Through September, the buzz in the Golden State centered around the long-awaited third stimulus check announced by Gov. Gavin Newsom. Around 23 million Californians are finally getting the long-awaited Middle-Class Tax Refunds, nearly 4 months after another round of relief was announced by the state government.
The cashback is the first stimulus check that is meant to provide relief from the record inflation that has severely affected the finances of low and moderate-income households across the US. prices of goods and services began to spike even as the third stimulus checks began reaching people after the American Rescue Plan Act was signed by President Biden in March 2021.
The record inflation rate was due to a combination of factors that included the supply issue following the pandemic, the downturn in the world economy, the war in Europe, and also the direct push of trillions of dollars into the US economy that increased the purchasing power of low and middle-income families at an unprecedented level.
Even as the production and supply of foods were hit, people began to spend more on products even as expenditure on services took a nosedive thanks to the drop in tourism and the hotel business. For the first time in their life, many low-income families had money to spare at the end of the month even after clearing their dues.
Even those who spent the money on refunding credit payments found they suddenly had money to spend on their credit cards.
This led to a sudden spurt in the purchase and with the supply bottleneck affecting the availability of goods, the prices were bound to go up. And it did at a rapid pace.
And the rate has constantly stayed above the 8% mark since the beginning of 2022 and touched 9.1% in June, the highest since November 1981.
This rapid increase has led the Federal Reserve to increase lending rates to arrest the spike in sales. While it has not been able to arrest inflation, it has only added to the woes with higher lending rates.
California Stimulus Check Details
With its vast budget surplus, the California government under Democrat Gavin Newsom has been able to move ahead with the third round of stimulus checks. the state reported a surplus of $97 billion this year, prompting Gov. Newsom to declare a $308 billion state budget.
Around $9.5 billion will go towards the cashback which is primarily focused on giving residents relief from gasoline prices, which are the highest in the US. gas prices closed at $6.38 in September and touched $7.4 in some places even as the national average remained at around $3.9 to the gallon.
How much you receive under the Middle-Class tax rebate will depend on several factors, primarily on the state-adjusted gross income as filed in the 2020 income tax returns in 2021. Taxpayers will receive either $350, 250, or $200 based on the three tiers of income level. And additional income will go out to a maximum of one dependent.
The first tier is for individuals with an AGI of $75,000 or less for 2020. They will get a $350 stimulus check plus the same amount if they declare any dependent. For joint filers with an AGI of $150,000 or less, the amount is the same for both filers, plus the same amount for a dependent. Joint filers in this tier will get the maximum possible of $1,050 if they claim for a dependent.
The second tier is for individual earners between $75,001 and $125,000 and joint filers earning between $150,001 and $250,000. They will get $250 and $500 respectively plus another $250 for any dependent.
The third tier is the higher income group above which individuals and joint filers will not receive any amount. For individuals, the tier is between $125,001 and $250,000 and for joint filers, it is between $250,001 and $500,000. They will get $200 and $400 respectively and another $200 for any dependent.
The Franchise Tax Board has set up a tool to estimate the amount a resident can expect.
Eligibility For The California Stimulus Check
Residents are eligible if they have filed their income tax returns for 2020 by October 15, 2021. You must also meet the California AGI (CA AGI), limits as described above.
You should not be eligible to be claimed as a dependent in the same tax year (2020) and must have been a resident of the state for at least 6 months in the tax year 2020. You should also be a resident of the state on the date the payment is issued.
When To Expect The Middle-Class Tax Refund
Taxpayers in California will receive their payment through debit cards and direct deposit to accounts. Franchise Tax Board has partnered with Money Network to provide the cash rebate through debit cards.
The first Californians to receive the direct deposit of the MCTR payments are those who have received either the Golden State Stimulus I or II. They are expected to receive the money in the bank account starting October 7, 2022, through October 25, 2022. The remainder of the direct deposits is expected between October 28 and November 14, 2022.
The stimulus check debit cards have been planned between October 25, 2022, and December 10, 2022, for Californians who receive payment under the Golden State Stimulus Check. the remaining debit cards will be mailed by January 15 next year.
Almost 95% of the tax refunds will be sent by the end of this year through a combination of direct ban deposits and stimulus check debit cards.
Residents will receive their payments from the US Postal Service through debit cards if they have filed paper returns instead of online, received their Golden State Stimulus Check by check, or had a balance due.
If they have received their previous payment by check perspective of filing methods, they can expect a debit card this time. Residents who have received their tax refund for 2020 through direct deposit can also expect their payment to be through debit cards this time around.
