Pandemic Relief Increased Income Equality
A new study found that pandemic relief helped improve income equality across the majority of the 100 largest US metro areas.
According to a study from MagnifyMoney by LendingTree, income equality grew from 2019 to 2020 in 62 out of the 100 metros examined.
The organization clarified that stimulus checks are not equivalent to UBI and that they dont hold the power of being consistent, month after month payments.
The account also claimed that UBI empowers people to plan, to invest, to grow, to pursue happiness.
State Stimulus Checks 202: See If Payments Are Coming Your Way Before The Year Ends
Nearly 20 states approved stimulus payments in one form or another in 2022, and residents in a dozen of them are still waiting for their money. If you live in one of the following 12 states and you havent yet received a payment you qualified for, dont panic the check might be in the mail.
Take a look below for more payment information from these state governments.
Didnt Get The Full Third Payment Claim The 2021 Recovery Rebate Credit
You may be eligible to claim a 2021 Recovery Rebate Credit on your 2021 federal tax return.
Individuals can view the total amount of their third Economic Impact Payments through their individual Online Account. Through March 2022, well also 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 from your online account or your letter to accurately calculate your 2021 Recovery Rebate Credit when you file your 2021 federal tax return in 2022. For married filing joint individuals, each spouse will need to log into their own online account or review their own letter for their half of the total payment. All amounts must be considered if filing jointly.
Using the total amount of the third payment from your online account or Letter 6475 when preparing a tax return can reduce errors and avoid delays in processing while the IRS corrects the tax return.
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Read More On Stimulus Checks
Some have specifically used their surplus, while others are offering the payments as a tax rebate.
Also, the second round of California’sGolden State Stimulus program, for example, provided residents with 8.1million payments worth more than $5.8billion, a spokesperson for the California Franchise Tax Board told The Sun.
Below, we explain whether these stimulus checks are subject to taxation if you’re still preparing to file a return in 2022.
You Can Claim Missed Payments As Tax Credits
If for some reason you didnt receive the stimulus payments directly, you likely can claim them when you file your tax return.
As the payments were technically tax credits, you can claim them on your return just as you would any other income tax credit, such as the Earned Income Tax Credit. As with all credits, you could then use the stimulus credits to offset any outstanding tax liability.
If you end up claiming your stimulus credit when you file your taxes, its important to remember that its a refundable credit, as opposed to a nonrefundable credit.
The Child and Dependent Care Credit is an example of a nonrefundable credit, which cant be used for more than you owe in taxes. For example, if you claim the $500 Child and Dependent Care Credit but you owe just $100 in taxes, you can only use $100 of the credit to offset your tax liability. You do not receive the additional $400 in the form of a refund.
But, with a refundable credit such as the stimulus credit, youre entitled to a refund if the amount of your stimulus exceeds your tax liability.
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Stimulus Checks 202: State Relief Checks Tax Implications And More Of The Biggest Topics Of 2022
Although the federal government did not issue any economic impact payments aka stimulus checks in 2022, some states took it upon themselves to offer financial relief to eligible residents to offset the effects of inflation and rising gas prices. These inflation relief checks were issued in 17 states in 2022: California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Virginia. Payment amounts ranged from $50 to $1,050 for individuals, depending on the state and income level of the recipient.
Given the tough economic times, its no surprise GOBankingRates readers looked for information on future stimulus payments they may be receiving, which states are offering inflation relief payments and when they might expect to receive these payments. These topics and more were among our most-read stimulus stories of the year.
Heres a look at the top 10 most-read stimulus stories of 2022.
Either Way Half The Credit Is Still Waiting
While the fate of the child tax credit is uncertain for 2022, one thing is certain. The most anyone received in the form of advance payments for the 2021 credit is $1,800 theyll receive the other half of the fully refundable credit when they file their 2021 tax returns this year. A minority of households opted out of the advance payments altogether and will receive the whole windfal come tax time.
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Nature Of Stimulus Payments
A refundable tax credit provides advance payment of a tax credit. Instead of waiting until you file your tax return to claim the credit, the government pays you the amount of the credit in advance.
Stimulus payments are characterized as a refundable tax credit, a type of payment rarely used by the government previously. This type of payment differs substantially from a tax deduction or standard tax credit. A refundable tax credit provides advance payment of a tax credit. Instead of waiting until you file your tax return to claim the credit, the government pays you the amount of the credit in advance.
Like a standard tax credit, stimulus payments are not taxable. Anofficial IRS statement answers the question of whether the 2020 stimulus payments are includible in gross income as follows:
No, the payment is not includible in your gross income. Therefore, you will not include the payment in your taxable income on your federal income tax return or pay income tax on your payment. It will not reduce your refund or increase the amount you owe when you file your 2020 federal income tax return.
A payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.
The Politics And Economics Of The Time Make More Checks Unlikely
Despite the arrival of a highly contagious variant of the virus and a startling spike in infections, the social and economic conditions that justified the first three rounds of pandemic stimulus have changed.
Despite the continued hardship being experienced across the U.S. by millions of Americans, at this juncture, another stimulus check looks unlikely, said Olivia Tan, a Florida-based personal finance coach and the co-founder of CocoFax. The U.S. economy will keep growing at a healthy pace through 2022, with J.P. Morgans chief U.S. economist Michael Feroli expecting job creation to push unemployment down to around 3%. As well as strong GDP growth of 3%, he also thinks that the outlook for wages and inflation appears favorable for next year.
In short, the economy doesnt seem to need rescuing. But more importantly, its a midterm election year and the political will required for a lift so heavy simply isnt there the Democrats couldnt even get President Joe Bidens Build Back Better plan past their own razor-thin majority. Also, as CBS News points out, many economists have directly linked stimulus payments with rising inflation and another round could very well send prices even higher.
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Are Stimulus Checks Considered Taxable Or Untaxed Income For Title Iv Purposes Including Pj
Please rate this Q& A on how helpful this guidance is to you. Thank you!
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This guidance is not award-year-specific and applies across award years.
2022-23 Verification Waiver: Beginning May 18, 2022 and for the remainder of the 2022-23 FAFSA processing and verification cycle, the U.S. Department of Education waives verification of all FAFSA/ISIR information, except for identity/Statement of Educational Purpose in Verification Tracking Groups V4 and V5. See Dear Colleague Letter GEN-22-06 and AskRegs Q& A, How Do We Implement the Verification Waiver For the Remainder Of 2022-23?, for guidance. The following guidance is still relevant depending on context and/or application of the waiver.
This AskRegs Knowledgebase Q& A was updated on May 4, 2021 to include U.S. Department of Education confirmation of guidance previously provided by NASFAA, particularly as it relates to untaxed income.
No. NASFAA has confirmed with ED that Economic Impact Payments are neither taxable income nor untaxed income for Title IV purposes. They are also not estimated financial assistance . They are ignored for all Title IV need analysis and packaging purposes.
The IRS does not consider stimulus payments under the Coronavirus Aid, Relief, and Economic Security Act , the 2021 Coronavirus Response and Relief Supplemental Appropriations Act , or the American Rescue Plan Act of 2021 to be taxable income. ED does not consider stimulus payments to be untaxed income either.
Who May Be Eligible For More Money
Taxpayers who earned less money in 2021 than the previous year may be eligible for more money than they initially received from the third round of stimulus payments.
Those include single filers who had incomes above $80,000 in 2020 but less than this amount in 2021 married couples who filed a joint return and had incomes above $160,000 in 2020 but less than this amount in 2021 and head of household filers who had incomes above $120,000 in 2020 but less than this amount in 2021, according to the IRS.
Individuals and families who added a child in 2021 through birth, adoption or foster care could be eligible for additional money. Families that added another kind of dependent, such as an aging parent or grandchild, may also be eligible.
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The Child Tax Credit Is Dead For January
Along with the Economic Impact Payments, most parents got extra help from the expansion of the child tax credit. The American Rescue Plan increased the credit to as much as $3,600 per child. For the first time ever, half of the full credit was delivered in advance as monthly payments throughout 2021, but those payments have run their course.
The credit would have continued into 2022 if Congress had passed Bidens Build Back Better legislation, but talks broke down between the president and West Virginia Sen. Joe Manchin, a holdout in his own Democratic party. Therefore, its now certain that there will be no advance child tax credit payments coming in January.
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Find Out If Your State Still Owes You A Tax Rebate Or Stimulus Check
South Carolina is mailing out refunds through the end of the year, and California won’t finish until January 2023.
