer has an Individual Taxpayer Identification Number but no Social Security number .
- This person is ineligible for the stimulus.
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How Are Americans Using Stimulus Checks
The Federal Reserve Bank of New York says that households are spending a smaller percentage of their stimulus checks and saving more. The that households set aside just under 25% of their third-round payments for consumption. This share fell from just over 29% of first-round payments reported in June 2020 and almost 26% of second-round payments reported in January 2021.
The table below is based on all three SCE surveys and breaks down the average percentage of stimulus payments spent, saved and used to pay off debt:
| New York Fed SCE Breakdown of Stimulus Check Spending | |
| Payment Round | |
| 37.4% | 33.7% |
The New York Fed also says that households expect to spend an average 13% of the third stimulus check on essential items and an average 8% on non-essential items.
For a comparison, preliminary data collected by the U.S. Census Bureau from shows that the majority of stimulus recipients are almost three times more likely to use checks to pay down debt than add to their savings.
An earlier showed that the majority of recipients who got the first stimulus check spent their payment on household expenses. Adults with incomes between $75,000 and $99,999 told the Census that they would most likely pay off debt or add to their savings. While adults making less than $25,000 said they would use their stimulus to pay for expenses.
For those households that spent their first stimulus checks, the study says: