Fourth stimulus check and Child Tax Credit updates on Wednesday 7 July
US stimulus checks and Child Tax Credit news | 7 July 2021
- Courts prevent states from prematurely ending additional unemployment benefits (Full story)
- Maryland will continue to pay federal unemployment benefits after courts uphold lawsuit (Full details)
- Stimulus checks have gone to some high-income households with annual earnings above $200,000, according to the IRS (Full story)
- US unemployment rate rises despite stimulus efforts, what are the reasons behind the increase?
Useful information / links
- You have until Monday 2 August to opt out of the August round of Child Tax Credit monthly payments (find out more)
- Some families will nee to file taxes or use the Child Tax Credit Non-filer Sign-up Tool to trigger monthly payments
- Should you update your tax return information? Find out when to contact the IRS
Take a look at some of our related news articles:
The majority of the millennial generation was old enough to understand and feel the impacts of the 2008 Financial Collapse. This historic failure of major banks has created distrust in the financial sector, which was captured in a recent poll by Morning Consult.
The poll found that a third of millennials had switched banks in the last two years, compared to 16% for Gen Xers and 7% for Baby Boomers. The second-highest rate was seen among Gen Z at 25%.
Additionally, 37% reported that they plan to switch within the next year, more than ten points than all other generational groups.
Almost a million people voluntarily left their jobs in June, many with the hope of finding one with higher pay. For those who do not have the ability to leave with no security of quickly finding their next gig, one question lingers, "is it time to ask for a raise?"
Washington Post tackles the question.
Late last month the federal eviction moratorium was extended to the end of July. However, a major housing crisis still looms as new reporting shows that of the $46 billion allocated for rental assistance under the American Rescue Plan, only $15 billion had been spent by the end of May/
When will the bipartisan infrastructure bill be brought to the floor for a vote?
Politico's Burgess Everett reports that the infrastructure package could make it to the Senate for a vote in the next two weeks.
Will Democrats be able to meet in the center on investments?
Democrats are working on the rest of the Biden agenda with proposals ranging from $2 trillion to $6 trillion to invest in the nation’s economy, the environment and social programs. Can the party find the Goldilocks proposal that keeps the right programs with the right price tag? E.J. Dionne Jr analyzes how the Democrats can get there.
Debate heating up at Fed over tapering stimulus
When the Fed met last month the Central Bank officials unanimously agreed to continue purchasing $120 billion total in Treasury bonds and mortgage-backed securities while keeping the baseline interest range at 0 to 0.25 percent. However, recently released minutes from that meeting shows there is division over when the Fed should start applying the brakes to tame inflation or keep the current stimulus flowing.
The jump inflation didn’t come as a surprise to the officials with the economy correcting for the drop in prices and economic activity due to the pandemic. But the amount is making one group of officials consider “the risks to their inflation projections were tilted to the upside.” The other group sees supply shortages and short-term factors pushing inflation higher and expect it to dissipate sooner than expected.
Starting 15 July, the Internal Revenue Service will begin sending eligible families advance payments on the 2021 Child Tax Credit. Any parent or guardian who filed their 2020 tax return or used the IRS Non-Filer online tool should be automatically signed up. But if you still haven’t done either you’ll want to take action now.
Have questions about 2021 Child Tax Credit?
Three US Representatives for North Carolina, David E. Price, G. K. Butterfield and Deborah Ross, will be presenting a webinar on the 2021 Advance Child Tax Credit payments at 3pm ET Wednesday 7 July.
Last week, the California legislature passed a bill that would allow for sending the second round of Golden State stimulus checks with an expanded income threshold. The first round of $600 checks was sent to residents making under $30,000 a year. The new bill will not send another check to those that received one during the first distribution cycle. Instead, those making under $75,000 a year will receive a check.
Very few details have been released on when the payments will be made. However, the entity tasked with its distribution, the California Franchise Tax Board (CFTB), has stated that they will release more information once they receive directions from state leaders.
The checks will be sent based on the information provided this year during tax filing season. For those who have not yet filed their taxes, the state recommends sending in a return to ensure eligible individuals receive their payments.
Throughout the pandemic the federal government has been providing additional unemployment benefits for out-of-work Americans to help them deal with the economic consequences of the pandemic.
In recent months 26 states have announced their intention to prematurely withdraw from the pandemic unemployment benefits, saying that the programmes are encouraging workers to stay at home.
All but two of those states have now passed their deadlines to cancel the additional federal support but they are now facing legal challenges from residents who argue that the state does not have the right to deny them access to the schemes.
Millions could receive unemployment benefits tax refund this summer
The American Rescue Plan included a programme which made the first $10,200 of unemployment benefits received in 2020 completely tax-free. However by the time the stimulus bill was passed in March 2021 millions had already submitted their tax returns and so had already paid the tax on that support.
This means they are due a substantial tax refund once the IRS has processed their filings. At last count the IRS was working through a backlog of 35 million unprocessed tax returns, meaning that it may not be until later this summer than the tax refund payment arrives.
