Money and finance news live updates: January unemployment, IRS letter 6475, claim $1,400, Child Tax Credit, tax returns...
Headlines
- Initial unemployment claims decrease by 23,000 to 238,000.
- Tax season is here, how do you know if your return was accepted by the IRS?
- Many students struggle to cover basic costs like those related to housing and food, in addition to tuition.
- With the stock market on rocky terrain, many wonder if tax season will have a further impact.
- Parents can expect larger tax refunds thanks to the child tax credit payments.
- How is cryptocurrency taxed?
Helpful information & links
Tax season
- To avoid delays in receiving tax refund, file early says the Internal Revenue Service
- What is the Letter 6419?
Child Tax Credit
-Can the refund per child be higher than last year?
Read more from AS USA
The IRS urges families to hold onto any letters send by the agency as they may be helpful to filers when they submit their tax returns. The due date to submit your return is 18 April. So far, unlike in 2020 and 2021, no extension to the tax filing deadline has been announced.
Two members of Congress introduce bill to end child poverty
Representatives Mondaire Jones and Rashida Talib have introduced a new bill, called the End Child Poverty Act to tackle the issue. This comes as negotiations over the Build Back Better bill collapse, leaving little chance of the child tax credit being extended through that avenue.
The bill includes a universal monthly child allowance that would be "set equal to the difference between the one-person poverty line and the two-person poverty line, which is currently $393 per month." Unlike the current version of the child tax credit, this program would be distributed by the Social Security Administration and children would be enrolled at birth.
The two other measures are tax credits. The first would be an "annual $600 fully refundable credit for adult dependents. This replaces the current non-refundable $500 credit for adult dependents." The second is a fully refundable tax credit for single/married filers worth $600/$1200 that "phases out at $20,000/$40,000 of income."
Senator Joe Manchin says Build Back Better bill is dead
Just about a month after Senator Joe Manchin of West Virginia broke off negotiations with the White House over the Build Back Better bill, he told reporters on Capitol Hill this week that the bill was dead.
The White House and other Democrats had alluded to the fact that the parties were still meating, but the Senator's comments this week show that there is little hope that an agreement will be reached.
It doesn’t matter your age, if your income exceeds certain thresholds you will need to file a tax return. This is applicable to children of all ages as well, unless their income, earned and unearned, is below a limit and another taxpayer can claim them as a dependent on their return.
However, if the dependent has earned income, they may want to file a tax return in order to get a tax refund or take advantage of tax provisions. Additionally, a parent will want to make sure that adding a child’s income onto their tax return doesn’t push them into a higher tax bracket. Read more.
Where did initial unemployment claims increase?
For the week ending on 22 January, Alabama was the only state to see an increase in initial unemployment claims. States that saw the greatest decreases in California (-8,078), Pennsylvania (-7,967), New York (-5,722), New Jersey (-4,818), and Kentucky (-4,049).
How many people quit their job in December?
The Bureau of Labor reported December to 4.3 million down -161,000 from November. Sectors that saw increases in November included Trade, transportation, and utilities and Information industries.
IRS sending letters for Child Tax Credit and stimulus payments
The IRS sent out two mailings to tax payers this year which they will need in order to correctly file their 2021 tax returns. Parents who benefited from the advance Child Tax Credit payments should receive a Letter 6419 telling them how much money the IRS sent and how many children they have on file for a taxpayer.
They can use that information to claim the remainder of the credit they are due. Taxpayers that opted out of the payments or families that added a new member will be able to claim the full amount they are eligible for.
Likewise, people that received an Economic Impact Payment, better known as stimulus check, should receive a Letter 6475. If your financial situation changed making you eligible for more of the credit than you received, or again families that added a new member, you will be able to claim the amount due to you.
States across the nation are considering tax changes, eleven set to send direct payments
Lawmakers in 23 states are considering proposals to cut certain states taxes including on income, groceries and gas. Idaho will become the first state to enact a significant tax cut package when Gov. Brad Little signs the legislation headed to his desk.
Included in the bill is a one-time tax rebate of $75 per person. Ten other states are considering similar direct tax rebate payments to their residents.
When you apply for a student loan several factors are taken into account to calculate how much you can receive. One of the key factors for both federal and private loans is the “cost of attendance” at the institution where you are enrolled or plan to enroll.
Tech stocks fall in premarket trading
After one of the worst January performances in years, all three New York indexes experienced four straight days of gains. However, a disappointing forecast for Meta, Facebook's owner, triggered a premarket sell-off of shares in other technology companies. Nasdaq futures are down nearly two percent.
Meta saw its stock price plummet by 20.5 percent after reporting for the first time a decline in global active daily users. The company blamed competition from TikTok and Apple's privacy changes.
Other companies that saw significant value drops were Pintrest, Snap Inc, Spotify and Twitter with share prices dropping between 7.3 and 15.9 percent.
