The adoption of the American Rescue Plan by the Democrats in March 2021 paved the way for the Internal Revenue Service (IRS) to start dispatching to more than 169 million US Citizens the third stimulus check or the third Economic Impact Payment (EIP). The en.as.com reports that the stimulus check of $1400 will be given to every eligible man, woman, and child, to enhance household finance in view of the continuing covid-19 pandemic. However, many US citizens were eligible but still did not receive the payments for a variety of reasons.
This happened because the IRS disbursed the stimulus checks on information received from taxpayers, either through an online portal for Non-Fliers or from 2019 or 2020 tax returns. Therefore, any citizen who the tax agency was not aware of or did not have the information would not have received the stimulus checks. However, the slip can be rectified when the 2022 tax season rolls around.
Are citizens who file 2021 tax returns in 2022 in lieu of receiving thousands of dollars?
For thousands of ordinary US citizens who are struggling to meet their household expenses, the third stimulus check, this time for $1,400 under the American Rescue Plan, came a godsend. Along with the third stimulus checks, many measures have been taken for households with children and dependents. This includes the 2021 Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit. The Earned Income Tax Credit can be claimed by workers who don’t have a child or are dependent.
US taxpayers who did not file a tax return in the previous three years or did not furnish information through the Non-Filer online portal were left out of all three EIPs. A notable group that did not receive the third stimulus check is families who welcomed a new member to their household. However, they can claim the $1400 when they file their 2021 tax return next year.
US Citizens who file a 2021 tax return in 2022 could qualify for extra tax benefits in addition to the third direct payment or other EIPs. Citizens can get numerous tax benefits like the 2021 Child Tax Credit, which would give parents up to $3,600 for their newborn. The benefit can also be accrued by parents who have adopted a child under age six and as much as $3,000 for each child six to 17 that wasn’t already claimed as a dependent on a taxpayer’s filing for 2020.
Who can claim the $1,400 stimulus check ?
The $1,400 stimulus check can be accrued by families who had a newborn or adopted a child in 2021 under the third Economic Impact Payment (EIP3) they are due through the 2021 Recovery Rebate Credit. It will also include those taxpayers who didn’t get the full amount due to them from the direct payment scheme. Taxpayers who did not receive the first two Economic Impact Payments (EIP1 and EIP2) will need to file 2020 1040 to claim the 2020 Recovery Rebate Credit.
Who are eligible for the third stimulus check?
The essentials for qualifying for the three stimulus checks include:
The single taxpayer must earn under $75,000, $112,500 as a Head of Household filer, or less than $150,000 for married couples who file jointly. The phase-out is quicker this time than the previous two rounds and includes a cutoff for eligibility at $80,000 for single filers, $120,000 for Head of Household filers, and $160,000 for married couples who file jointly.
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The 10-Word Joe Biden Social Security Quote That Can Change Everything
In August, more than 48.1 million elderly Americans collected Social Security checks. For the vast majority of these recipients — 89%, according to an April poll by national pollster Gallup — their Social Security income is vital to making ends meet.
This reliance on Social Security benefits is also expected to be passed on to future generations. Gallup’s April poll found that 84% of non-retired people expect to rely on their monthly allowance as a “big” or “small” source of income during their golden years.
But despite the importance Social Security plays in the financial well-being of retirees, our country’s most successful retirement program is in serious trouble.
Based on the latest report from the Social Security Board of Trustees, the program expects a long-term cash shortfall of $20.4 trillion, defined as the next 75 years. In addition, the Old-Age and Survivors Trust (OASI), which is responsible for paying the aforementioned 48.1 million retired workers on a monthly basis, is expected to reduce its cash reserves (i.e., the excess money accumulated since its inception) by 2034. If and when the OASI’s cash reserves run out, an overall 23% cut in Social Security checks may be necessary to avoid additional payout cuts through 2096.
Changes need to be made to strengthen Social Security, and the American public is looking to President Joe Biden and lawmakers on Capitol Hill to make this happen.
Democrats and Republicans have approached a Social Security solution from opposite sides
The $64,000 question is: If Congress has known since 1985 that Social Security is not expected to have enough revenue in the long run to cover the current payout schedule, why haven’t lawmakers done anything to fix it?
