Personal finance and money news | Summary for 20 February
US finance aid: latest updates
IRS tax audits considered
The last couple of years has thrown up aspects of the US tax system never experienced before. And as people have gotten to grips with these, doubts and concerns have been raised about a potential tax audit by the IRS.
Check out the following guide to help you avoid some of the key red flags.
Expanding social security
Representative Mike Thompson has posted a reminder that he is working alongside Re. John Larson to expand benefits and improve the social security program for years to come.
Student loans and Child Tax Credit
Are you behind on your student loan payments? Are you worried that this may affect you receiving other benefits?
Student loan collection has already been paused until after 1 May, which led to worry that once that pause ends, the tax refunds could be snagged.
But the Education Department said it plans to suspend offset for six months after that to 1 November, protecting the 2022 tax season refund, according to a post on the Federal Student Aid website.
The number of people locking in their mortgage rates have had a big rise at the start of 2022, as home-buyers prepare for a big increase later in the year.
A report from Black Knight says that rate locks have risen nearly 10 percent since December, suggesting buyers are aware that the current low locks need to be exploited before they become too expensive. To match this, there has been a near 20 percent increase in the amount of loans being taken out to afford down payments.
Are you thinking of getting a new credit card? New data published by the New York Federal Reserve on Tuesday showed that household credit card debt rose at the highest rate for 22 years during the fourth quarter of 2021 as the US economy rebounds. But which of the myriad options is best for you?
Bipartisan group of lawmakers sends letter to IRS chief
“As the IRS works to eliminate the current backlog of returns and correspondence, we request you to pursue additional actions to maximize the IRS’ current workforce to address the backlog in order to reduce disruptions this filing season."
“We continue to hear from constituents who are still waiting for their 2020 tax returns, have received confusing notices about overdue payments they already paid, and cannot reach anyone at the IRS for assistance. Many of these problems stem from the millions of unprocessed correspondence items from 2021."
How does the Child Tax Credit affect tax returns?
The IRS is the federal agency tasked with overseeing tax season and processing returns each year, but during the pandemic it had some extra responsibilities. The IRS was in charge of distributing the Child Tax Credit advance payments which went out during the second half of 2021. Now it comes to filing time, how should you cite the Child Tax Credit in your tax return?
Senate candidate wants the CTC payments to be made permanent
Last year the American Rescue Plan (ARP) passed by President Biden ensured that eligible families were able to receive a monthly payment worth up to $300 per child from July to December, but that support expired at the end of 2021. The ARP only secured six months' of payments with the rest of the one-year programme to be distributed as a tax refund at filing time. However there are growing calls from lawmakers for the monthly payments to be made permanent, with many citing the significant drop in childhood poverty recorded in recent months.
Have you received Letter 6419 from the IRS? Millions of letters were sent out by the tax agency to make recipients aware of additional Child Tax Credit payments that they are entitled to claim with their tax refund this year. However a number of these Letter 6419s include some incorrect information which could cause delays with your tax return.
Here's everything you need to know...
Watch out for tax refund scams
This tax season millions of Americans will be expecting a tax refund from the IRS, with many in line to receive a payment in lieu of a missing stimulus check from 2021 or as part of the Child Tax Credit expansion. However the IRS is warning that potential recipients watch out for unscruplous fraudsters who will try part you from your money.
Bear in mind that the IRS will not send unsolicited emails regarding your tax refund status, so be extremely wary of any messages purporting to come from the tax agency.
"Fiscal policy, which provided a huge boost to the economy during the past two years, is unlikely to be as significant a source of demand this year. This is true not only for the United States, but also for many other economies.For this year, I look forward to continued growth and receding inflation, both for the nation and North Jersey. Specifically, my forecast for the U.S. economy is for real GDP to grow a bit below 3 percent this year, for the unemployment rate to end the year around 3-1/2 percent".
IRS dedicated tax help page
During this tax season, taxpayers face a number of issues due to critical tax law changes that took place in 2021 and ongoing challenges related to the pandemic. The IRS continues to share updated information for people filing tax returns this filing season as well as those who have previous year tax returns awaiting processing by the IRS.
This page will be updated with special alerts covering a variety of information and developments for people preparing their tax return, awaiting processing of a return or refund and the latest updates on IRS letters, or notices. Newer updates will be placed at the top of this page; the IRS will also provide critical updates through social media.
Child Tax Credit impacting tax return
With tax season underway, many Americans are getting their tax forms and starting to file but for parents, those child tax credit payments from 2021 could cause a smaller refund.
The child tax credit was passed as a part of pandemic relief legislation last year and some families received up to $300 per child each month from July to December.
More than 36 million families received the advanced payments in December alone.
Janae Bowens and John Seward bring you more.
IRS managing expectations
The ability to successfully manage expectations can help deflect criticism that can lead to a crisis for organizations. It can also put an ongoing crisis into perspective and create understanding or sympathy for what the organization — and their leaders — are going through.
IRS Commissioner Charles P. Rettig may have had this crisis management best practice in mind when he posted an op-ed on Yahoo Money. In an apparent effort to help put the issues the agency is facing this year in perspective, he noted that the IRS is confronting enormous challenges related to the pandemic and years of underfunding by Congress.