The IRS has confirmed that the monthly payments from the new Child Tax Credit will begin on 15 July. Unlike the credit’s previous structure, claimants will receive monthly payments until December with the remaining balance of the annual credit to be claimed at the end of the tax year.
The tax authority recently launched the Advance Child Tax Credit Eligibility Assistant to help potential beneficiaries “check if you might be eligible for advance payments." Here's everything you need to know about using the new online portals and control your monthly payments...
How are cities spending their $350 billion stimulus windfall?
The American Rescue Plan, the $1.9 trillion relief package passed in March, included a lot more than just another round of stimulus checks. Also included in the bill was a massive $350 billion investment for local authorities to spend as they wished to aid their area's covid-19 recovery.
“It’s not like all places are rushing out to do the most aspirational things, since the first thing they need to do is replace lost revenue,” Mark Muro, a senior fellow with the Brookings Institution, told the New York Times. “But there is much more flexibility in this program than in previous stimulus packages, so there is more potential for creativity.”
Biden's optimistic about the role that Child Tax Credits will play in US recovery
The IRS is expected to start sending out payments for the new Child Tax Credit from 15 July, providing monthly payments worth up to $300 for children younger than six and $250 for those aged between six and 17. The new system is hoped to halve the number of children in poverty during the next 12 months, something that President Biden sees as a key part of the recovery plan.
The President said: “This is historic progress pulling our economy out of the worst crisis in 100 years, driven in part by our dramatic progress and vaccinating our nation, and beating back the pandemic, as well as other elements in the American Rescue Plan."
Last week the California legislature approved Gov. Gavin Newsom's latest stimulus bill, known as the California Comeback Plan. The package is a result of the state’s record-breaking tax surplus and expands the programmes included in the Golden State Stimulus bill.
California has been the most proactive when it comes to doling out financial support with $600 stimulus checks going out to an estimated two-thirds of Californians as part of the latest wave. But the Golden State is not the only one to offer financial relief to residents and other states have also introduced their own stimulus checks for vulnerable residents.
Make sure you file taxes to recieve Child Tax Credit payments
The IRS will begin sending out payments as part of the new monthly Child Tax Credit from 15 July, but there is concern that some eligible families will miss out on the support. For the majority of recipients the payments will come automatically but those who do not typically file a tax return will need to provide their personal details separately.
If you have not filed a tax return for either 2019 or 2020 you will need to use the Child Tax Credit Non-filer Sign-up Tool to submit the relevant information to the IRS to trigger the payments.
IRS backlog will delay tax refund payments
Speaking to YahooFinance, National Taxpayer Advocate Erin Collins runs through the current state of play as the IRS looks to process tens of millions of tax returns. The tax authority is battling against a backlog of 35 million unprocessed returns which is having a knock-on effect for those waiting for a tax refund.
The IRS is also tasked with distributing the third round of stimulus checks and introducing the new-look Child Tax Credit, which is expected to go live from 15 July. Both of these programmes, as well as the outstanding tax refunds, will be threatened with further delays unless the backlog is addressed
Last week the Bureau of Labor Statistics released the United States’ unemployment data for June, which was a mixed bag for President Biden. It is thought that the findings of that report may impact how Biden chooses to negotiate the next stage of the country’s economic recovery and impact on the chances of a fourth stimulus check.
The report found that more than 850,000 jobs were added during the month but there is concern that the national unemployment rate actually rose slightly to 5.9%.The unemployment rate is now close to the level at the time when the American Rescue Plan was signed into law, something that could help the push for a fourth stimulus check.
New online tools to help Child Tax Credit distribution
The American Rescue plan inplemented a complete overhaul of the Child Tax Credit in a move that is expected to halve the number of children living in poverty over the next 12 months. As is expained here, the first half of the year-long programme will be sent out in the form of monthly payments while the remainder will be issued as a single tax credit at the end of this year.
The IRS will continue to distribute the third round of stimulus checks for the rest of the year and we finally beginning to see a clearer picture of how that process has gone. Last week it was confirmed that 163.5 million payments have been made since the American Rescue Plan was signed into law in March, at a total cost to the government of $389.9 billion.
But a new report shows that a surprising amount of that money hase gone to households that most would consider ‘high-earners’. Why has this happened or who has been getting the money?
Child Tax Credit "will make a real difference" for American children
Democratic Sen. Dick Durbin has spoken about the potential of the reformed Child Tax Credit payments to make a significant difference in the lives of American children. The next system is set to go into effect from 15 July with monthly payments sent out automatically to tens of millions of families.
Durbin said of the news: "Of all the things we do, is there anything more important than ensuring that these kids have a fighting chance when it comes to the basics in life."
Nearly three million signatures support a fourth stimulus check
An online petition introduced last year in support of a recurring stimulus check is nearing its target of three million signatures. The petition, named “$2000/month to every American #moneyforthepeople #covid19”, is currently on 2,519,831 signatures and has drawn a lot of interest in recent weeks.
