Relief checks news summary | 23 January 2023
Inflation Relief: Latest Updates
Headlines | Monday, 23 January 2023
- Multiple states still offering inflation relief payments this month
- The IRS has begun to process tax returns, we took a look at some options taxpayers have this year to file electronically.
- Median home price in the US rose to $386,300 in 2022, breaking previous record high
- Apple stands apart from other tech giants as one of the only companies not to announce a massive wave of layoffs.
- California to send one last batch of inflation relief checks in February.
- Will there be cuts to Social Security and Medicare during debt ceiling talks?
- Eligibility and value of Child Tax Credit remain the same this year
- Medicaid enrollment has increased by 1.6 million in New York since 2020
- The IRS warns taxpayers of changes that they should be aware of as they submit their return
- The IRS will begin processing tax returns today; what changes should I be aware of this year?
Senate Republicans to "take a backseat" over debt ceiling fight
At this point, Mitch McConnell, Senate Minority Leader, looks happy to have his colleagues in the House of Representatives take the lead on negotiations with the White House over the debt ceiling. The GOP has very little power in the Senate to dictate any terms, and with the final deadline months away, 'taking a backseat' may prove the most effective strategy to avoid backlash.
Republicans in the Senate likely support extracting concessions from Democrats over the debt ceiling. However, without a majority, they have few muscles to flex to support their counterparts in the House of Representatives.
After staying closed for the past two years, the IRS’ local offices will reopen this year to support taxpayers as they submit their returns.
The number of offices depends mainly on the geography and population of the state. California, for instance, is home to twenty-eight offices, whereas Iowa only has five locations.
Read our full coverage for details on how to find the office nearest you.
The Internal Revenue Service began accepting and processing 2022 tax returns 23 January, and American taxpayers will have until 18 April 2023. While the agency expects most filers to get a refund, it warned that they might be smaller than in the past couple of years as covid-19 relief programs have come to an end.
However, to make sure that you get all the tax credits and deductions that you have coming your way to potentially increase your refund, or barring that, paying less taxes, there are a number of tax software programs. The top providers have both free and paid versions of their services that can make the process of submitting your 2022 tax return easier. Additionally, many have apps that allow you to use the software on your smartphone or even a tablet.
Read our full coverage for a look at the best software available in 2023 .
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The 2023 tax season begins on January 23. While it Isn't mandatory to create an online account at IRS.gov to submit your tax declaration it can be very useful for your interactions with the tax agency. We explain how to do it...
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By changing your marital status you may lose Social Security benefits.Here’s a look at the reasons you can lose payments if you get married.
IRS improving service to American taxpayers
In just five months since the IRA's passage, we've made meaningful progress to deliver the service American taxpayers deserve.
ERIN SCOTT / REUTERS
IRS ready to help taxpayers faster and better with 5,000 new customer reps
The IRS has begun accepting and processing 2022 tax returns and after a boost to its budget it is planning to up its service to Americans.
The Inflation Reduction Act (IRA) passed last year sent $80 billion in new funding to the IRS. Part of those funds are being used to improve the interaction that the public have with the agency by fully staffing its 361 field offices to triple the number of Americans that can seek help in person with their taxes.
As well, the IRS has hired 5,000 new customer service representatives to man the phones with the intention of cutting in half the wait time for callers to 15 minutes according to Wally Adeyemo, US Deputy Treasury Secretary. An additional goal of the staff increase is to raise the percentage of callers who get through to a human operator from the dismal 15% last year to 85% this tax season.
The new hires should be fully trained when call traffic begins to peak 20 February.
Additional efforts by the agency to make it easier to file include setting up new online tools which will allow tax filers to directly upload documents instead of having to email them.
Shannon Stapleton / REUTERS
Wall Street continues Friday rally boosted by strong showing from tech stocks
All three major indexes made gains again on Monday extending Friday’s rally. A strong showing from tech shares saw the Nasdaq composite starting the week as the biggest winner finishing nearly 233 points higher, a gain of over 2%.
The tech sector was up 2.3% on the S&P 500 where all 11 major sectors were up at the end of trading. The broad-based index rose nearly 1.2% on Monday climbing 47.2 points. The Dow Jones Industrial Average racked up a gain of just over 254 points to close 0.76% higher.