Talking of delays, millions have already filed their tax return to the Internal Revenue Services (IRS) in hopes that their refund will be sent as soon as possible. This year households across the US are expected to receive higher refunds thanks to the remaining balance of the child tax credit and the ability to claim the third stimulus checks if it was never received.
Facing a growing backlog of paper return the tax agency has urged filers to submit as quickly as they can to avoid seeing delays in their refund. However, while filing on or before the deadline is recommended, the IRS also warns against filing "prematurely" as mistakes can cause serious delays in reviving your refund.
Maite Knorr-Evans brings you more on the tax processing situation.
Social security wait
The covid-19 pandemic prompted the Social Security Administration to pivot to mostly phone and online services starting on 17 March 2020. Since then, the agency’s more than 1,200 field offices have offered limited in-person services by appointment only. Customers have often had to submit paperwork by mail.
Those processes have not always been smooth, the Social Security Administration Office of the Inspector General has found. Specifically, the agency needs to improve its timeliness and efficiency with regard to processing mail, including original documents provided as proof of eligibility, an investigation found.
Lorie Konish reports on the experiences being faced by claimants.
Manchin thanked for "fiscal sanity"
Republican senator Chuck Grassley said this week that we should "thank Senator Joe Manchin for bringing some fiscal sanity to this Congress of the United States."
Inflation is a major discussion point in Iowa, as elsewhere, in reference to the Build Back Better plans.
Child Tax Credit expiration affects millions
Rebecca Parson states in her bio that 'In the richest country on Earth, nobody should be homeless, hungry, in poverty, or without healthcare.'
Few would likely argue with that.
Yet, as she points out this morning, 'one in five kids are going hungry during a pandemic after the expanded Child Tax Credit expires.
'Hunger and poverty are policy choices,' she states.
When will my tax refund payment arrive?
Even before tax filing began this year IRS chief Charles Rettig warned that Americans might experience delays this year due to the agency's massive backlog of unprocessed tax returns. This can be particularly frustrating if you're awaiting a tax refund from the IRS. The agency typically advises that claimants wait 21 days for their refund to be processed but that could be much longer this year. Here's how to check the status of your tax refund from the IRS...
Can I get a Recovery Rebate Credit?
Throughout much of 2021 the IRS was tasked with distributing the third round of stimulus check payments to eligible Americans, a massive undertaking that saw close to 170 million payments worth up to $1,400 sent out. However despite that effort some peopl were missed out of the distribution process. These unfortunate individuals still have to chance to claim their missing money at filing time this year, through the Recovery Rebate Credit.
Here's everything you need to know about the credit...
Do I qualify for the Earned Income Tax Credit (EITC)?
The Earned Income Tax Credit (EITC) is a one-time tax credit designed to support low-income individuals. If you are not eligible for programmes like the Child Tax Credit you may be entitled to a considerable sum from the EITC, here's what you need to know to claim the money...
Sen. Warren proposal tax return changes
Tax-filing is a time of the year dreaded by many Americans, with one recent study showing that the typical filer spends around ten hours and an average of $200 on their tax return each year. Sen. Elizabeth Warren wants to see the process streamlined to make much of the returns process automated, saving filers time and money.
Millions have already filed their tax return to the Internal Revenue Services (IRS) in the first month of tax season 2022. This year many households across the US will receive higher refunds due to the additional Child Tax Credit support and the ability to claim the third stimulus checks if it was never received. Here's what that could mean for you...
What is Sen. Romney's Child Tax Credit alternative?
The Unted States offers less in the way of child support payments that most developed nations, but last year a massive expansion of the CHild Tax Credit programme gave some 35 million families access to monthly direct payments for the first time. That programme came to an end in December 2021 but there are calls to see it reintroduced, while Sen. Mitt Romney has proposed his own plan to support families financially.
How big is the IRS tax return backlog?
Even before tax seaosn 2022 had begun the IRS were warning of a considerable backlog of unprocessed tax returns from previous years which threatened to cause significant delays this time around. Well little over a month into filing season and the tax agency is now thought to have a backlog of roughly 24 million unprocessed returns, suggesting that the problem is not going away.
How would a Russian invasion after finances in the US?
The threat of a Russian invasion of Ukraine appears increasingly likely to materialise and Douglas Rediker, Brookings Nonresident Senior Fellow, outlines the potential consequences of an attack for the United States' economy. The US is attempting to disuade Russia from an invasion using the threat of financial sanctions but in reality the US could also suffer if fighting were to break out due to the disruption to supplies of oil and natural gas.
Roughly 70 million Americans recieve a payment from the Social Security Administration (SSA) every month, with a range of programmes offering financial support to vulnerable, eldery or disabled people across the country. However the payment structure for Social Security can be confusing if you're not used to the scheme. Here's when you can expect your payments to land in your bank account...
How much is my tax refund worth?
Tax refunds are distributed to filers who have overpaid on taxes over the past year and are therefore owed money back from the IRS. The tax agency is working overtime to get the payments out as quickly as possible but some filers may be disappointed to learn that they get less than they had expected. Here's why you may be feeling short-changed...
Hello and welcome to the AS USA financial news live feed, giving you all the latest new and information on tax season 2022. We'll have updates on the delayed tax refund payments, the Child Tax Credit as well as financial news from across the United States.