Fourth stimulus check and child tax credit summary: 3 July 2021
Global stimulus approaching its end game
Central banks are starting to tip-toe away from the emergency stimulus they deployed to fight the pandemic-driven global recession.
A report from Bloomberg considers the next steps.
Slashing child poverty with expanded Child Tax Credit
July 15, 2021, could wind up being one of the most important days in the history of American anti-poverty policy. On that day, most parents in the United States will begin receiving monthly checks of up to $300 per child — no strings attached.
What’s technically happening: The child tax credit (CTC), a policy that has existed in some form since 1997, has been expanded, both in its size (going from $2,000 per child per year to $3,000 for children ages 6 through 17, and $3,600 for children under 6) and in its reach.
But calling this a “tax credit expansion” makes it seem less momentous than it is. It’s really a one-year test of an idea known as a child allowance, a policy that has been adopted in most rich countries besides the United States.
Dylan Matthews reports for Vox on the upcoming changes.
The case against a fourth stimulus check
While all three rounds of direct payments dished out by the federal government to date have been enormously popular, economists are still undecided about the long-term effects. This video from Vox outlines some of the concerns that may be preventing President Biden from pushing for a fourth stimulus check in negotiations for his American Families Plan legislative package.
The IRS will begin sending payments for the Child Tax Credit on 15 July, offering a complete overhaul of the old system which provided just a single partially-refundable tax credit for eligible families.
As part of the new system those in the care of dependents who qualify will receive monthly payments worth up to $300 per child until December. The remaining balance of the credit will be claimed and set with the taxpayer’s refund next year. To make the new process smoother the IRS have introduced an Eligibility Assistant to advise families on how much they are getting.
Watch out for Child Tax Credit scammers
If you are expecting to receive a Child Tax Credit or tax refund from the IRS, it may be worth checking out their anti-fraud advice linked below. With the federal government dishing out hundred of billions of dollars in various pandemic-era financial relief programmes, unscruplous criminals are looking to get between you and your money.
Earlier this week the California legislature approved Gov. Gavin Newsom's new stimulus bill, known as the California Comeback Plan. The state’s made a record-breaking tax surplus in 2020 and Newsom have pledged to use the money to expand the programmes included in the Golden State Stimulus bill.
California has been the most proactive when it comes to providing support to struggling residents, but other states have passed their own legislation to get financial relief out to those in need.
Stimulus payments are on their way this month
The American Rescue Plan was signed into law back in March but the $1.9 trillion stimulus bill still has more financial relief programmes to come. On 1 July a new system giving unemployed Americans free or extremely discounted health insurance went live to boost the Affordable Cares Act.
On 15 July the new Child Tax Credit will begin sending out monthly payments to an estimated 39 million American families. The payments will be worth up to $300 per child and there are already efforts in place to extend it beyond its initial 12-month duration.
Although the monthly payments are the default method for the new Child Tax Credit, parents do have a choice in how they receive the money. Typically the IRS will send six monthly payments to eligible families, with the remaining six months’ worth of cash coming as a lump sum tax credit at the end of the year.
However some are choosing to opt out of the monthly payments to avoid the risk having to pay the money back if their circumstances change. They will also receive a lucrative end-of-year tax credit in place of the monthly payments; here's everything you need to know.
What is the latest on the fourth stimulus check?
The fate of the next round of direct payments has been a matter of much debate in the past months, with President Biden apparently eager to focus legislative efforts on other priorities. However there remains a real appetite for additional stimulus checks, specifically for a recurring payment, across the country.
An online petition which aimed for 3 million signatures is now nearing that mark, showing that the American people feel they need additional suppot from the federal government. There is just a few weeks left before Congress breaks for the summer, meaning that time is running out.
Where's my tax refund from the IRS?
With the tax authority struggling to work through a busy filing season, millions of Americans are being forced to wait longer than normal for the tax refunds to arrive. The IRS advised all filers to utilise e-filing when completing their 2020 tax returns but even those who used the online system are experiencing delays.
If you are still waiting for yours, why not try the IRS' Where's My Refund? online portal? Simply enter the required details on the help page and you will see the status of your payment.
Sen. Bennet takes questions on the new Child Tax Credit
Although there is less than two weeks to go until the IRS starts sending out monthly payments, many families are still unsure about what the reformed Child Tax Credit would mean to them. To help straighten out any confusion, Democratic Sen. Michael Bennet has hosted a webinar on the upcoming payments.