As part of the Inflation Reduction Act, the IRS is offering a $7,500 credit when you file, but who is it for and how do you apply? Find out how to apply for the tax credit...
After a barnstorming end to 2021, the value of cryptocurrency markets collapsed in 2022. Bitcoin went from an all-time high of $69,044.77 on 10 November 2021 before tumbling to $16,400 just one year later, a drop off of more than 76%.
After the collapse of FTX, another large crypto trading platform, Genesis, filed for bankruptcy on Thursday.
The market as a whole went from a valuation of nearly $3 trillion to $798 billion dollars with some dubbing it the ‘crypto winter’. It would take something very special for the market to recover all of that ground in one year, especially in a much changed economic environment compared to the government pumping of stock markets during the covid-19 pandemic.
After the 2021 American Resuce Plan, families were able to claim a larger Child Tax Credit. While there are still some in Washington, on both sides of the aisle, who would like to see the program extended, no bills have been introduced. The impact of this inaction means that taxpayers with dependents will receive a smaller credit valued at $2,000.
Read our full coverage for details on how the value of the credit is determined.
Today marks the beginning of tax season with the IRS now accepting and processing returns for the 2022 tax year. Filers have until 18 April to submit their tax return and most of them are expected to receive a refund.
You can save thousands of dollars by taking advantage of the various deductions and tax credits that are available to filers. They are sometimes referred to interchangeably, but deductions and credits are completely different.
What next for the housing market?
The covid-19 pandemic and subsequent public health restrictions caused chaos for the markets. The housing market, in particular, has fluctuated wildly due to the changing economic conditions of the past two years. But there are finally signs that confidence is once again returning to the market as the United States begins to emerge from a period of high inflation that sparked a mssive rise in interest rates.
The housing market is closely tied to interest rates because those rates define how expensive mortgage agreements will be for prospective buyers. If the Federal Reserve is able to lower interest rates in the coming months we should see demand for houses increase and a flood of fresh capital into the housing market.
When will Congress raise the debt ceiling?
The matter of rasing the debt ceiling has come to the forefront in the past week as the United States has reached the statutory limit on debt. This leaves the country unable to borrow any more money and the Treasury has been forced to resort to extraordinary measures to ensure that the US does not default.
However these measures will only last until June and Congress needs to raise the debt ceiling to ensure that the US can keep up with its financial obligations. Failure to do so would be catastrophic for the United States and the entire global economy.
Today, Monday 23 January, marks the start of tax season in the United States. The IRS has begun accepting returns relating to the 2022 tax year, with an estimated 168 million filers set to submit their taxes.
The deadline to file taxes is Tuesday, 18 April. You can request a six-month extension to give you more time to get your affairs in order, but you will still need to ensure that you have no outstanding tax liability when the original deadline arrive.
Tax-filing season begins!
The IRS is now officially accepting returns for the 2022 tax year, starting of a months-long process that will likely see 168 million Americans submit a return. The tax agency's deadline for filers is 18 April, but many residents in California are eligible for an automatic extension to allow them to recover from the winter storms that have struck the state this month.
Here's what you need to know about the process for 2023...
White House refuses to negotiate on debt ceiling
"Like the President has said many times, raising the debt ceiling is not a negotiation; it is an obligation of this country and its leaders to avoid economic chaos. Congress has always done it, and the President expects them to do their duty once again. That is not negotiable."
Sen. Manchin wants talks on debt ceiling rise
The White House has insisted that it will not countenance a debt ceiling deal that limits future government spending. The US has reached the statutory debt limit and Congress needs to raise the threshold by June to avoid a damaging default. However the GOP-led House are unwilling to support an increase without negotiations.
President Biden said that the debt ceiling increase should not be subject to partisan wrangling. However Sen. Joe Manchin, perhaps the most centrist Democrat in the Senate, claimed that refusing to negotiate on the debt ceiling would be a mistake.
The Social Security Administration was established in 1935 to provide financial support for retired workers who contributed to the program through taxes on earned income. Additional programs have been added over the years to cover benefits for disability, survivors and those with limited financial means.
While the standard amount of credits a worker must obtain to apply for retirement benefits is 40, each program has its own requirements. Here’s a look at how long you need to work in order to qualify for Social Security benefits.
