Tomorrow, Friday, October 7, 2022, California is expected to begin issuing inflation relief payments in response to the increased gas prices and cost of living in the state. Earlier this year, the California State Legislature and Governor Newsome agreed to send Californians who file income tax in the state and make less than $500,000 per year up to $1,050, depending on the income and family size.
How Do I Qualify for This Payment?
First, you must have file your 2020 tax return by October 15, 2021. That means you must have lived in California at least six months during 2020 and filed a 2020 tax return with the state, and must still be a California resident on the date the payment is issued.
Second, you must not be able to be claimed as a dependent on someone else's tax return.
How Much Will I Receive?
How much you receive will depend on your California adjusted gross income (AGI), as well as family size. Taxpayers will receive either $350, $250, or $200, based on income level and number of dependents.
- Single filers with AGI less than $75,000 will receive $350.
- Joint filers with AGI less than $150,000 will receive $700, plus an additional $350 if claiming dependents, for a maximum of $1,050.
- Single filers with AGI between $75,001 and $125,000 will receive $250.
- Joint filers with AGI between $151,000 and $250,000 will receive $500, plus an additional $250 if claiming dependents, for a maximum of $750
- Single filers with AGI between $125,001 and $250,000 will receive $200.
- Joint filers with AGI between $251,000 and $500,000 will receive $400, plus an additional $200 if claiming dependents, for a maximum of $600.
Single filers with an AGI above $250,000 and joint filers with an AGI above $500,000 do not qualify and will not receive any inflation relief payments.
How Will I Receive the Payment?
According to the California Franchise Tax Board, payments will be distributed through direct deposits and mailed debit cards.
If you received the Golden State Stimulus, filed your tax return electronically, and received a tax refund through direct deposit, then the payment should be issued to your bank account between October 7th and October 25th.
If you didn't receive the Golden State Stimulus, then the payment should be issued to your bank account between October 28th and November 14th.
If you did not file electronically or did not receive a tax refund through direct deposit you should receive a debit card between October 25th and December 10th if you did receive the Golden State Stimulus, or by January 15th if you didn't receive the Golden State Stimulus.
What Should I Do With My Payment?
These payments are intended to help Californians cope with the general increased cost of living due to the current high inflation rate, and specifically for the high gas prices Californians are experiencing. Of course, if you're struggling to pay all of your expenses, the payment may be best used to cover your living expenses.
However, if you're managing your finances well enough before receiving the payment, it is always a good idea to save. Whether it's adding to your emergency fund, general savings, or to your investments, an unexpected cash inflow is something that could benefit you in your future.
Escient Financial can provide advice, and even a full financial plan, on the best use for your inflation relief payment and the rest of your finances. Feel free to...
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Digital assets and cryptocurrencies are highly volatile and could present an increased risk to an investors portfolio. The future of digital assets and cryptocurrencies is uncertain and highly speculative and should be considered only by investors willing and able to take on the risk and potentially endure substantial loss. Nothing in this content is to be considered advice to purchase or invest in digital assets or cryptocurrencies.
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