Bennet said of the new programme: “This means direct monthly help to cover groceries, for a college fund, maybe even a summer camp, and we want to make sure everyone eligible for the monthly benefits receives them."
Who is supporting a fourth stimulus check in Congress?
The White House appears intent on pushing for a new large-scale infrastructure bill and is also aiming to extend the new Child Tax Credit. However many lawmakers are still convinced that a fourth round of stimulus checks is required to keep the covid-19 recovery going.
This article from CBS lists some of the attempts made by Democrats in Congress to push Biden to consider introducing another round of direct payments.
The IRS have faced an uphill battle this tax season with various pandemic-era programmes and tax deductions to process and distribute. With the passage of the American Rescue Plan in March, the IRS had to send out a third round of stimulus checks as well as adapt quickly to changes in the tax code which altered the amount that would be refunded.
That enormous workload has led to a massive backlog of unprocessed tax returns, which is reportedly currently at 35 million filings. This may well have a knock-on effect and delay tas refunds for millions of Americans.
Stimulus check impact fades ahead of summer reopenings
The two rounds of stimulus checks sent out in the early months of 2021 combined to provide payments worth up to $2,000 per person for eligible Americans. That influx of cash had a remarkable effect on spending patterns in April with consumer spending up considerably. However that effect has now largely worn off as the extra money has either been spent or saved.
Yet many experts are still optimistic about the continued economic recovery. Gregory Daco, chief U.S. economist at Oxford Economics, said recently: “Overall consumers are still well positioned to attack the summer with a lot of enthusiasm."
He added: “We have households that have a strong itch to spend, they have the means to do so, and they have fewer and fewer health reasons not to indulge.”
How to register for the new Child Tax Credit payments
The first round of payments as part of the reformed Child Tax Credit is set to go out on the 15 July, with monthly payments worth up to $300 per child continuing for the remainder of 2021. However while most families will receive the money automatically, some will need to provide their details to the IRS first.
Essentially, if you do not regularly file a tax return with the IRS they may not have the relevant details on file for you and your family. If this is the case, use the new Non-Filers Tool to ensure that you don't miss out on the payments.
McConnell ups pressure on Biden, Democrats over infrastructure bill
(Reuters) - US Senate Republican leader Mitch McConnell urged President Joe Biden to get the two top Democrats in Congress to abandon a plan to link a $1.2 trillion bipartisan infrastructure deal to a larger reconciliation package that Republicans oppose.
On Saturday, Biden withdrew a threat to not sign the bipartisan bill unless it was accompanied by a separate package focused on what he called "human infrastructure," including help for home healthcare. McConnell said that separating the two would be the only way for Congress to revamp America's roads and bridges.
"I'd like to see us get there, and I do think the only way we can get there is to de-link the two issues. They are really separate issues," McConnell said at a news conference in Louisville in his home state of Kentucky.
McConnell has not decided whether to support the bipartisan agreement, noting on Monday that it was not clear whether the proposal was "credibly paid for."
With the Senate divided 50-50 between the two parties, a move by McConnell against the bipartisan bill could cost it the 60 votes it would need to pass under Senate rules. Democrats aim to pass the companion measure through a process called reconciliation that requires a simple majority.
The White House did not respond directly to McConnell's comments but said Biden has long supported a two-track approach, would engage with the public on infrastructure and looked forward to signing each bill separately.
"The most impactful role that the president thinks he can play ... is to make the case to the American people," White House spokeswoman Jen Psaki said.
Republicans earlier this year rejected Biden's call for a sweeping $2.3 trillion infrastructure package as too costly.
53% of poll respondents know little or nothing about Child Tax Credit
The expanded Child Tax Credit payments of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above will start out on 15 July but many American parents are unaware of the new changes to the benefit. According to a Data For Progress poll conducted in May, 53% of the poll’s respondents expressed knowing little or nothing about the monthly payments, which are expected to cut child poverty in half. The child benefit payments, set to begin a week on Thursday, requires typical non-filers to register with the IRS.
HHS announce rules to protect consumers from surprise medical bills
The Biden-Harris Administration, through the US Departments of Health and Human Services (HHS), Labor, and Treasury, and the Office of Personnel Management, issued "Requirements Related to Surprise Billing; Part I," an interim final rule that will restrict excessive out of pocket costs to consumers from surprise billing and balance billing.
