January 21, 2022

Surprise stimulus checks come after the deadline

Next week (Jan. 15) will be the first mid-month period in more than six months when millions of Americans will not receive a child tax credit from the IRS.

Those checks went out last July and continued through December on a monthly basis. President Biden’s Plan to Expand It stimulus checks for another year, however, is on ice — thanks to GOP opposition and at least one Democrat in the Senate. The last one is Joe Manchin from West Virginia, who told a local radio station? in December that his biggest problem with the credit is that it’s too generous. “Do you think people who make $200,000 and $400,000 still get the same child tax credit as someone who makes $50,000, $60,000, or $70,000 and really needs it?” he said. That was the day after he amazed the political world by announcing his “no” to the legislation.

What comes next for child tax credit payments?

An interesting historical footnote about Manchin’s opposition to extending the child tax credit this year, however, has to do with its overly generous nature (as Manchin sees it).

Republicans are actually responsible for that. They made the child tax credit much more generous as part of Trump’s big 2017 tax bill. Until then, eligibility for the credit began to lapse for individuals earning more than $75,000 and parents earning more than $110,000.

Republicans raised those limits to $200,000 and $400,000, respectively. Whatever the case may be, unless political dynamics change — and Manchin changes his mind or the Democrats peel off at least one Republican senator — there won’t be any new tax credit checks for kids for the foreseeable future.

However, there is a silver lining

As we have noted in previous posts, this year’s stimulus control narrative will now take place on two fronts. The first concerns new controls, the possibility of which seems remote at the moment (yet could happen anyway).

The second includes at least one perk already baked in for this year. And that stems from last year’s $1.9 trillion stimulus bill from the US bailout.

All recipients who received six child discount checks in 2021? They also get that same cumulative amount in the form of: a tax credit this year. One they can use when filing their federal taxes. For millions of Americans, they get either a $1,500 or $1,800 credit per child. That’s what those six checks added up (either $1,500 or $1,800 in total, depending on the child’s age).

An even bigger credit

Some recipients also decided that, for whatever reason, they didn’t need or want the six-monthly checks upfront. In that case, they will receive all that child discount money this year. But instead of a check, it will instead be in the form of a flat-rate tax credit.

As a reminder, for any child under the age of 6, a family can get an extended child tax credit of as much as $3,600. Does this mean, if those families decided to waive the monthly checks? They could still get that $3,600 as a tax credit this year, let alone the Senate still hasn’t acted this year to increase the monthly payments.

The same applies, incidentally, if families eligible for the lowest tier of the extended child tax credit have opted for a flat-rate benefit for this year. They can get up to $3,000 as a tax credit.

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