January 21, 2022

What 2022 means for incentive checks and the tax credit for children

Bill Oxford/Getty Images/iStockphoto

Bill Oxford/Getty Images/iStockphoto

So far, most US adults have received $3,200 directly stimulus payments — $1,200 from the CARES Act in March 2020, $600 at the end of that year, and then $1,400 from the U.S. bailout under the Biden administration in 2021. That doesn’t count eligible dependent payments or other incentive money such as extended unemployment or advance payment of the child tax credit.

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But all good things must come to an end, and it now appears that with 2022 just around the corner, the pandemic stimulus source has largely dried up. If you were to make another round of tax-free cash payments in 2022, you’ll probably be disappointed. It’s almost certain now that there won’t be a fourth episode, but there’s more to it.

The politics and economics of the time make more controls unlikely

Despite the arrival of a highly contagious strain of the virus and a surprising spike in infections, the social and economic conditions that justified the first three rounds of pandemic stimulus have changed.

“Despite the ongoing hardships experienced by millions of Americans in the US, a new stimulus check seems unlikely at this point,” said Olivia Tan, a Florida personal finance coach and co-founder of CocoFax. “The US economy will continue to grow at a healthy pace through 2022, with Michael Feroli, JP Morgan’s chief economist, expecting job creation to drive unemployment down to about 3%. In addition to strong GDP growth of 3%, he also thinks the outlook for wages and inflation looks good for next year.”

In short, the economy doesn’t seem to need saving. But more importantly, it’s a midterm election year and the political will needed for such a heavy lift just isn’t there — the Democrats couldn’t even get President Joe Biden’s Build Back Better plan past their own wafer-thin majority. In addition, as CBS News points out, many economists have linked stimulus payments directly to rising inflation — and another round could very well push prices even higher.

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But many still support more stimulus

Despite a lack of consensus and the roadblock to the political stalemate, millions of Americans are still in financial turmoil — according to CBS, 1 in 4 are now struggling to cover basic household expenses. The omicron variant has closed colleges, canceled thousands of vacation flights and put much of the leisure and entertainment industry back into hibernation, according to an analysis by JP Morgan.

There has been pressure from special interest groups — both Tan and CBS citing advocacy by the Senior Citizens League calling for new incentives for older Americans, for example — and a Change.org petition for $2,000 recurring monthly payments is approaching 3 million signatures. .

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The child tax credit is dead for January

In addition to the Economic Impact Payments, most parents received extra help from the extension of the child discount. The US bailout plan increased the credit to a whopping $3,600 per child. For the first time ever, half of the full credit was prepaid as monthly payments throughout 2021, but those payments have expired.

The credit would have continued into 2022 had Congress passed Biden’s Build Back Better legislation, but talks between the president and West Virginia Sen. Joe Manchin, a holdout in his own Democratic party, failed. That is why it is now certain that no advances on the child discount will be paid in January.

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But maybe you’ll get two in February

A local CBS affiliate recently reported that Biden hasn’t given up on Build Back Better and that the government could try to break the legislation into smaller pieces that have a greater chance of being passed individually. One of those minor breaking points of the bill would be an extension of the child tax credit for 2022.

If successful, there is likely to be an additional payment included to compensate for the advance not spent in January. That payment would arrive in February, along with the payment already scheduled for that month, giving eligible Americans two payments in the second month of the year.

Anyway, half of the credit is still waiting

While the fate of the child discount for 2022 is uncertain, one thing is certain. The most someone has received in the form of advances for the 2021 credit is $1,800 — they will receive the other half of the fully refundable credit when they file their 2021 tax returns this year. A minority of households have omitted advance payments altogether and are getting the whole windfall at tax time.

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This article originally appeared on GOBankingRates.com: What 2022 means for incentive checks and the tax credit for children

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