Fourth stimulus check: COLA 2022 benefits, Medicare, Child Tax Credit… | Summary 15 december
- Senate votes to raise the US debt ceiling by $2.5 trillion - What does this mean?
- The last of the Child Tax Credit payments will hit bank accounts today (Wednesday)
- Manchin still not convinced on Democrats' $2 trillion spending bill after call with Biden
- Could the Omicron variant lead to another stimulus check?
- Inflation outpaces social security 2022 COLA increase
- More US lawmakers pledge backing for Medicare for All
- Unemployment rate in the US down to 4.2% after 210,000 jobs added in November
Useful information & links
Child Tax Credit
- Biden faces a battle to secure Child Tax Credit extension
- IRS sends out final Child Tax Credit payment of 2021 on 15 December
- In Atlanta, some medical students are to get a $6,300 stimulus check.
- New parents could see another stimulus check reflected in their tax refund in 2022.
- What is the deadline to claim stimulus check plus-up payments in 2021?
- Congress urged to approve new stimulus check for Social Security recipients
- Some states could send out another stimulus check
- How many Social Security payments are still to be sent out in 2021?
- Some states offer those receiving Supplemental Security Income benefits much larger payments
- Details of 2022 COLA increase being mailed to Social Security recipients
- What is the maximum Social Security benefit for 2022?
- 5.9% COLA increase -how much does this affect benefits?
- What is the natural unemployment rate formula?
World shares turn positive after Fed tapering announcement
Global shares rose slightly on Wednesday after the U.S. Federal Reserve said it would end its pandemic-era bond purchases in March.
The announcement paves the way for three quarter-percentage-point interest rate increases by the end of 2022, as the Fed exits from policies enacted at the start of the global health crisis. In new economic projections released following the end of a two-day policy meeting, officials forecast that inflation would run at 2.6% next year, compared to the 2.2% projected as of September, and the unemployment rate would fall to 3.5%.
MSCI's global gauge of stocks gained 0.10%, and the pan-European STOXX 600 index rose 0.26% after the Fed's statement.
IRS increases tax information to over 20 languages
Being aware that that tax information can be complex, the Internal Revenue Service are now translating our tax resources into more than 20 different languages.
Sen. Wyden attempts to get Child Tax Credit extended outside of Build Back Better Act
With the extension of the Child Tax Credit enhancements looking to be in peril Senator Ron Wyden of Oregon tried to get it attached to another bill both parties want to pass. The unanimous consent legislation, which would expedite a vote, was blocked by Wyden after Senator Marco Rubio objected to the inclusion of a one-year extension for changes to the Child Tax Credit for the 2021 fiscal year.
The unanimous consent would have sped up a vote to ban imports from China’s Xinjiang region unless companies could prove no slave labor was used. Additionally, it would have unlocked a "hold" by Republicans on key Biden administration national security nominees.
Fed will begin tackling inflation
The Federal Reserve Chair Jerome Powell said on Wednesday that the Central Bank will end its pandemic-era bond purchasing stimulus program in March. The Fed will also begin raising interest rates now that inflation targets have been met.
Currently at zero, the interest rate will rise to 0.9 percent by the end of 2022 with subsequent hikes through 2024 to 2.1 percent. According to the central bank, the timing of the first hike in 2022 would hinge solely on the path of the job market, which is expected to continue improving in coming months.
Powell said that in his view "we are making rapid progress toward maximum employment," and that "the economy no longer needs increasing amounts of policy support."
After a two-day policy meeting officials forecast that the unemployment rate would fall to 3.5 percent and inflation would run at 2.6 percent in 2022.
SALT tax cut will cost more than Child Tax Cut extension
The Build Back Better Act that the Senate is debating includes to major tax cuts for taxpayers, an increase of the state and local tax (SALT) cap and an extension of the enhanced Child Tax Credit.
The former would mainly benefit those making over $100,000, around 98 percent, and costs $285 billion according to the Committee for a Responsible Federal Budget. While the latter those at the lower end of the income spectrum at a cost of $185 billion.