The answer, to put it bluntly, is political hubris from both political parties.
Democrats are in favor of raising payroll taxes on high-paid workers to generate more income for Social Security. In 2022, all earned income (wages and salary, but not investment income) between $0.01 and $147,000 is subject to the 12.4% payroll tax. But for the 6% of workers earning more than $147,000, every dollar after this point is exempt from payroll taxes. This allows more than $1 trillion in income to escape payroll taxes annually.
Meanwhile, Republicans prefer to raise the full retirement age — the age at which an eligible employee can receive their full retirement benefits. In the 82 years that Social Security has been distributing a monthly benefit, the full retirement age has risen by just two years (65 to 67). By comparison, the average life expectancy in the U.S. has risen from about 63 in 1940 to 77 in 2020. Raising the full retirement age will force retirees to choose between an early claim that would permanently lower their monthly payout, or wait, which would eventually drop the amount of benefits received during their lifetime. In other words, it would reduce Social Security spending over time.
Both fundamental solutions work to strengthen social security, meaning neither side is incentivized to find common ground with their opposition. So the stalemate we have today.
This quote from Joe Biden leaves the door open for sweeping changes in Social Security
However, it is also worth noting that neither individual solution solves the long-term financing gap of Social Security.
Raising payroll taxes for high earners gives an immediate boost to revenue collection and has the potential to extend the solvency of the OASI by years or a few decades, depending on the source of the analysis. But simply raising taxes on the rich won’t bring in enough forecasted revenue to close the projected $20.4 trillion cash deficit through 2096.
Likewise, the GOP’s plan to raise the full retirement age has a flaw. While it would help reduce program spending, raising the retirement age would take decades to take effect. This does not help OASI avoid the potential depletion of its asset reserves and a 23% cut in social security checks by 2034.
But President Biden may have another solution in mind that could completely change Social Security and solidify its foundation.
In 2007, when then-Senator Biden ran for president on the 2008 ticket, he was asked a straightforward question about America’s “third track” by host Tim Russert on Meet the press. Said Russert, “Senator, we have a deficit, we have Social Security and health care lurking. Would you consider looking at those programs, the age at which you qualify, the cost of living, to put it all on the table.” to lay?”
Biden’s final ten-word response to Russert was, “You have to put everything on the table.”
What this response implies is a willingness to break with strict party views and open the discussion to compromise. While neither side’s solution will solve Social Security’s long-term funding gap on its own, a bipartisan proposal could do just that.
Keep in mind that Joe Biden played a part in the last major overhaul of Social Security, which took place in 1983 under President Ronald Reagan. This bipartisan piece of legislation that gradually increased payroll taxes and the full retirement age, and introduced taxes on Social Security benefits above certain income thresholds, was supported by 88 senators, including Biden.
Is President Biden still open to a two-pronged solution?
Of course, a lot has changed in the 15 years since Biden was willing to “put everything on the table”. Senator Biden is now President Biden, and his views on Social Security have evolved a bit.
While campaigning ahead of winning the 2020 election, Biden released a four-point plan to strengthen Social Security:
- Increase payroll taxes for high earners: As noted, any earned income between $0.01 and $147,000 is subject to payroll taxes. Biden’s plan creates a donut hole that exempts earned income between the maximum taxable income limit ($147,000) and $400,000, while reinstating payroll taxes on earned income above $400,000.
- Increased benefits for long-lived recipients: Expenditure for elderly beneficiaries tends to increase later in life. Biden proposed a 1% annual increase in the primary insurance amount (PIA) from ages 78 to 82. Ultimately, this 5% cumulative increase to the PIA would increase benefits for older recipients.
- Increase the special minimum benefit: In 2022, a lifetime low earner with 30 years of coverage will bring home $951 a month, which is well below the federal poverty level. Biden’s proposal would raise the special minimum benefit to 125% of the federal poverty level.
- Switch the Social Security inflationary chain to the CPI-E of CPI-W: Finally, Biden’s plan uses the consumer price index for the elderly (CPI-E) as an inflationary measure, rather than the consumer price index for urban wage earners and white-collar workers (CPI-W). The CPI-W has done a poor job of tracking the inflation that the program’s retirees face.
