Relief checks 2023 | Summary news 13 April
US Finance: Latest Updates
Headlines: Thursday 13 April, 2023
- Initial unemployment claims increased by 11,000 to 239,000 last week
- Inflation rose 0.1 percent in March; housing was the primary driver of the increase.
- Federal Reservecould increase rates again as soon as early May
- Tax deadline extended in California after the state was battered by severe storms this winter
- Home prices begin to fall in some cities in California
- Over 3 million layoffs in the US this year, which sectors have seen the highest job cuts?
- Social Security and Medicare Trustees warn of respective funds depleted by 2031 and 2033
- Various states will continue to issue inflation relief checks and generous tax refunds in April
- Social Security April payment schedule: when can you expect your payment?
The tax season in the United States is coming to an end.
As of January, the Internal Revenue Service (IRS) has been receiving and processing tax returns for millions of American taxpayers.
With just a few days left in the tax filing season, the IRS is urging those who received a relief check from their state government and counted it as income, that their return will need to be amended. By amending the return, you may be eligible for a larger refund if receiving the check bumped you up into a higher tax bracket.
Check out our full coverage for details on who should amend their return and how to do it.
The United States offers a number of social programs to aid low-income residents, including the Supplemental Nutrition Assistance Program (SNAP), which focuses on food assistance.
SNAP is a federal program run by the US Department of Agriculture but administered by the states who usually depend on county governments to enroll beneficiaries and manage the program. Households receiving SNAP are sent an EBT card, which functions like a debit card, and each month money is added to an account associated with the card that can only be used to purchase certain food and household products. The amount varies depending on the number of people who live in the home and the state in which the beneficiary lives.
During the COVID-19 pandemic, the federal government approved an increase of $95 for SNAP recipients to better provide crisis relief. However, this increase ended on 1 March after almost three years. As inflation continues to drive up food prices, these dollars are sorely missed by many households enrolled in SNAP.
Read our full coverage for details on which SNAP beneficiaries will see a small increase in their benefit amount.
Self-employed workers in the United States are required to report their earned income to the IRS on a quarterly basis.
The IRS has stated that “self-employment tax” only refers to Social Security and Medicare taxes and not any other tax (like income tax).” Salaried employees pay 7.65 percent of their income in Social Security and Medicare taxes, and their employer contributes the same amount. The total paid in these taxes is 15.3 percent, and self-employed workers, who make over a certain amount, will be required to pay this total to the IRS.
Read our full coverage for details on how these taxes must be paid.
Every month, the Social Security Administration (SSA) issues millions of payments to recipients of the program, who are mostly retired workers.
The amount to be received depends on the years worked, the salary received and the age at which the worker requested retirement. However, insurance beneficiaries must continue to pay taxes on monthly payments.
However, there are some states in the country that have their own exemptions to avoid paying such high taxes.
If you have not completed the procedure yet and during the last year you had an emergency or medical expense, you should know that the IRS allows you to deduct these expenses on your tax return.
The deadline to submit a 2022 federal income tax return to the Internal Revenue Service (IRS) is Tuesday 18 April 2023.
You can either file for an extension online, or submit electronically with Form 4868
To file for a tax extension with the IRS, you can follow these steps:
Social Security experiencing 'worst crisis' says labor union
The Social Security Administration “is in the midst of the worst public service crisis in memory caused by historic levels of employee attrition due to uncompetitive pay in benefits, exceedingly low employee morale, and overwhelming workloads,” according to Rich Couture, Council 215 president at the American Federation of Government Employees.
The service delays facing the program’s approximately 67 million beneficiaries are signs of “an agency in crisis,” according to Couture.
Union leaders spoke out about the Social Security Administration’s diminishing services amid funding constraints that have lasted for more than a decade.
Social Security beneficiaries now confront long waits for service on the phone and in person at the agency’s field offices, as agency workers face low staffing levels.
Increased funding for the program, as well as stronger policies to help retain workers, may help, according to the union.
Prices slowed their growth in March, only rising 0.1 percent, bringing the year-over-year change in the CPI down from six to five percent. Housing continued to be a major driver of inflation, a worry for some economists who predict that higher rates could continue to push home prices up.
Combined with the increases seen in January and February, inflation has officially hit one percent this year. Markets are likely to respond positively, given the newest report is a major sign that inflationary pressure may be disapating.
Read more on which goods and prices saw changes in their price in March in our full coverage.
The Bureau of Labor Statistics reported that real wages rose for the first time this year in March, climbing up 0.2 percent. In January and February, wages lost around 0.4 percent of their purchasing power, meaning that the figures from March offset half of what has been lost so far in 2023.
From March 2022 to March 2023, the number of hours worked each week fell from 39.9 to 33.1, Compared to this time last year, weekly earnings have fallen 0.7 percent, and as noted by the BLS, “combined with a decrease of 0.9 percent in the average workweek,” since March 2022, real wages have actually fallen by around 1.6 percent. Not only are workers making less, but they are working less, a double whammy for the purchasing power of the average household in the United States.
Some workers have seen real wages fall much more rapidly than others. Read our full coverage to find out which sectors have seen the largest losses in terms of purchasing power.
31 million families qualified for EITC in 2022, a nearly $7,000 tax credit
The Earned Income Tax Credit is a refundable credit, meaning that once taxes owed are accounted for the remainder gets added onto a tax refund. The credit could be worth up to almost $7,000, but the amount varies depending on earnings and the size of the taxpayer's family.
Last year, the Internal Revenue Services reports that "as of December 2022, 31 million workers and families received about $64 billion in EITC. The average amount of EITC received nationwide was about $2,043."
If you’ve ever taken the time to take a look at your paycheck, you’ll see that your take-home pay is reduced by a fair amount from what you actually earn. Depending on your job there are a number of deductions listed that could be for healthcare coverage or retirement plans through your employer, for example.
But all paystubs will list taxes both federal and state at a minimum, as well as Medicare and Social Security. Sometimes these are grouped together under the label FICA (Federal Insurance Contributions Act). Other times they are separate but instead of Social Security you may see OASDI or OASDI/EE.
Inflation for food flat, energy falls but rents still red hot
The Bureau of Labor Statistics (BLS) reported a 0.1 % increase in the Consumer Price Index for March.
Based on the data from March, the year-over-year inflation rate tracked by the CPI stands at 5%, down significantly from the figures recorded in summer 2022.
According to the BLS, the main driver of inflation in February was shelter, “accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing.” The price of “shelter” rose by 0.8 % last month, leading to a year-over-year rise of 8.1% nationally.
However, the agency noted that grocery prices didn’t rise.Energy inflation fell as well with prices last month 6.4% lower than they were a year ago.
Extreme weather events from coast to coast across the United States have prompted the IRS to grant filing extensions for certain counties in seven states. Extensions for the affected areas range from 15 May to 16 October 2023.
The IRS will automatically identify the taxpayers who are in those areas and apply filing and payment relief. But, as Greg Heilman tells us, they will still need to indicate on their tax forms which natural disaster applies when claiming a loss.
Welcome to AS USA’s live blog on the latest financial news
There’s less than a week to go before the 18 April deadline to file your tax returns. We give you some reminders and tips to help the process go smoothly.
Plus we will give you the latest figures on the economy after more inflation data was released yesterdat and other financial news.