Although the White House appears unwilling to push for a fourth stimulus check there remains considerable desire in Congress for an additional wave of direct support to be passed. Stephanie Bonin, the petition’s creator, told Newsweek recently: “We need immediate checks and recurring payments so that we can keep our heads above water."
From 15 July 88% of families across the United States will begin to receive payments for the enhanced Child Tax Credit (CTC). Major changes to the quantity and distribution method were made to the CTC under the American Rescue Plan, passed back in March. Under the new system, each child under the age of six will be sent $300, and $250 will go to those between the ages of six and seventeen.
To help with the administration of this process the IRS has launched the Child Tax Credit Update Portal, which it describes as “a secure, password-protected tool, available to any eligible family with internet access and a smartphone or computer. It is designed to enable them to manage their Child Tax Credit accounts.”
Here's everything you need to know about the upcoming payments and how to manage them...
When will my tax refund arrive from the IRS?
There is concern that the huge tax return backlog that has hampered the IRS is still affecting the distribution of tax refunds for millions of Americans. At last count there were still 35 million unprocessed tax returns, with the IRS also tasked with sending out the third stimulus checks and introducing the new-look Child Tax Credit.
"I would like to tell you that absolutely this summer. I'm not that optimistic," National Taxpayer Advocate Erin Collins told Yahoo Finance Live when asked about the delayed refunds. "The returns will not be coming in so fast, so hopefully that will give the IRS the opportunity to get caught up on all of those returns that are going through the manual processing."
What's the difference between a stimulus check and a Child Tax Credit payment?
Throughout the pandmeic the federal government has attempted to provide direct support for the American family through the use of stimulus checks. After three rounds of the payments have gone out it seems like President Biden is now eager to concentrate on other forms of support.
The newest of those is the reformed Child Tax Credit, which is due to begin from 15 July. The new programme will see parents receive a monthly direct payment for the rest of the year. As it stands the Child Tax Credit is set to revert to the only single-credit structure after one year bu the Democrats are desperate to extend it beyond then.
18m Californians have received stimulus checks
Rep. Salud Carbajal has announced that some 18 million Californians have now received stimulus checks worth $43bn under the American Rescue Plan. "These rescue payments put money into Americans pockets and helped revitalize our economy," he said.
Many of those residents could also be in line to receive another $600 as Califonia rolls out a second state-level stimulus check under the Golden State Stimulus initiative.
"One of the most important things Congress has ever done" - Rep Maxin Waters on child tax credit
Los Angeles Democratic Rep Maxine Watters told Fox that she's "jumping with joy" ahead of the rollout of the new child tax credit, which comes into effect on 15 July.
Rep. Waters hailed the Biden administration initiative as: "One of the most important, effective things that the Congress of the United States has ever done."
4 in 10 Americans say income is still below pre-pandemic levels
Despite that financial assistance offered by stimulus checks and other benefits, millions of Americans remain in financial distress, with about 4 in 10 people saying their income remains below its pre-pandemic levels, according to a survey from financial services firm TransUnion.
IRS Child Tax Credit: Can the web portal help you to receive extra money?
To assist families in managing their payments, the IRS has launched the Child Tax Credit Update Portal. The IRS describes the portal as “a secure, password-protected tool, available to any eligible family with internet access and a smartphone or computer. It is designed to enable them to manage their Child Tax Credit accounts.”
More features will be added to the portal within the next few months, but currently, users can update their bank account information and unenroll from the payments to claim at a later date.
These features should help those in care of dependents get their payments more quickly, as direct deposit ensures that the funds are available almost immediately. Without direct deposit information, the IRS will send a physical check which could take weeks to be mailed and received.
Soon the platform will allow families to check the status of their payments, and a Spanish language version will become available.
Read our full coverage for more details regarding eligibility and when the payments will be sent.
When will the bipartisan infrastructure agreement and the reconciliation bill which includes popular progressive policies be brought to a vote?
Will unemployment benefits be extended after June rates show no change?
On 2 July, the Bureau of Labor Statistics has 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.
The first is that the labor market is hot, meaning that if you are looking for a job, the market is working in your favor. Many businesses and organizations impacted by the pandemic opted to let go of their employees to reduce costs and weather the storm. With so many businesses hiring, these individuals are now free agents in the market and can be more selective when picking their next job.
Read our full coverage to understand the other factors that kept unemployment steady at almost 6%.
IRS promotes CTC tool
The Internal Revenue Service has developed an online tool to help families who don’t file tax returns register for monthly Child Tax Credit payments.
Stimulus check live updates: welcome
Hello and welcome to our daily live blog for today, Wednesday 7 July 2021, bringing you updates on a possible fourth stimulus check in the US.
We'll also provide you with information on the third round of stimulus checks, which began going out in March as part of President Biden's American Rescue Plan, in addition to news and info on other economic-support programs such as the new, expanded Child Tax Credit.