Relief checks, $7,000 Tax credit, inflation, debt ceiling, housing market... | Summary news 11 February
Headlines: 11 February 2023
- Yahoo announces 20% cut to workforce, 1,000 workers to be laid off this week
- Wall Street indexes trade negative on Thursday, losing overnight gains
- Last week, initial unemployment claimsincreasedby 13,000 to 196,000
- More taxes on the rich, Biden’s formula against inequality
- Michigan to send $180 inflation relief checks: who qualifies and when will they arrive?
- Debt ceiling negotiations continue with cuts to Social Security and Medicare off the table after confrontation at the State of the Union
- US trade deficit grew to $67.4 billion in December up from $61 billion a month earlier
2023 Tax Season
- A look at the most undervalued housing markets in the United States
- Tax season is here: top tips to avoid errors when filing your return
- Actions that can be taken if your tax refund is stolen or never arrives
Read more from AS USA:
Should I pay tax on the California relief payments?
Earlier this month the IRS advised filers who had received a state-funded relief check in 2022 to hold off on submitting their taxes. The federal tax agency still had to decide whether the payments, many of which were termed 'tax refunds', would be liable for federal taxation.
The IRS is gradually ruling on the various programs and has confirmed that recipients of the California Middle Class Tax Refund will not be subject to federal taxes on the payment. Good news for Californians!
Debt ceiling is on the agenda at the White House
President Biden hosted the nation's governor's at the White House on Friday and the debt ceiling talks were high on the agenda. Biden told the gathered governors that he hoped to secure a solution without agreeing to future budget cuts, while ensuring that the nation's economic position remains secure.
“I believe we can be fiscally responsible without threatening our country,” Biden said. “I don’t think my colleagues are really serious – I hope they’re not – about holding the debt hostage to cuts they want to make in certain things that I may or may not want to make.”
Who is eligible for the Child and Dependent Care Credit?
Tax filing season can be a stressful time but, with a majority of filers expected to receive a refund, it can be a lucrative time if you take advantage of the various tax credits on offer.
The Child and Dependent Care Credit is designed to ease the burden of childcare for working people. If you have to pay to ensure a child or dependent is looked after while you are at work, you will most likely be able to claim the credit.
For the 2022 tax year parents and care-givers can claim the tax credit to cover employment-related expenses worth up to $3,000 per dependent, up to a maximum of $6,000. The total amount of the credit cannot exceed 20-35% of your expenses, depending on your income level.
What is a 'tight' housing market?
The United States housing market has undergone a tumultuous few years since the start of the pandemic, with interest rate changes spooking investors and making life very difficult for mortgage-holders. Currently the housing market is incredibly tight, meaning that there are almost no vacant home for sale. This means that those with a home at the moment have little choice but to stay where they are.
The saying goes “sharing is caring” and Uncle Sam will look the other way up to a point. Should you cross the thresholds of the Gift Tax exemption you could face a tax rate of 18 percent to 40 percent.
The Tax Cut and Jobs Act passed in 2017 increased the lifetime limit that Americans are allowed to gift in the form of money or property to family and friends for nothing in return.
Should you surpass the annual gift tax limit you will eat away at your lifetime exclusion. Here’s a look at the amounts you can give without getting taxed.
Sellers return to the housing market, tentatively
In the second part of 2022 the US housing market underwent a significant change as the number of homes on the market began to dry up. The slump in new listings was blamed for an increase in house prices as demand continued to outstrip supply. It looks like that trend is starting to wane but, for now, only gradually.
How to receive the Earned Income Tax Credit
These are the requirements to receive the Earned Income Tax Credit:
- Have worked and earned income less than $59,187
- Have investment income less than $10,300 in tax year 2022
- Have a valid Social Security number by the due date of your 2021 return
- Be a US citizen or resident alien for the entire year
- Cannot file a Form 2555 (Foreign Earned Income)
EITC refunds will begin to be issued until the end of February. The exact date will depend on the moment the taxpayer made their declaration.
When filing your taxes, you may be able to apply for any of the tax credits offered by the tax collection agency, including the Earned Income Tax Credit (EITC), which is aimed at low-income individuals and families.
EITC recipients can receive up to $6,935, almost $7,000. However, the exact amount will depend on the situation of each family or individual applying, such as the number of children one has or annual income.
For those who have questions or concerns, the organization says, “the best course of action is to wait for additional clarification on state payments rather than calling the IRS.” If you have already submitted your refund, hold tight, and wait for further guidance. Amending your already submitted return could create more problems down the line.
