Personal finance and money | News summary for 16 February
- Many states are still offering rental assistance to tenants who are behind on their payments.
- Federal Reserve holds closed door meeting to discuss the central banks approach as the pandemic recovery continues.
- IRS has stopped issuing automated notices indicating tax balances, unfiled returns, etc to focus on a returns backlog
- Democrats push for new-look Build Back Better bill
-Consumer Price Index rose by 0.6% in January, suggesting an increase in prices
- Some States have been unable to provide economic relief to residents after suffering budget shortfalls
- Congress will not push for a fourth stimulus check, focusing instead on other financial relief measures
- Who is eligible for the $8,000 Child and Dependent Care Credit?
- You can still receive pandemic financial support from some states
- How much did inflation rise by across 2021?
Helpful news and links
Medicare and Social Security
-Humana and United Healthcare are the largest providers of Medicare Advantage: Which other companies offer policies?
-Social Security VS Supplemental Security Income: What are the differences?
- Can Medicaremembers get access to free at-home covid-19 tests.
SNAP and WIC
- Does Amazon accept WIC?
- Do any meal delivery kitsaccept SNAP?
Read more from AS USA
Beware of Ponzi schemes, don't get milked of your money
Ponzi schemes, think Bernie Madoff, have been around for a long time and they aren't going away. If an investment sounds too good to be true, you'll probably get taken to the cleaners.
Recently, the culprit of another Ponzi scheme was sentenced to 20 years in prison for convincing investors to part with $650 million to invest in film distribution rights that could be licensed out making a profit of 25 to 45 percent.
Could there be a bipartisan expansion of the Child Tax Credit?
Senator Michael Bennet has been advocating for monthly payments to families with children since he introduced the American Family Act in 2019. He along with several other Democratic senators called on their colleagues to pass the Build Back Better Plan in December last year to avoid a lapse inthe monthly installments. That piece of legislation however now appears that it may be broken up perhaps with the enhanced Child Tax Credit pulled out.
But it may not be all bad news, it seems Bennet has been in talks with Senator Mitt Roney who himself presented a plan that would also send monthly payments to Americans with children,albeit a slightly different program.
The Family Security Act would send slightly larger payments for each child under age 6, including four months of payments to expecting mothers. However, households would only recieve payments for up to two children in the family. The 2021 Child Tax Credit did not cap the number of children a taxpayer could claim for the credit.
Abscence of Child Tax Credit felt by families two months since last payment
The last advance payment of the 2021 Child Tax Credit was sent 15 December. In total six months worth of payments were sent to families that didn't opt out and chose instead to receive a lump sum with their tax refund. But all taxpayers that wish to receive the credit must file a 2021 tax return.
Recipients of the payments last year will be able to claim the remainder of the credit they are due when they file taxes this year. Many families will be anxiously awaiting that extra cash on their refund.
According to a survey by ParentsTogether Action, an advocacy group, after two months without the monthly boost to household finances 60 percent of families are having difficulty affording enough food. While 22 percent reported lacking the financial means to meet their families basic needs.
Fed mintues of January meeting stresses flexibility with raising interest rates
The US central bank is set to hold its Federal Open Market Committee meeting next month to vote on what steps need to be taken with regards to the current 40-year inflation highs. The Federal Reserve has already begun tightening the financial faucet that has pour liquidity into the economy since the start of the covid-19 pandemic which helped stave off a full collapse.
That process began in response to high inflation numbers over the past four months that don't appear to be as temporary as once thought. The next step the Fed will take is an expected interest rate hike at their policy meeting in March.
How much will depend on the next Consumer Price Index report due out five days before they are set to meet. The hike could be as much as half a percent, something the Fed hasn't done since 2000.
Study finds more entrepreneurship among Child Tax Credit recipients
Researchers at the Washington University’s Social Policy Institute and Appalachian State University looked at data from the Census Household Pulse data from July to October to study the effects of the 2021 Child Tax Credit payments on employment.
They found that recipients were more likely to be employed at higher rates compared with non-recipients. Futhermore that the percentage of self-employed recipients who earn less than $50,000 increased from 13.4% to 16.3% with some 300,000 starting up their own business.
Skeptics of the monthly payments to households have argued that they would result in people to not working, choosing to just collect the money.
The Bureau of Labor Statistics released the January jobs report earlier this month and it made positive reading for President Joe Biden. Despite a massive spike in covid-19 cases across the country the United States added hundreds of thousands of new jobs, suggesting that the jobs market recovery is still on track
The report found that employers added 467,000 new jobs in January, far exceeding experts’ predictions. During previous points of high coronavirus infection businesses had acted by cutting staff or closing premises, but January’s strong numbers suggests that employers are no longer as anxious.
