Relief checks summary news: 21 february

What to do if you already paid taxes for your relief or stimulus checks in California

Earlier this month, the Internal Revanue Service (IRS) warned taxpayers who had received a stimulus check from their state to postpone filing their tax return until the agency determined if these payments counted as taxable income.

The guidance is now available, and for taxpayers in California, the news is good. Because the Middle-Class Tax Refund is classified as a “payment [...] made for the promotion of the general welfare or as a disaster relief payment,” the checks will not be taxed at the federal level.

The tax authority cited the pandemic emergency declaration that the White House as a justification for these payments to be treated as a relief program. Since the White House plans to end the pandemic emergency declaration in May, in the future, these types of payments may be subject to federal taxes. State governments should be aware that when the pandemic state of emergency is lifted, any payments made to their residents are likely to be taxed, and recipients should be informed of that fact to ensure they are not caught by surprise when filing the federal return.

Interests rates for mortgages are trending upward once again

The average interest rates applied to mortgages in the US have fallen since their high in late 2022 but are, once again, trending upward. The thirty-year fixed mortgage rate stands at 6.3 percent, with the rate applied to a 15-year loan reaching 5.5 percent. 

With further rate increases expected in the coming weeks, the rates applied to loans are also likely to rise in tandem. 

What will the Fed take into consideration as it decides on further rate hikes?

Next week the US Federal Reserve is expected to announce further changes to the Effective Federal Funds rate. 

Many economic factors will influence the decision over the expected increase. 

In early February, the Bureau of Labor Statistics reported that in December, 4.1 million people voluntarily left their jobs. This was the highest number recorded in over four months and is a sign that the labor market remains tight. When economic conditions favor workers, many feel more willing and interested in switching roles, companies, or industries. 

Additionally, the BLS reported that in January, the economy added over half a million jobs, far exceeding most projections. Officials at the Federal Reserve have said that the tightness of the labor market is one factor pushing up prices. 

Chairmen Jerome Powell has warned that the impacts of rate increases have not taken effect. In January Consumer Price Index tracked an average increase of 0.5 percent in goods across the market. It remains to be seen whether or not the Federal Reserve will continue pushing up rates slowly or move more quickly in light of the January inflation report. 

Housing market slowdown nearing bottom

Home sales are bottoming out. Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.

US existing-home sales down in January, but end of housing downturn in sight

Sales of existing homes in the United States dropped for the twelfth straight month in January to the lowest level in more than 12 years. The month-on-month decline slowed to 0.7% according to a report from the National Association of Realtors, raising hopes that the housing market downturn could be reaching a bottom.

January also saw the smallest increase in annual house prices since 2012 with the average existing-home price for all housing types at $359,000, an increase of 1.3% from the same time last year.

“Inventory remains low, but buyers are beginning to have better negotiating power,” said Lawrence Yun Chief Economist at NAR. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”

FINANCIAL NEWS

Requirements to receive up to $2,000 Child Tax Credit in 2023

The 2023 Child Tax Credit is available to parents with dependents under 17 as of 31 December 2022 and who meet certain eligibility requirements. In 2021, the American Rescue Plan made big changes to the credit for one year that helped many families by allowing them to receive half of the value of the credit over six months rather than as a bulk sum when they file their taxes. 

We take a look at the Child Tax Credit for this year, and who is eligible to receive the support...

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How to check the status of your tax return

The IRS has a tool called “Where’s My Refund” which is accessible online. This allows taxpayers to check the status of their refund after providing their Social Security Number, the refund total, and their tax filing status. Information is available 24 hours after a filing has been submitted. Another good use of the tool is its notifications if there is an error with an application, allowing filers to make changes quickly. This will require your return to be sent electronically instead of paper.

For those who have not seen any changes to their filing status and filed a paper return, the IRS offers a help line which can be reached at 1-800- 829-4477.

FINANCIAL NEWS

Requirements to receive up to $7,000 for the Earned Income Tax Credit refund (EITC)

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.

SOCIAL SECURITY

How much is the raise for disability benefits for 2023?

Around 16.5 million Americans received payments from either Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) at the beginning of 2023.

Social Security payments for disability benefits have on average by roughly $119 per month, which works out to an additional $1,428 per year. Those who receive Supplemental Support Income saw the maximum amount they could receive jumped by $73 per month, while for couples the gain was $110.

FINANCIAL NEWS

Are interest rates going to continue to increase in 2023? What’s the 30-year fixed-rate mortgage now?

The Federal Reserve is tasked with providing stable conditions for the US economy and is utilising its power to adjust interest rates to cool inflation. But what does an ‘interest rate hike’ actually involve?

With financial experts predicting another three interest rate hikes in 2023, home-owners should anticipate further increases on their monthly mortgages repayments in the coming months. We take a look at what to expect...

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Wall Street markets slump on expectations of Fed rate hikes and grim retail profits for 2023

Walmart and Home Depot reported their latest earnings on Tuesday. While America’s largest retailer beat expectations, higher-than-expected food costs are predicted to eat into profits this year. Likewise, the No. 1 domestic home improvement chain painted a grim picture for earnings in 2023.

