While a new round of federal stimulus checks isn’t on the horizon for Americans, some states are providing their residents with payments to help cope with the rising costs of living. Keep in mind, though, the Internal Revenue Service (IRS) has indicated that refunds in 2023 might be smaller due, in part, to the absence of Economic Impact Payments for 2022.
Stimulus checks, which are direct payments from the government to individuals during economic hardships, are designed to stimulate the economy by boosting consumer spending. Recipients have the option of receiving a paper check or having their stimulus payment directly deposited into their bank accounts from the IRS.
Let’s look at a few states that are rolling out their own IRS stimulus payments
However, not everyone is eligible for a stimulus check. For example, U.S. citizens and residents who aren’t claimed as dependents on someone else’s tax refund usually qualify. California initiated one-time inflation relief payments starting last fall.
The Middle-Class Tax Refund delivered payments of up to $1,050 to millions of taxpayers. It’s worth noting that about 15% of the 9.6 million debit cards sent out were never activated. If you received a letter indicating your card wasn’t activated, and you don’t have the card, you can contact Money Network to claim your payment. The IRS also extended tax filing deadlines for Californians affected by recent winter storms.
Stimulus checks in Maine, Georgia, New Mexico, and New Jersey
Maine has sent out payments to help families stay safe and warm as part of its Emergency Winter Energy Relief Plan. Individuals received $450, and married couples and families received $900. These payments went to those who met income requirements and filed their 2021 Maine income tax return as a full-year resident by October 31, 2022.
Georgia is providing a 2022 Surplus Tax Refund to eligible residents. The refunds range up to $250 for single or married separate filers, $375 for heads of households, and $500 for married joint filers. Refunds should be issued within six to eight weeks of the April 18 deadline, which means they could arrive through May and into June.
New Mexico is preparing to send out another round of rebates in June. Single filers will receive $500, and other filers, such as married taxpayers filing jointly, heads of households, and surviving spouses, will receive $1,000. Payments will be automatic for those who filed a 2021 New Mexico Personal Income Tax return and weren’t declared as a dependent on another taxpayer’s return.
New Jersey is offering up to $1,500 to eligible taxpayers through the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) property tax relief program. Payments will be distributed throughout May.
Remember, these initiatives aim to provide financial relief to residents amid the current economic challenges. Be sure to check your eligibility and claim your due stimulus where possible!
What is the Middle Class Tax Refund in California?
The Middle Class Tax Refund (MCTR) is a one-time payment that was developed by California legislators to provide economic relief to eligible California taxpayers who filed their 2020 tax return by October 15, 2021, and met the eligibility criteria.
To qualify for the MCTR, you must have been a resident of California for at least six months during the 2020 tax year and be a California resident on the date the MCTR payment was issued. Eligibility and the amount received depend on your income.
The MCTR payment is not taxable for California state income tax purposes, but those who received more than $600 from the MCTR will receive a 1099-MISC for this payment. However, after initially stating that MCTR payments were taxable, the IRS has issued new guidance clarifying that Californians will not need to declare the MCTR on their 2022 tax returns.
How do stimulus checks benefit the economy in the United States
Stimulus checks benefit the United States economy by boosting consumer spending, personal income, personal savings, and economic growth. The payments provided under the Consolidated Appropriations Act in January 2021 coincided with a 3% monthly increase in real consumer spending and a 10% rise in real personal income.
However, the personal savings rate also increased that month, reflecting household preferences to mostly save the money instead of spending it. While saving money is less likely to stimulate the economy in the near-term, it may help in the long-term by reducing the need to take out riskier loans in the future.
The stimulus payments enacted under the CARES Act were estimated to have boosted the country’s economic output by 0.6% in 2020, according to the Congressional Budget Office. By comparison, that amount is about one-half of the economic boost provided by the unemployment benefits that were enhanced through that legislation and 33% less than the boost from the first tranche of Paycheck Protection Program loans.
Moreover, the US stimulus checks could power a rebound in other countries as well. When the US economy is strong, that strength tends to support global activity as well. The International Monetary Fund has signaled that the estimates for the country’s growth will be marked up further when it releases fresh forecasts.
America has been willing to spend to combat the pandemic’s economic fallout from the start. America’s initial pandemic response spending, amounting to a little less than $3 trillion, was 50% larger, as a share of gross domestic product, than what the United Kingdom rolled out, and roughly three times as much as in France, Italy, or Spain.
Among a set of advanced economies, only New Zealand has borrowed and spent as big a share of its G.D.P. as the United States has.
