US stimulus checks | News summary for 26 January
- US unemployment falls to the lowest rate since the start of the pandemic at 3.9%
- You can still claim the full value of the Child Tax Credit
- Tax season 2022 began on Monday, 24 January - How long do you have to file your taxes?
- Payment schedule for Social Security checks across 2022 released
- Stimulus checks linked to soaring inflation across recent months and a 7% annual price increase
- IRS boss Chuck Rettig warns of tax refund delays: "Avoiding a paper tax return is more important than ever this year"
- You can now use SNAP food stamp benefits in US restaurants
- Thousands have their student loan debt cancelled after Navient agreed to a $1.85bn settlement across 39 states
Useful information & links:
- What was the date of the three federal stimulus checks sent out so far?
- Social Security beneficiaries could soon get a fourth stimulus check from the SSA
Child Tax Credit
- Congress let the Child Tax Credit expansion expire in December, withdrawing payments for millions of families
- How to calculate the full entitlement in Social Security benefits
- SSA announces payment structure for retirees?
Should I report income from a hobby in my tax return?
Tax season can always be a confusing time but the IRS is using its Twitter feed to run through some frequently asked questions from filers. Not sure whether you need to include income from a hobby on your tax return? Here's everything you need to know...
Last year President Biden passed a huge relief package which included an overhaul of the Child Tax Credit, providing a monthly direct payment for eligible families for the first time. The programme was very popular with recipients but it came to an end last month after Congress was unable to pass an extension.
Secretary of the Treasury Janet L. Yellen said: “Since July, monthly payments of the Child Tax Credit have helped millions of families pay for essentials such as food, childcare, and other household needs as those expenses arise."
Lawmakers demand Child Tax Credit expansion
“Without the expanded credit, nearly 10 million children will be thrown back into or deeper into poverty this winter, increasing the monthly child poverty rate from roughly 12% to at least 17%."
“After historic progress, it is unacceptable to return to a status quo in which children are America’s poorest residents and child poverty costs our nation more than $1 trillion per year. Raising taxes on working families is the last thing we should do during a pandemic.”
The true cost of the Child Tax Credit expiration
New research from the Center on Poverty and Social Policy at Columbia University has suggested that instances of childhood poverty could rise by between 12-17% this year after the expiration of the boosted Child Tax Credit programme. For the last six months the IRS has been distributing an enhanced version of the credit in the form of a monthly direct payment but that has stopped after Congress failed to extend the programme last month.
Anyone who received an 'Economic Impact Payment', better known as a stimulus check, in 2021 should have received Letter 6475 from the IRS in recent weeks. This letter outlines whether the recipient is eligible to claim the Recovery Rebate Credit, topping up the amount that they received from the stimulus check with an additional payment. Here's everything you need to know...
IRS struggles with massive tax return backlog
Tax season 2022 got underway on Monday, but already there is concern that the IRS is ill-equipped to deal with a busy filing season. The last two years' tax filing was confused and delayed by the pandemic, with the IRS also forced to oversee various relief programmes like the stimulus checks and the Child Tax Credit.
As a result the agency has a backlog of some six million unprocessed tax returns from previous years. Here's how that could affect your filing this year and could even delay the distribution of your tax refund...
Biden blames Manchin for Child Tax Credit expiration
President Biden had hoped to end his first year in office with the passage of the Build Back Better bill before Christmas, which would have provided funding for some ambitious social spending initiatives and investment in the green economy. Unfortunately he could not pass the legislation without the support of moderate Sen. Joe Manchin, which the West Virginia lawmaker was unwilling to provide. Biden is reportedly considering removing the Child Tax Credit expansion from the proposals to ensure that it can be passed this year.
IRS fact sheet on Recovery Rebate Credit
A reminder that Americans who didn't receive a stimulus check in 2021 despite being eligible, or didn't receive the full amount they were entitled to, can claim their money when they file their return in tax season 2022.
To do so, taxpayers must claim a Recovery Rebate Credit in their tax return.
To help resolve doubts and queries that people might have about the Recovery Rebate Credit, the IRS this month released an in-depth fact sheet on the process - take a look.
You'll also find a Recovery Rebate Credit FAQs page on the IRS website.
Tax season 2022: most filers have until April
In tax season 2022, which began on Monday 24 January, individuals and corporations have until Monday 18 April to get the necessary forms filled out and turned in. Already, however, the IRS has extended the deadline for a few states that have experienced natural disasters that could make filing more difficult.
(Photo: Scott Olson/Getty Images)
File taxes electronically to avoid delays, IRS says
The IRS commissioner, Chuck Rettig, is urging US taxpayers to file their 2021 federal taxes electronically to avoid delays in having their return processed and, if they are due one, receiving their tax refund.
Earlier in January, National Taxpayer Advocate Erin M. Collins released her 2021 Annual Report to Congress, revealing that the IRS still had a backlog of around 11 unprocessed returns from the previous year’s tax season.
Collins noted that delays were particularly prevalent among returns filed in paper form. "Paper is the IRS's Kryptonite, and the agency is still buried in it,” she said.
Tax season began on Monday 24 January.
There have been three federal stimulus checks in the US since the beginning of the covid-19 pandemic in early 2020. Two under former President Trump, and one since President Biden took office in January 2021.
The Social Security Administration (SSA) oversees a number of programs designed to provide additional financial support for close to 70 million Americans.
For Americans with disabilities, the Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) both play a vital role in providing financial support. The SSDI programme provides funds for disabled American and certain family members, provided that the subject of the claim paid sufficient Social Security taxes during their time in work.
