Relief checks news summary | 20 January 2023
Inflation Relief: Latest Updates
Headlines | Friday 20 January 2023
- Some tax preparation servicers offer interest-free loans for those looking to get their tax refund more quickly… be careful to read the fine print.
- The IRS warns taxpayers of changes that they should be aware of as they submit their return
- The US reaches its debt limit, what will the day-to-day impacts be?
- New year, new wages: what is the minimum wage in each state?
- The IRS will begin processing tax returns on 23 January, what changes should you be aware of this year?
- Credit card debt is rising rapidly; meanwhile, average credit score in the US hit a historic high just a year ago
/cloudfront-eu-central-1.images.arcpublishing.com/diarioas/ATYILUM64ZM2QJIUYOXRLHSAMI.jpg)
What is the debt ceiling?
Yesterday the United States hit the debt ceiling, the statutory limit on the amount of borrowering that the federal government is allowed to sanction. Treasury Secretary Janet Yellen has enacted a number of extraordinary measures that will allow the US government to continue fulfilling its obligations for a few more months, but this is only expected to last until early June.
What next for the housing market?
After favourable lending conditions for much of 2021, things changed last year as the Federal Reserve instituted a series of interest rate hikes. This pushed up the cost of borrowing and made mortgages a lot less appealing for prospective buyers. While the housing market remains in a state of flux, experts predict that a standstill could continue for some time.
Yellen calls for action on debt ceiling increase
"The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. Government months into the future. I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."
If you're looking into the possibility of buying a house, you will want o pay attention to your credit score. To get a good deal on a mortgage agreement it is crucial that your credit score shows that you are responsible with your finances. Credit ratings agency Experian classify five rough categories of credit scores:
Excellent: 800+
Very Good: 740 - 799
Good: 670 - 739
Fair: 580 - 669
Poor: 579 and below
We take a look at how to boost your ratings and increase your chances of getting a top deal on a mortgage...
If you are now turning your attention to your filing, you will likely be wondering how to minimise the amount of tax that you are required to pay. Some organizations, however, may not be required to pay tax at all.
Certain organization are eligible for federal tax exemptions. Here's everything you need to know...
Will the Federal Reserve continue to increase interest rates?
The Federal Reserve is facing to competing concerns as it looks to steer the nation's economic recovery over the next 12 months. During 2022 the US central bank was focused on bringing down the rate of inflation, doing so with a number of interest rate hikes.
But while those efforts do appear to have cooled price rises, there is concern that continuing with the policy could serve to strangle growth and push the country into recession.
The seven brackets remain the same this year 10%, 12%, 22%, 24%, 32%, 35% and 37% which were set after the 2017 Tax Cuts and Jobs Act. These will be in place through the 2025 fiscal year.
Filers will have nearly two full months for which to file their taxes with the deadline on 18 April. However, it is not worth leaving it late as the sooner you file your taxes, the sooner the IRS can process your refund, if that is what you are owed.
23 January has is the official beginning of the 2023 tax filing season.
As interest rates tick up, Microsoft is one of the latest tech companies to announce plans to lay off workers.
The company announced earlier this week that they will sack 10,000 workers, or around five percent of their global workforce. This comes after 1,000 workers were let go in October 2022.
The details of which departments will be impacted have not been made public, but Bloomberg has reported that jobs in human resources and engineering could be at risk.
White House says it will not negotiate on the debt ceiling
From now through June, the deadline many are giving Congress to increase or suspend the debt ceiling, there will be a lot of talk about the various positions held by leaders in Washington. With Democrats in control of the White House and the Senate, they have a clear advantage in the negotiations. Additionally, considering that the majority held by the GOP in the House of Representatives consists of four votes, it would not be surprising to see a handful of Republicans join their to pass an increase with no strings attached.
The White House has said that they do not plan to negotiate with Republicans over changes to domestic spending to have the cap raised. Republicans are saying that without these stipulations, they will not bring forward a vote for a clean increase. The GOP has not made public which programs they plan to alter or cut funding for, but many believe they may try and force an increase in the retirement age.
/cloudfront-eu-central-1.images.arcpublishing.com/diarioas/CAMZDKBOMHJZKGBIESZPV5CWQY.jpg)
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.
US hits the debt ceiling; what now?
The United States has officially reached its statutory debt limit and stands at increased risk of defaulting on its debt obligations, a potential catastrophe for the national economy. Treasury Secretary Janet Yellen has advised Congress that the extraordinary measures at her disposal will likely only last until early June, meaning that the country has just a matter of months to find a solution.
Inflation continues to fall but Fed may raise rates again
The Federal Reserve is seeking to tread to narrow line between inflation and recession. The central bank has instituted a number of interest rate hikes in the past 12 months as it tries to cool the US economy and ease price rises. However, interest rates are a pretty blunt tool and there is a risk that their efforts may curb growth to such an extent that the country slips into recession.
Inflation has now fallen for six consecutive months, and some are wondering whether the Fed will consider lowering interest rates in the near future.
IRS warns that tax refunds could be smaller this year
"Refunds may be smaller in 2023. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction, won’t be able to deduct their charitable contributions."
Hello and welcome to AS USA's live blog on inflation relief and financial news.
Yesterday, the US Treasury reported that the US had reached its debt limit but that the department would take measures to avoid a US debt default. Leaders have until June to strike a deal to increase or suspend the debt ceiling. If no such deal is passed, which would be unprecedented and unlikely, there could be catastrophic impacts on not only the US, but the global economy.
Markets this week are down slightly. The Dow Jones is down 2.95 percent, the S&P 500 has fallen nearly two percent, and the NASDAQ is 1.07 percent. Inflation remains high, covid-19 infections in China are impacting supply chains, and the labor market remains strong. The Federal Reservees move to increase unemployment by raising interest rates has yet to pan out.
Follow along for updates on available state and federal relief, the latest on talks over the debt ceiling, and much much more,