McCarthy and Biden to meet over debt ceiling crisis
Having flipped the House of Representatives in the 2022 midterm elections, the Republicans now hold considerable influence in Congress and could prove a major roadblock for President Biden going forward. GOP members are refusing to support a raising of the debt ceiling unless they secure significant concessions on future spending.
House Speaker Kevin McCarthy confirmed that he will meet with President Biden to discuss the situation.
GOP demands spending cuts to raise debt ceiling
Congress is split on the prospect of raising the statutory debt limit after the United States reached its borrowing ceiling last week. In recent decades that upper limit has be raised fairly regularly with bipartisan votes in Congress to ensure the US can fulfill its financial obligations.
However this time the Republican-led House of Representatives appears unwilling to approve a debt ceiling increase without securing considerable future spending cuts. The Democrats, President BIden included, are insisting that this issue cannot be allowed to become the subject of partisan leverage.
After three years of pandemic-related chaos, the IRS was determined to keep filing deadlines on schedule this year. After receiving billions in extra funding from the federal government the IRS looks set to work through some of the huge backlog of unprocessed tax returns from previous years.
However in California, where winter storms and flash flooding have disrupted the lives of millions of residents, the IRS is offering deadline extensions for filers. Here's everything you need to know...
Interest rates set to remain high, Fed President suggests
Throughout 2022 the Federal Reserve has implemented a series of interest rate hikes in a bid to bring down rampant high inflation. That effort was successful, up to a point, but it looks like the Fed is intent of keeping interest rates high for some time to come.
That's what the Fed's New York President John William suggested on CNBC recently. Inflation remains the top priority, but many will be hoping for an end to high interest rates to bring down the cost of borrowing.
The state began distributing the Middle-Class Tax Refund in late October and to date 7.1 million have been sent out via through direct deposit, with an additional 9.4 million on pre-paid debit cards.
The California Franchise Tax Board (CFTB) estimates that in total more than 31 million residents have benefited from the tax credit and that the program cost the state just over $9 billion. If you are yet to receive yours, there is one more batch of payments to be sent.
Here's when that money could arrive...
Sen. Manchin dismisses Social Security cuts
With the country having officially reached the statutory debt limit, there are renewed calls for significant changes to programs like Social Security to save federal money. Republicans in Congress are refusing to approve a raising of the debt ceiling without securing future spending cuts. However Sen. Joe Manchin, perhaps the most centrist member of the Democratic caucus, has dismissed the idea of Social Security cuts.
Average prices fall as housing market cools
More evidence that the housing market in the UNited States is beginning to slow; a new report from Redfin found that only 21% of homes sold this month are selling above the list price. This is in stark contrast to last January, when around 40% went in excess of the asking price.
With high interest rates pushing up the cost of mortgages it appears that the demand for, and price of, property has dipped.
According to the Bureau of Labor Statistics’ summary of the Consumer Price Index (CPI), the year-on-year inflation rate was 6.5 percent at the end of December last year, representing a drop compared to November when this indicator was 7.1%.
Even as inflation has fallen, several states will continue to send inflation relief checks, sometimes referred to as stimulus checks, or tax refunds in January 2023 and beyond, which were approved last year to provide relief from high prices.
Bipartisan effort needed to raise debt ceiling
Senator Dick Durbin told CNN’s 'State of the Union' anchor Dana Bash on Sunday that President Biden should “absolutely not” negotiate with Republicans on raising the debt.
"Those who are posing for holy pictures as budget balances, the MAGA Republicans, should note one important fact," he said. "Almost 25 percent of all of the national debt accumulated over the history of the United States, 230 years, was accumulated during the four years of Donald Trump."
While technically true, the majority of the ballooning US debt has happened over the past two decades under both Republican and Democratic administrations. The US debt stood at roughly $5.8 trillion in 2001, by the time Obama came to office it had doubled, giving GW Bush 18.4% share. Eight years later it nearly doubled again to just shy of $20 trillion, giving Obama almost 29.7%.
Under Trump it jumped another $7.8 trillion, 24.8%, thanks to Republican tax cuts and bipartisan measures to alleviate the fallout from the covid-19 pandemic. So far, in the two years of Biden's term the national debt has risen over $3.6 trillion, or an 11.7% share of the overall amount over the history of the United States.
Welcome to AS USA!
Good morning. We'll be bringing you all the latest news and information from the United States as tax season 2023 kicks off today. There's also news on the impending debt ceiling talks and the state of the US housing market.