Taxpayers who missed out on EIP 3 could be due a nice surprise
If you didn't qualify for a third Economic Impact Payment or got less than the full amount, you may be eligible to claim the 2021 Recovery Rebate Credit based on your 2021 tax year information. As the stimulus check was sent out in the whole year, changes to your tax status could mean at some point in the year could mean you were eligilbe to receive the check.
You will have to file a 2021 tax return if you think you are eligible, and your 2021 Recovery Rebate Credit will reduce any tax you owe for 2021 or be included in your tax refund, totaling $1,400.
While very few states have committed to a full round of stimulus checks, some have introduced extra pandemic-related support that state residents can access.
The standout state is California, which has the only real form of stimulus checks remaining, and these are just the last payments of a plan set up last year.
What did families spend the Child Tax Credit on?
According to the Treasury Deparment, the Census Bureau’s Household Pulse Survey data showed that middle-income families spent the first monthly credit on:
- 55 percent on food
- 26 percent on clothes
- 23 percent on costs related to school and afterschool
- 50 percent on bills relating to their house, including mortgage or rent
What the Treasury Department said about the final Child Tax Credit monthly payment
Since July, monthly payments of the Child Tax Credit have helped millions of families pay for essentials such as food, childcare, and other household needs as those expenses arise. The lives of tens of millions of children across the country have improved because families have received tax relief when they need it most.
The Child Tax Credit, widely hailed as a significant measure in reducing childhood poverty, is awaiting its final rollout with the filing of this year's tax returns. Once recipients of the credit have done so, they will receive the final lump sum of up to $1,800 per child, providing one last boost to finances before the scheme draws to a close.
The first payment sent out in July reached a staggering 59.3 million children, around 88 percent of the nations entire children. This number only grew, reaching 61 million children by the date of the final monthly payment on December 15.
What did the CTC letter say?
We respectfully ask you to work to extend the American Rescue Plan’s (ARP) expanded Child Tax Credit (CTC) as a centerpiece of the legislation... The consequences of failing to extend the CTC expansion are dire, particularly as families face another wave of the covid-19 pandemic... Raising taxes on working families is the last thing we should do during a pandemic.
Will the Child Tax Credit be expanded?
Democratic Senators Michael Bennet (Colo.), Sherrod Brown (Ohio), Cory Booker (N.J.), Raphael Warnock (Ga.), and Ron Wyden (Ore.) sent Biden and Vice President Harris a letter on Wednesday pushing for the inclusion of an expanded Child Tax Credit in a deal on Build Back Better.
When Congress passed the American Rescue Plan in March 2021, the structure and amount of the child tax credit was altered. The legislation mandated that the Internal Revenue Service (IRS) distribute a monthly advance of the payment between July and December 2021, then send the final six payments as a lump sum during the 2022 tax season.
The value of the credit was increased from a non-refundable $2,000 credit, to a fully refundable credit worth $3,600 ($300 per month) for children under six, and $3,000 ($250 per month) for children between six and seventeen.
Child poverty to have a big rise in January
According to research by the Center on Poverty and Social Policy at Columbia University, childhood poverty is to increase from 12 percent to 17 percent by the end of January, the highest amount since December 2020. For black and latino children, this rises to 1 in 4 children below the poverty line.
“The power of what the child tax credit did was getting funds directly to those kids who need them, there is simply no policy that is as effective as that,” said Andrew Stettner, a senior fellow at The Century Foundation, “The reductions were historic and it is criminal that it’s so controversial to take a simple step to rectify the inequality our modern economy causes.”
The other letter is Letter 6475. If you received a 'Third Economic Impact Payment', better known as a stimulus check, in 2021, then the letter will tell you whether you are eligible for some more money in the form of the Recovery Rebate Credit.
Basically, if you didn't receive the full stimulus check amount when you were eligible, or you missed out entirely, then you could receive the stimulus check in the form of a tax deduction or refund.
As is made clear in the letter, anyone who received the Child Tax Credit must file a tax return for 2021. This is because the six months’ payment received in 2021 was only halve of the total amount on offer from the boosted program, with the remainder to be claimed in the form of a tax credit when a tax return is filed.
Follow the instructions on your Letter 6419 and file your taxes so you can claim an additional tax credit worth up to $1,800 per child to reduce your tax bill or to increase the size of a tax refund.
Two important letters for your tax return...
To facilitate as easy-a-filing as possible, the IRS has sent multiple letters and documents to let you know what you need to pay, or money you can be eligible to receive.
These are: Letter 6419, relating to the Child Tax Credit, and Letter 6475, about the third stimulus check.
Nailing your tax return first time
It is of large importance that taxes are filed correctly. If there are errors, the IRS could do a manual review of your filing, which would inevitably lead to a delay in getting the results back. The refund is only sent to you once a case has been fully checked.
Tax season 2022 began on Monday, 24 January which means that the IRS is now accepting and processing tax returns relating to 2021.
Biden on Build Back Better warpath
President Biden is set to meet with corporate executives on Wednesday to discuss his Build Back Better proposal, which has been dead in the water since Joe Manchin killed it at the end of last year.
Biden is expected to discuss with them how the agenda “will make the US economy more competitive, increase worker productivity and workforce participation, lower inflation over the long-term, and strengthen business growth.”
While he may be able to convince them, it is his own party members that he needs to convince if the bill is to get on to his desk.
Good morning! Welcome to the AS USA fourth stimulus check live feed, giving you all the latest news on direct payments and other forms of financial relief available in the United States. We will also keep you up to date on the ongoing tax season 2022 with tips on how to complete your filing.