Surprise billing happens when people unknowingly get care from providers that are outside of their health plan's network and can happen for both emergency and non-emergency care.
Unemployed can receive free, zero-premium health insurance until December
Anyone receiving unemployment benefits in 2021 will be eligible for free, zero-premium private health insurance as part of the $1.9 trillion American Rescue Plan.
From Thursday 1 July, zero-premium health plans that come with minimal or no cost-sharing are available through the Affordable Care Act (ACA) to individuals receiving unemployment at any point during this year (even for just one week). To apply, you must create an account at HealthCare.gov, upload your information and then shop for a free plan on the site. The enrollment period ends on 15 August.
Stimulus vs employment
With the announcement of the 850,000 new jobs some have been quick to point out that their are around 10 million job listings still open, and the unemployment rate actually went up.
One vehement argument being spouted is that too many Americans are just sitting at home and living off their stimulus payments and other benefits, but Ande Parks has a different angle.
Biden's job growth
US President Joe Biden is rather pleased with the latest figures and tweeted out:
'Our economic growth means that instead of workers competing with each other for jobs, employers are competing with each other to attract workers.
'That means higher wages and the power to demand to be treated with dignity and respect in the work place.'
Clearly there have been some unprecedented events built into his comparison, but positive news nonetheless.
IRS Child Tax Credit: resource pool
From frequently asked questions to toolkits and user guides, the Inland Revenue Service has a wealth of links to all materials and guidance regarding the 2021 Child Tax Credit and Advance Child Tax Credit Payments organized by type for quick reference by the media and tax professionals.
You can access it here.
Since the passage of the bill that allocates funds to send a $600 stimulus check to anyone making less than $75,000 a year, leaders in California have been quiet. With no news from the governor or state leaders, many are left wondering when they can expect their checks.
The bill also includes an additional $500 payment for adults with dependents and undocumented families. Those who have already received a check during the first round, will not be sent another.
Maite Knorr-Evans reports on the situation in California.
How to opt out of child tax credit payments
For many families, advanced payments are a big financial relief from pandemic hardships. But there may be several reasons why unenrolling is a good idea for others.
For instance, if you know that your family circumstances - like income or number of dependents - are changing this year, maybe you don't want the hassle of updating your details online. Or if you know those changes may mean you'll have to pay the IRS back because you're ineligible.
1. Head to the new Child Tax Credit Update Portal and click the Unenroll from Advance Payments button.
2. On the next page, sign in using your IRS or ID.me account. If you have neither, the page will walk you through setting up an ID.me account.
3. On the next page, you can see your eligibility and unenroll from the monthly payments.
Deep dive into Child Tax Credit
The revised Child Tax Credit is about to take effect. Starting 15 July, most parents will receive a monthly payment of up to $300 per child, courtesy of the American Rescue Plan. That extra money, like recurring stimulus checks, can really add up, especially for families on the low end of the income spectrum. It may even be the difference between eating and not eating or paying and not paying rent.
The enhanced Child Tax Credit will be available to about 39 million families, accounting for 65 million children, according to the Biden administration. That covers around 88 percent of the nation’s children.
Approximately 13 percent of households with children faced food insecurity due to lack of money, according to Census data from late May and early June of 2021. About 21 percent of renting households with children were behind on their rent, according to the same data. Early estimates from the Center on Budget and Policy Priorities suggest that expanding the Child Tax Credit will push 4.1 million children beyond the poverty line.
Katie Johnston discusses the new plans with lead researcher on guaranteed income, Stephen Nuñez. Watch here.
Recurring stimulus checks: 2.5 million sign petition
A change.org petition calling for recurring stimulus checks from the federal government has reached nearly 2.5 million signatures.
Denver restaurant owner Stephanie Bonin created the petition which calls for a monthly $2,000 per month check to every American as many remain unemployed and the economic effects of the pandemic linger.
The petition, which will be sent to Congress, currently has 2.456 million signatures with the goal of reaching 3 million to become one of the top petitions hosted on the site.
Average wage up from last year
According to the Bureau of Labor Statistics, average weekly earnings fell from $877.39 in May to $875.69 in June. However, this rate is still about the average weekly benefit from unemployment insurance that stands at around $617, when adding in the $300 federal topper. This figure is up considerably from June 2020, when it was recorded at $839.70.
