Today we’re going to talk about money, money, money—or more precisely, government stimulus payments.
Several rounds of federal and state payments directed at individuals in 2020 and 2021 were intended to help people cope with the pandemic’s shock to the economy.
Each of them has different rules, but all of them are pegged to taxable income. In a recent report, the California Policy Lab estimated that up to 2.2 million eligible Californians will not get up to $5.7 billion in federal payments because they earn too little to file tax returns and therefore are not popping up in government computer systems.
That means it is important to file your 2020 federal and state tax returns to get all the payments that you qualify for. The deadline is May 17 for both this year.
Here’s a quick guide to the government checks.
What payments were made by the federal government?
The federal government has sent out three rounds of checks, which most eligible people should have received by now.
The first payment, for up to $1,200 per adult and $500 per child, went out starting April 2020. The payments were phased out at higher levels of taxable income, based on your 2018 or 2019 tax return.
The second payment, for up to $600 per adult and child, went out in December and January. Again, the payments were reduced for those with higher incomes.
The third payment, for up to $1,400 per adult and child, started going out last month. And like the other two, the payments are being phased out at higher income levels, reaching zero for individuals earning $80,000 and couples earning $160,000.
What if I didn’t get a payment?
If you didn’t get the first two federal payments but think you might be eligible, you can calculate any amount due and claim a credit on your 2020 tax return. At this point, that’s the only way to catch up on those payments.
For the third payment, the IRS calculated eligibility and amounts based on 2019 returns. If your income dropped in 2020, you are likely to qualify for a bigger payment. After you file your 2020 return, the IRS says, it will send out any higher amount that you are owed. If you still do not get a payment and think you are owed one, you can file for a credit when you complete your 2021 return.
What is the Golden State Stimulus?
In February, California lawmakers approved a separate state stimulus payment of $600 to $1,200 for residents who qualify for the earned-income tax credit or who earned less than $75,000 last year.
California is not sending out checks under this Golden State Stimulus program. Instead, any money you are entitled to will be added to your tax refund or reduce your tax due when you file your 2020 state return. Unlike the federal payments, residents in the country illegally can receive the California funds as long as they have a valid tax identification number.
San Francisco also runs a separate stimulus program for low-income residents. And yes, that, too, requires a tax return.
Will there be a fourth federal stimulus payment?
No more big checks are in the works.
But as part of the March stimulus package, many taxpayers with children will get a higher child tax credit, and the Treasury Department is supposed to start paying it out in monthly installments of $250 to $300 per child starting in July.
On Wednesday, the Biden administration also proposed $1.8 trillion in spending increases and tax cuts, including new federal support for child care and education, financed by higher taxes on wealthier Americans.
You keep telling me to file my taxes. Could you do them for me?
Older adults, low-income residents, the disabled, military personnel and those who speak limited English can get assistance from two state programs. Visit www.ftb.ca.gov/help/free-tax-help/index.html/.