Even given the better-than-expected good news, President Biden reiterated his belief that further investment is needed to build a fairer economy.
For low-income families, winter can be a very hard time, as temperatures drop and their reliance on heat increases. To help offset the increased spending on energy costs, the federal government established the Low Income Home Energy Assistance Program (LIHEAP).
Funds from LIHEAP are available year around and are distributed through individual states and tribes.
Investors are waiting in the wings to deploy capital for clean energy, with this industry poised to be the major engine of 21st-century prosperity. Without these government incentives, that capital won’t get deployed. With them, we are poised to have a prosperous clean energy economy.
Climate investment halted as Build Back Better halted
The proposed bill, backed by President Biden, would put around $550 billion into the clean energy and climate business, according to the Joint Committee on Taxation, about $311 billion of it in the form of tax credits and incentives.
But it being stuck in Congress means businesses are finding it difficult to plan ahead.
As household incomes plummeted around the country in March 2020, many feared they would be evicted. To support families, the federal government implemented an eviction moratorium and passed billions of dollars in funding to provide assistance to renters and landlords.
One of these programs is Emergency Rental Assistance Program which is administered by the US Treasury Department. More than $46 billion dollars have been approved by Congress for states, tribes and territories that allow grantees "to provide assistance to eligible households through existing or newly created rental assistance programs."
Analysis of inflation growth
The latest advance in producer prices was driven by another strong gain in goods prices, while increases in services prices continued to broaden. The combination of stubborn supply disruptions and elevated energy prices will prevent producer prices from reverting to more normal patterns until later this year.
Inflation increase higher than forecast
Prices charged by producers rose 1 percent in January, according to data released Tuesday by the Labor Department, twice the jump projected by economists.
On an annual basis, the PPI for final demand was up 9.7 percent, in line with a record set in December.
Americans have several options they can take advantage of when saving for retirement. One such is 401(k) plan through their employer which depending on the type could come with upfront tax benefits or tax-free distributions when you retire.
However, if you need to withdraw money from your 401(k) plan before you turn 59½ you could incur a hefty penalty. There are some cases where you can draw down on your 401(k)-retirement nest egg after you’ve turned 55 without being punished.
Earliest EITC and ACTC payments will arrive next month
The IRS has confirmed that the first tax refunds from the Earned Income Tax Credit (EITC) will start to arrive from early March, calming fears that there will be excessive delays with the tax refund process this year. The EITC is a fully refundable tax credit for low- and moderate-income workers, particularly those with children, to boost household income.
Close to $10bn in tax refunds has already gone out
The IRS is under pressure to oversee tax season 2022 in a prompt manner after covid-19 caused chaos in the two previous years. One of the main issues in 2020 and 2021 was considerable delays for tax refunds, meaning that filers were left to wait months before receiving the money that they were entitled to, and in many cases were relying on to cover the cost of essentials. But this year around $9.5 billion worth of tax refunds has already gone out, and the agency is just just starting the process.
The markets took a hit on Monday after the White House warned that an invasion could be imminent and experts say that the price of crude oil may continue to rise.
More than 35 million working families won’t receive the Child Tax Credit today for the SECOND consecutive month. Unacceptable.
The Senate needs to take action to make sure this doesn’t happen again.
Potential workaround on expanding the Child Tax Credit
With the Build Back Better bill in limbo over Senator Joe Manchin's vocal concerns about the cost of the proposals in the legislation and their effect on inflation Democrats are seeking ways to pass a new expansion of the Child Tax Credit. Some Republicans have put forth ideas as well. Once such possible alternative came from Senator Mitt Romney last year called the Family Security Act.
Like the 2021 Child Tax Credit it would include monthly payments to parents with eligible children. However, instead of the IRS sending out the payments they would be doled out by the Social Security Administration.
The monthly amount for school-age children 6 to 17 would still be $250 but the amount for children under 6 would increase to $350 per month. Expecting mothers would also be included receiving four months of payments.
However, whereas the 2021 Child Tax Credit doesn't have a cap on the number of children that can be claimed by eligible taxpayers, the Family Security Act would limit the benefits to two children. Additional removal of aid programs and tax cuts would be poison pills for Democrats.
Comments last week by St Louis Fed President James Bullard raised market expectations of a large rate hike, possibly even before policymakers meet in March. US Federal Reserve officials remain split on how aggressive they should be on tackling high inflation which hit 7.5 percent year on year in January.
Good morning and welcome to the AS USA financial news live feed, bring you all the latest on tax season 2022 and the latest on proposed extension to the Child Tax Credit.