Many states are still issuing tax refunds and stimulus checks as residents cope with ongoing inflation. Massachusetts only began returning $3 billion in surplus tax revenue in November. The Massachusetts payments, equal to about 14% of an individual’s 2021 state tax liability, are expected to continue to be issued at least through about Dec 15.
South Carolina will continue issuing for up to $800 through the end of the year, and residents of California, Colorado, Massachusetts and Hawaii are also still receiving their payments
Your state could be sending out a rebate or stimulus check, too. See if you qualify and how much you could be owed. For more ontax credits, see if you qualify for additional stimulus or child tax credit money.
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Heres How To Claim The Payment On Your Tax Return
Those who believe they are due more money must file a 2021 tax return, even if they dont usually file taxes, and claim whats called the Recovery Rebate Credit. If a taxpayer is eligible for more money, it will either reduce any tax the personowes for 2021 or be included in a tax refund.
In order to claim the Recovery Rebate Credit, a taxpayer will need information that was sent in a letter from the IRS in the past couple of months. Known as Letter 6475, it confirms whether a taxpayer was sent a third stimulus payment and the amount. Alternatively, that information can be obtained by accessing your IRS online account.
For most taxpayers, the federal tax return filing deadline is April 18, though its a day later for residents of Maine and Massachusetts. Taxpayers having difficulty meeting the deadline can file for an automatic six-month extension by using Form 4868.
Not Your Average Tax Credit
The stimulus payment or economic impact payment, as the IRS calls it is technically a tax credit. But this isn’t widely understood. Some people assume that the IRS will add the amount to your income, generating a bigger tax bill, or reduce your future tax refund when you file your tax return next year. Neither is the case, but this bears some explaining.
In the tax world, a tax deduction is a good thing. It reduces your income, which reduces the amount of tax you owe. If you had $50,000 in income and had a $5,000 tax deduction, your deduction would reduce your taxable income by $5,000. If you were in the 12 percent tax bracket, you’d reduce your taxes owed by $600 .
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A tax deduction is good, but a tax credit is very good. A tax credit reduces your tax bill dollar for dollar. If you owe $1,500 in federal income taxes and you get a $1,000 tax credit, your tax bill sinks to $500.
A refundable tax credit is a thing of wonder. A garden-variety tax credit can reduce your tax bill to zero, but it can’t turn a tax bill into a tax refund. Refundable tax credits can. For example, if you owed $1,000 in taxes but had a refundable tax credit of $1,200, you’d get a $200 tax refund check from Uncle Sam.
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Where Can People Get More Information
Taxpayers who are required to file a tax return, can go to IRS Free File to file electronically. If they aren’t required to file, they should go to the Non-Filers: Enter Payment Info Here tool and submit their information to receive an Economic Impact Payment.
The IRS encourages people to share this information with family and friends.
Child And Dependent Care Tax Credit
If you paid for childcare so you can work or look for work, you can claim the Child and Dependent Care Tax Credit. You can also claim this credit if you pay for the care of an adult dependent who is unable to care for themselves so that you can work or look for work.
This tax credit usually can reduce the amount of federal taxes you owe. For 2022 only, the tax credit is worth more than ever and is fully refundable. This means that if you dont owe any taxes, you can get the money as part of your tax refund.
To get the credit, you will need to know how much you spent on childcare in 2021. You can refer to bank account statements, receipts, or any documentation that tracked your expenses.
Read Child and Dependent Care Credit to learn more about your eligibility, the amount of money you can get, and how to get it.
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Idaho: $75 Rebate Payments
In February, Idaho Gov. Brad Little signed a bill that allocated $350 million for tax rebates to Idahoans. There were two criteria for eligibility:
- Full-time Idaho residency and filed 2020 and 2021 tax year returns, OR
- Full-time Idaho residency and filed grocery-credit refund returns.
The payments began in March. Each taxpayer received either $75 or 12% of their 2020 Idaho state taxes, whichever was greater . The rebate was applicable to each taxpayer and dependent.
The tax commission first issued rebates to taxpayers who received tax refunds via direct deposit, then sent paper rebate checks. The majority of the rebates have been issued.
In a special session on September 1, Idaho lawmakers voted to authorize another tax rebate for all residents who filed state tax returns in 2020. Individual filers will receive $300, and couples filing jointly will get $600.
Those payments started processing in late September, and about 75,000 payments will be sent out each week throughout the end of the year and into early 2023.
State residents can check their rebate status on the Idaho State Tax Commission website.