As you’ll notice, no aspect of Joe Biden’s latest Social Security proposal mentions raising the full retirement age.
Without a supermajority of 60 seats in the Senate, the only way to solve the Social Security funding gap is with votes from the opposition. While Senator Biden has been part of important bipartisan Social Security legislation before, it’s not clear whether he’s open to the idea of ”putting everything on the table” as president.
While Biden’s candor in his 2007 interview offers hope that real change is possible, it seems more likely that the deadlock in Capitol Hill will continue.
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Only 28% Of Americans View Economic Conditions Of Their Country As Excellent
The American economy has experienced much turmoil during the COVID-19 pandemic. Indeed, according to the Motley Fool, the United States of America’s economy has come a long way since the beginning of the pandemic.
Of course, the pandemic sore the unemployment level in the year 2020 reaching a record high. In addition to this, finding work during this period has been extremely difficult. As such, the federal government issued various stimulus and COVID relief payments and credits and unemployment benefits to combat the effects of the pandemic.
The State Of U.S. Economy
Currently, the American economy is has a 7.5% inflation rate or consumer price index. This has surpassed the 40-year record high since 1982, that is, since last month. However, besides this – the unemployment rate has decreased, and it seems the United States of America is ‘getting back to work,’ and their country’s economy is starting to recover. However – a recent survey conducted by the Pew Research Center showed that 28% of participants viewed the country’s economic conditions as good or excellent.
Why Such Economic Pessimism
It seems the supper high inflation rate leads most Americans to have such a negative view of their economy. Indeed close to 90% of participants viewed food and gas prices as higher than last year, 89 and 88 82 percent respectively.
Is Inflation Always Bad?
However, some economists argue that inflation, is at times, a sign of a healthy economy and does not always have to be viewed in a negative light. This is easier said than done though, with living costs increasing – consumers can feel the pinch in their budgets.
The argument, however, is that supply and demand determine the unit price. So if there is an increased demand – and supply does not necessarily change – unit price must increase. This means consumer price index increases or inflation. So an increase in demand could show people are buying more, and this might at least be the signs of a recovering – or active economy.
When supply chain issues are fixed – inflation should decrease. Furthermore, since December last year, unemployment is the lowest it has been since the start of the pandemic. So perhaps such an opposing economic viewpoint – can be replaced, which is realistic, in this light.
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Experts Predict Long Payment Delays From IRS This Season, Provide Few Tips To Speed Up The Process
The IRS faces an enormous backlog due to staff shortages amidst the pandemic, it has recruited new officials, but the challenge remains tough. IRS is yet to process millions of tax returns of last season. The IRS officials are crushed under a ton of paperwork; millions of taxpayers will file their returns this year. The authorities will need to devise a compact strategy to overcome the backlog. CNBC reports that IRS had 6 million unprocessed returns by December 31, this is large numbers, and 2021’s tax returns might take some time.
IRS Workers Are Sparse
Experts suggest various ways to slim the time lag between filing the returns and receiving the payments. CNBC reports that the IRS only had 15,000 workers to answer around 24 million customer calls during the first six months of 2021, one person for 16,000 customers. Experts suggest taxpayers avoid the paperwork to the maximum extent; filers can switch electronic modes to fast forward the documentation. Taxpayers need to use advanced features to process tax refunds and other pending payments quickly. The electronic method will ease the burden on IRS officials during data verification.
Taxpayers Should File Electronic Tax Returns
IRS quoted Erin Collins, the National Taxpayer Advocate; she said, “Paper is the IRS’s kryptonite, and the agency is buried in it. The IRS still transcribes paper returns line by line, number by number, they received around 17 million original paper returns last year, and the processing delays have run as long as 10 months.” The taxpayers need to recheck their tax returns thoroughly; the wrong information might lead to payment abortion and several lengthy delays. The officials, too, will have to go through the same twice or thrice, which makes the process more complicated.
The families who receive enhanced Child Tax Credit or Stimulus payments or both need to exercise extra caution while filing their returns; the IRS issued letters to provide data for the amount allocated. The beneficiaries for the remaining half of the Child Tax Credit payments or extra credit should give complete information in their tax returns. IRS has announced April 18 as the deadline; individuals need to complete the filing process before the date.
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