EITC could provide a nearly $7,000 tax credit boosting IRS refund
The Earned Income Tax Credit (EITC) is targeted at low-to-moderate income households. The credit is refundable, meaning that any amount that exceeds what you owe in taxes, even if you owe none, will be tacked onto your tax refund. The credit can be worth up to $6,935 if you qualify.
Last year, inflation in the United States reached historic levels. Given the rising prices, particularly of staple goods, a number of government institutions approved sending stimulus checks or tax refunds as inflation relief for hard working Americans. Although inflation has fallen in recent months, support continues to be sent. Here are the states sending checks or refunds in February and what the amounts are.
The Social Security Administration sent out payments to over 71 million Americans as of January 2023. Due to the monumental nature of issuing so many payments, the agency spreads out when they are sent depending on date of birth, type of benefit and when a recipient first signed up for Social Security.
This creates a situation where every so often certain beneficiaries receive more than one payment in a calendar month. March will be one of those months.
"Out-of-the-box" ideas to avoid debt ceiling default and the economic fallout
Janet Yellen announced that the Treasury Department had begun “extraordinary measures” as the US has reached its debt ceiling limit. These accounting maneuvers will keep the nation from defaulting on its financial obligations until early June while lawmakers work on agreeing to an increase to the borrowing cap.
GOP lawmakers in the House of Representatives want to use the negotiations to exact spending cuts from the budget. However, the game of chicken that has become terribly common in recent years could bring dire consequences should the US hit the “X Date” when the US goes off the financial cliff.
Mehdi Hasan has a couple "out-of-the-box" ideas that he thinks should be considered to avoid from minting a $1 trillion coin to just ignoring the limit altogether declaring it unconstitutional. Have a gander...
The United States is in the midst of tax season. From 23 January to 18 April, the Internal Revenue Service (IRS) will receive and process more than one hundred and sixty million tax returns this year.
The agency typically tasks around 21 days to issue a refund if the return was filed electronically and direct deposit information was provided. If you submitted a paper return and are expecting a refund in a paper check via the mail, the time frame may be extended to six to twelve weeks.
If your refund has been stolen, you do have a few options. Here is the guidance from the IRS.
Biden takes his economic message to Florida, touts successes, warns against cuts
President Biden and his administration are touring the nation after his State of the Union address on Tuesday. They will visit 20 states with Biden kicking off the tour visiting first Wisconsin and on Friday, Florida.
He is touting successes that his administration has been able to acheive and warning Republicans not to make cuts to to Social Security or Medicare.
During the pandemic SNAP benefits, also known as food stamps, became a crucial form of financial support for millions of families. The federal government introduced Emergency Allotments (EA) in March 2020 to increase the amount on offer to recipients.
The program has gradually been rolled back in the past year and February 2023 will be the final month in which recipients in certain states, those still offering the boost, can benefit from the EA. The Center on Budget and Policy Priorities (CBPP) reports that 35 states and territories are still paying EAs this month...
What are the debt ceiling 'extraordinary measures'?
The United States has hit the statutory debt limit, also known as debt ceiling, and will soon be unable to fulfil its financial obligations unless Congress raises the limit. To buy lawmakers some extra time Treasury Secretary Janet Yellen has utilised a series of 'extraordinary measures' to extent the nation's borrowing abilities.
In a letter published last month, Yellen warned that "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."
IRS benefits from Inflation Reduction Act funding
Last year President Biden passed a massive package known as the Inflation Reduction Act, which was designed to help guide the US economy through a tricky period of rampant price rises. The legislation included varous programs and policies but, for those who are in the process of filing their tax returns, the additional funding for the IRS may be the most useful in the short term.
The tax agency has faced an impossible task in recent years; continuing to operate through the pandemic while also overseeing new programs like the expanded Child Tax Credit and multiple rounds of stimulus checks. There is now hope that this extra funding will help clear the tax return backlog and get refunds out as swiftly as possible.
Hello and welcome to AS USA
Hello and welcome to AS USA's live feed on financial news for Friday, 10 February.
Fears of a general recession have receded for now as the US economy continues to power forward. But economists think the nation may be in the grip of a phenomenon seen before in the 1980s, a “rolling recession”, where an economic downturn sweeps through sectors one-by-one.
Additionally, inflation still remains uncomfortably higher than policymakers would like who have signaled that interest rate hikes will continue. Although he was surprised by the "extraoridinarily strong" jobs report for January, Fed Chair Jerome Powell said that he expects 2023 to be a year of "significant declines in inflation.