Wages by the hour rose ten cents to $25.68.
Sectors with the highest average weekly earnings were, Private Service-providing, utilities and transportation, and warehousing, and Mining, and Logging. At around $16 an hour, the lowest hourly wages were found to be in Leisure and Hospitality, a sector that is struggling to attract workers.
$6 trillion stimulus boosts spending
A gusher of money is spilling out from the US economy and rippling around the world, driving the global recovery to an extent it hasn’t in decades and giving confidence to businesses to invest in meeting the huge American demand.
The US economy, turbocharged by stimulus worth almost $6 trillion and hungry for the world’s goods, is playing the role China played in the aftermath of the 2008 financial crisis, economists say.
While other countries largely welcome a burst of demand from the world’s largest economy, the force of America’s expansion is ricocheting through financial markets and causing dislocations around the world such as shipping bottlenecks in East Asia, effects on currencies and booming commodity prices.
Full story from Tom Fairless and Stella Yifan Xie
How much have wages increased this year?
According to White House Press Secretary Jen Pskai, "average hourly earnings were up 3.6 percent over the year." This is one of the largest increases in that amount of time recorded in the last two decades.
What else has the White House said about the unemployment rate?
In her press conference Pskai, highlighted a few areas of concern in the latest jobs report which showed that the unemployment remained the same compared to May levels. One was the uptick in the number of long-term unemployed people, saying that while it has decreased since the President took office, in June the number went up.
Gov. Lee under pressure to reverse benefits decision
ABC affiliate WBBJ from Jackson, Tennessee, reports on families that are urging their governor to rescind his call to end the payment of federal pandemic unemployment benefits.
Reporting highlights the fear that many families have, that cutting benefits "will force many people to take low wage jobs without benefits, keeping family members out of the workforce altogether because of unaffordable childcare or losing family healthcare."
Since the Fourth of July will take place on a Sunday this year, the federal holiday will be moved to Monday 5 July. This is customary when a federal holiday where many public and private workers are offered the day off, falls on a weekend.
For those who may need to make a run to a government office or a bank, errands should be completed before Saturday, as Sunday and Monday many offices will be closed. Most major banks in the United States follow the same holiday schedule as the Federal Reserve since “electronic bank transfers are routed through” them. Since they rely on The Fed for these actions, following their holiday schedule helps ensure customers see the quickest results.
Watch out! IRS tax scammers are about
The IRS has warned that fraudsters are looking to intercept tax refund payments currently being sent out and advise anyone expecting a payment to be vigilant. Unfortunately, throughout the pandemic thieves have tried to utilise the various financial relief programmes to make a quick buck.
This applies to stimulus checks and additional unemployment benefits too, but here they offer some simple tips on how to ensure that your tax refund is kept safe.
Child Tax Credit: President Biden explains
One of the key inclusions in President Biden's American Rescue Plan (ARP) was a complete overhaul of the Child Tax Credit to provide monthly payments for tens of millions of American households. The programme is due to begin on 15 July but there are already efforts to extend it.
The ARP provided funding for one year of the monthly payments but the American Families Plan will, if passed, see the programme extended through 2026. Biden is clearly a strong supporter of the new system...
Yesterday the Bureau of Labor Statistics released information showing that the June unemployment rate held steady at 5.9%.
The American Rescue Plan included a measure that would allow for the sending of federal pandemic-related unemployment benefits through 6 September 2021. After a lackluster jobs report for April, moderate job growth in May, and a plateau in the unemployment rate in June, some look to the September deadline and wonder if it should be moved back. While the slow job growth could be caused by the economy’s inability to absorb all workers who lost their jobs throughout the pandemic, there are a few other reasons as well.
Maite Knorr-Evans reports on the latest figures.
Stimulus checks live updates: welcome
Hello and welcome to our live stimulus checks blog for today, Saturday 3 July 2021.
We'll be bringing you updates on a possible fourth direct payment, in addition to the latest information on the third round of checks, which has seen around $395 billion go out to eligible people in the US.
As well as this we'll be providing news on other economic-aid schemes such as the expanded Child Tax Credit, which will see monthly payments of up to $300 distributed to qualifying households and details of economic aid for Californians on low-to-middle incomes in the proposed new state budget.
Basically, everything you need to know, we have you covered.
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