The enhanced Child Tax Credit has been credited with reducing childhood poverty by as much as 40 percent this year. The changes are set to expire at the end of the year.
Hoosiers are getting a stimulus check from the state
Around 4.3 million in Indiana will be receiving a $125 automatic refund from the state. Anyone who paid taxes in the state in 2021 will be eligible but will need to file a tax return in 2022. Indiana experienced higher than expected revenues in 2021 and under state law the excess reserves must be returned to residents.
36 million families receive final advance Child Tax Credit payment
On Wednesday the IRS sent out over 36 million payments to eligible families with children age 17 or younger. Since July, the agency has sent 200 million payments totaling $93 billion. Families that didn't file a tax return in 2019 or 2020, nor signed up on the online portal can still claim the tax credit by filing a 2021 tax return next year.
The advance payments this year represent part of the credit due to taxpayers, the remainder will need to be claimed on 2021 tax returns. The IRS advises families that have received the advance payments will to check how much they have received and compare that with how much they are eligible to claim. The tax agency will send recipients of the payments a Letter 6419 in January 2022 detailing the amount.
Child Tax Credit extension at risk as Biden Manchin talks sour
Millions of families received the sixth and final instalment of the advance 2021 Child Tax Credit payments. The changes to the credit were only for the 2021 fiscal year and are set to expire at the end of the month. The six payments so far represent half of the amount families are due with the remainder to be claimed when taxpayers file a tax return next year.
Congress has until 28 December to pass an extension of the changes made to the tax provision under the American Rescue Plan to avoid an interruption in the monthly payments. The extension has been included in the Build Back Better Act passed by the House but awaiting approval in the Senate.
However, it appears that Senator Joe Manchin wants to axe the enhanced Child Tax Credit extension.
While a fourth stimulus check is extremely unlikely to happen, the last dregs of the third check are still hanging around. These are taking the form of plus-Up payments, bridging the gap for those whose situation has changed between submitting their 2019 and 2020 tax returns.
But there is a catch, applicants have until the end of the year to submit their 2020 tax returns and receive the money, or it will not be able to be claimed.
More than 169 million payments have been sent out in the third round of stimulus checks, but groups are continuing to push for a fourth as inflation continues to bite, as well as the emergence of a new covid-19 variant, Omicron, that is scaring markets.
Two prior ones have been sent since the beginning of 2020, creating America's most generous social safety net in decades. People may now be wondering; how will these affect my tax returns? Will I need to pay more tax on the stimulus checks I received?
What is SALT relief?
One more controversial aspect included in the $1.75 Build Back Better bill is the extension of the State and Local Taxes (SALT) deductions passed as a part of the 2017 Tax Cut and Jobs Act. Through that legislation, Republicans capped the amount of taxes households pay in SALT at $10,000.
The Committee for a Responsible Federal Budget (CFTB) called this move “regressive” and found that “A five-year repeal would cost roughly $475 billion, with $400 billion of the tax cut going to the top 5 percent of households.”
The Build Back Better bill remains locked in Senate negotiations for now, despite President Biden’s hopes of getting the expansion package signed into law before Christmas.
The ambitious legislation, currently thought to represent about $1.9 trillion of additional spending, is designed to overhaul the national social safety net and introduce new green energy initiatives. It would also extend the expanded Child Tax Credit for an extra year and grant greater powers to Medicare providers.
The Congressional Budget Office estimates that the bill, if passed in its current state, would only increase the national deficit by $367 billion over the next decade. Here’s what that means for your taxes…
Manchin plays down chances of quick passing of Build Back better plan
Joe Manchin, who represents West Virginia, did not rule out the possibility of supporting the measure this month. He said that “anything is possible here” when asked about a vote before Christmas, and that he was still “engaged” in conversations with the White House.