Alphabet, Google's parent company, and Apple saw their price slide by around one percent and Amazon dipped over three percent.
DC day-care workers to get one-time direct payment for up to $14,000
The Washington DC Council is still working out how to raise the pay of day-care workers so that this vital but underpaid group has take-home pay comparable to public elementary school teachers. This year however, in order to make sure workers get the money quickly eligible workers who care for babies and toddlers can apply for a direct payment.
Depending on their role, childcare workers will be eligible for a one-time check of between $10,000 or $14,000. The money will come out of a $53 million fund, which was created specifically for the purpose, set aside from a tax hike on the city’s highest earners last year.
Eligibility requirements to claim Child Tax Credit
The American Rescue Plan that Democrats pushed through Congress in March enhanced the Child Tax Credit for the 2021 fiscal year. The amount of the credit increased from $2,000 to $3,600 for each child five and younger and $3,000 per child under 18 at the end of the 2021.
Eligible households that claimed a qualifying child on a 2019 or 2020 tax return were automatically enrolled in the advance payment scheme, that was part of the changes for 2021, but they had the option to opt out and take the credit as a lump sum added to their tax refund in 2022.
For those that received the advance payments, half the credit was paid to families in six monthly installments last year sent by the IRS. Families should have received a Letter 6419 informing them how much they received so that they can calculate the remaining value to claim on their 2021 tax returns due by 18 April.
Still there is confusion, especially in the case of divorced parents. Which one can claim the Child Tax Credit?
With tax filing season in full swing, there has never been a more important time to make sure your bookkeeping is in order.
Something that may go under the radar is what taxes children have to pay. For the majority of families it will be of no concern. However, children that have considerable money invested in their name will need to file taxes. It is certainly something to keep in mind this tax season.
The American Rescue Plan, besides approving a third round of stimulus checks to every eligible American for up to $1,400, enhanced and expanded several tax credits for the 2021 fiscal year. Households with children could especially benefit from these changes resulting in a larger tax refund when they file this year.
A few of the tax credits the legislation enhanced include the Child and Dependent Care Credit, the Earned Income Tax Credit and the Child Tax Credit, which also came with an advance payment scheme in 2021. Households that welcomed a new member to the family last year could potentially see another $1,400 stimulus check.
But you will need to file a 2021 tax return in order to take advantage of the changes.
IMF: Fighting covid will help economy recover faster
The covid-19 pandemic remains the biggest risk to the global economy, and is contributing to rising inflation in many countries, International Monetary Fund chief Kristalina Georgieva said on Wednesday.
Georgieva urged redoubled efforts to boost vaccinations and beef up defenses against the coronavirus, saying such moves -- coupled with interest rate increases now being eyed or executed by central banks -- would help ease supply chain disruptions and combat inflation.
"Pandemic policy is economic policy," the IMF chief said. "The biggest risk for the performance of the world economy remains this year covid and the disruption it causes."
The IMF chief conceded that inflation had turned out to be a "more significant economic and social problem" than expected, and said economists had underestimated the impact of both delayed consumption and climate shocks on food prices.
Georgieva noted that vaccination rates in 86 countries had not reached a target of vaccinating at least 40% of their populations in 2021, and vaccination rates were at just 5% in low-income countries, compared with 70% in rich countries.
"Why is this a problem? Because what we do is we retain a breeding ground for more and more and more covid variants," she told an event hosted by the Washington Post.
The IMF last week cut its economic forecasts for the United States, China and the global economy, and said uncertainty about the pandemic, inflation, supply disruptions and US monetary tightening posed further risks.
Child Tax Credit is over, but has plenty of supporters in the Capitol
The expanded Child Tax Credit has ended, but plans are still afoot to be included in future bills in Congress.
"The first payment, in July, kept 3 million children out of poverty," says Megan Curran, policy director at the Columbia University Center on Poverty and Social Policy. By December, Curran says, the benefit was keeping 3.7 million children out of poverty.
Once your taxes have been filed for this year, you will receive confirmation that the Internal Revenue Service (IRS) has checked the return and everything is in order. This will include checking for things such as any outstanding capital gains, or if the correct dependents have been listed.
This confirmation is crucial for you to receive your tax refund.
We are in the opening weeks of the 2022 tax season, and the Internal Revenue Service is encouraging people to submit their tax returns as swiftly as possible. Due to the array of financial supported doled out in 2020, there remains a backlog from the 2021 set of returns that still exists today.
Filing early means your return is likely to be processed faster, due to the system being first-come-first-served. A common phenomenon for the stock market around filing time is a slump in the price of stocks.
Good Morning and Welcome to AS USA's live blog to help you sort through today's financial, labor, and economic policy news in the United States for 3 February.
We will be bringing you the latest on the cryptocurrency market, Build Back Better, important tax information, the status of the Child Tax Credit, and Social Security.