But in a 50-50 Senate where Democrats would need all of their party’s votes to push through the legislation over unanimous Republican opposition, Manchin’s reluctance to embrace it has helped freeze the measure in place.
When will the Build Back Better bill be passed?
Democrats are divided over how hard to push Senator Joe Manchin to vote on President Biden’s climate and social spending bill before Christmas, with some lawmakers favoring an aggressive approach while others worry about killing the legislation by moving too hastily.
Senate Majority Leader Charles Schumer has said for weeks that he wants to vote on Biden’s signature Build Back Better Act before Christmas but on Tuesday he declined to guarantee a vote next week.
On Tuesday the Senate approved legislation raising the federal government’s debt limit by $2.5 trillion, taking the total figure to $31.4 trillion.
The Senate vote came just hours before a potential default on outstanding financial obligations, which would have had enormous consequences for the recovering US economy. The additional debt limit removes the prospect of a first federal default until 2023 at the earliest.
Senate approves raising debt limit to $31.4 trillion
The US Senate has approved raising the federal government's debt limit by $2.5 trillion, to about $31.4 trillion, and forwarded the measure to the House of Representatives to avoid a debt default.
A deal last week between Democratic Senate Majority Leader Chuck Schumer and his Republican counterpart, Mitch McConnell, set the stage for Tuesday's vote, bypassing normal Senate rules requiring at least 60 of the chamber's 100 members to agree on most legislation.
Stimulus check loopholes
Stimulus checks were to help those struggling financially after the pandemic hit. Others took advantage...
Ira Rennert, worth $3.7 billion according to Forbes, did not appear to need the cash infusion offered by the CARES Act. After all, his 62,000-square-foot Hamptons home is one of the largest in the country, so he was unlikely to get cabin fever during lockdown, let alone have trouble buying food. Nevertheless, Rennert, who made his fortune as a corporate raider in the ’80s and ’90s, got a $2,400 check from the government.
George Soros, who’s worth $8.6 billion, didn’t need the CARES cash, either. Neither did his son, Robert, himself worth hundreds of millions. But they, too, both got checks.
ProPublica, using its trove of IRS records, identified at least 18 billionaires who received stimulus payments, which were funded by US taxpayers, in the spring of 2020.
Hundreds of other ultra-wealthy taxpayers also got checks.
Congress passed the American Rescue Plan (ARP) back in March and the $1.9 trillion relief package expanded the decades-old Child Tax Credit program to include direct monthly payments for the first time. However, only one year of funding was ensured by the ARP and, unless Congress is able to pass an extension in the near future, the monthly payments will end with the December installment.
But what does all this mean for tax filing in 2022? Can you still rely on a Child Tax Credit to reduce the size of your family’s tax bill, or even use it to boost a tax refund?
What is the future of the Child Tax Credit?
The Build Back Better bill includes a one-year extension of the Child Tax Credit that has been in place since July, offering direct monthly payments to eligible families. President Biden is desperate to secure an extension before Congress breaks for Christmas but is yet to convince all of his party's Senate caucus to support the bill.
The final payment of the Child Tax Credit is today
It has arrived!
The looming expiration of President Joe Biden’s Child Tax Credit will have a lasting negative impact on many American families, with millions of children at risk of slipping back into poverty, according to research from the Center on Budget and Policy Priorities.
The last of six monthly payments, up to $300 per child, is scheduled to hit bank accounts today. If not renewed in the new year, the financial hit will come just as inflation approaches highs not seen in decades.
Initial data shows people have used their tax credits for necessities like food, clothing, shelter and utilities, and the lowest income families have been using the cash pay off debt. About a third of households used the money for school expenses, and one in four families with young kids used it to cover child-care costs, according to the US Census Bureau.
Good morning and welcome to our daily live blog for 14 December 2021, bringing you the latest news on President Biden's Build Back Better bill, whose provisions include funding for schemes such as the expanded Child Tax Credit.
We'll also be providing updates on a possible fourth federal stimulus check, in addition to information on unemployment and Social Security benefits.