The dour forecast for consumer spending going forward combined with expectations that the Fed will continue raising interest rates, forecast to peak in July at 5.35% and remaining at that level through the year sent all three major Wall Street indexes down sharply. The Dow Jones and S&P 500 have lost 1.85% by early afternoon, while the Nasdaq saw 2.15% knocked off its value.

FINANCE

Which states are still sending relief checks in 2023?

While the US economy in many respects has recovered from the economic collapse induced by the covid-19 pandemic, the disruptions brought about by the virus are still rippling through the economy. The federal government doled out trillions to keep the economy from imploding including direct stimulus payments to Americans.

However, those measures have been ended but supply and demand imbalances, shocks to the global economy and aftereffects of the pandemic have continued to push the price of basics higher like food and energy over the course of 2022. Since the federal government was no longer stepping up, state governments put in place their own programs last year to help their residents cope with the higher cost of living.

Using budget surpluses they sent their own direct payments, some of which are still arriving. At least one additional proposal is in the works for 2023. Here’s a look at which states are still sending extra money to there residents.

FINANCIAL ASSISTANCE

Which states have the highest and lowest payment for unemployment benefits in 2023?

The amount that those who find that they are out of work and eligible to collect unemployment benefits varies greatly from state to state. According to Savings to Invest, a personal finance blog, the stingiest state is Mississippi paying out at most $235 per week, but at least the state pays up to 26 weeks of benefits. Alabama, Louisiana, Tennessee and Florida all pay at most $275 per week, but Florida will only cover 12 weeks currently.

At the other end of the of the spectrum is Massachusetts which boosts household incomes with up to $1,051 per week plus $25 per dependent. ​​​​​​​

And the other tax credit for the $10,000?

To qualify for CalEITC you must meet all of the following requirements during the tax year:

You’re at least 18 years old or have a qualifying child

Have earned income of at least $1.00 and not more that $30,000

Have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) for you, your spouse, and any qualifying children

Live in California for more than half the filing year

Not be eligible to be claimed as a qualifying child of another taxpayer

Not be eligible to be claimed as a dependent of another taxpayer unless you have a qualifying child

How to recieve $10,000 back on your tax return

Below are the requirements to receive the EITC in the United States:

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)

And also...

FINANCIAL NEWS

Requirements to receive up to $10,000 for State and Local Taxes (SALT): Credit and deductions

Every tax year millions of Americans qualify for tax refunds. Although the IRS has said they expect refunds to be smaller this year, with the evidence suggesting they are correct, there are opportunities for some taxpayers to receive bumper refunds if they qualify for the Earned Income Tax Credit (EITC) and the California Earned Income Tax Credit (CalEITC).

It is only through qualifying for both of these credits that you can receive the $10,000 deduction.

Bernie Sanders on income inequality

Bernie Sanders, the newly appointed Chair of the US Senate Committee on Health, Education, Labor & Pensions, released a short video talking about income disparities between kindergarten teachers and Wall Street fund managers. 

Sanders says one fund manager makes more in a year "than every kindergarten teacher in America combined." Sanders asks how this fact can be explained when considering the value brought by teachers of all ages, particularly those who set children up for success at a young age. 

The Vermont senator also mentioned called attention to falling wages for teachers, noting that "in almost forty percent of our school districts," the starting pay for a teacher is $40,000." These conditions, which for many do not improve significantly as teachers gain experience in the profession, are causing a crisis in education. Educators are leaving the field in droves, and not just new teachers. Shortages of qualified and credentialed teachers are growing, which will worsen educational outcomes. 

Increasing pay and improving the conditions of teachers who are increasingly persecuted with false attacks of indoctrination. For Sanders, reducing income inequality and increasing teacher pay is one way to rebuild the failing educational system. 

Relief checks in California and two dozen more states will not count as taxable income

Earlier this month, the Internal Revanue Service (IRS) warned taxpayers who had received a stimulus check from their state to postpone filing their tax return until the agency determined if these payments counted as taxable income.

The guidance is now available, and for taxpayers in California, the news is good. Because the Middle-Class Tax Refund is classified as a “payment [...] made for the promotion of the general welfare or as a disaster relief payment,” the checks will not be taxed at the federal level.

Check out our full coverage for more details on the guidance from the IRS for California and other states who sent direct payments to their residents. 

FINANCIAL NEWS

Can you file for bankruptcy on student loans?

Student debt is a thorny issue for both the American youth affected and the Biden administration trying to deal with it. The decision to cut hundreds of millions of dollars of student debt was met with wide praise in many circles, though the move has been taken out of the president’s hands. 

With payments set to resume in the summer, along with the return oppressive interest rates, many students will be under the financial cosh come August. The desperation has people turning to all avenues of opportunity to get away from the debt, including the danger of bankruptcy.

Would bankruptcy be able to clear student debt?

In a difference to other debt wiped by bankruptcy proceedings, a filing does not automatically clear your student debt. Both the Chapter 7 and Chapter 13 bankruptcies are complicated processes that require exceptional circumstances with high thresholds of proof to be successful. Even with this, the consequences can be extremely damaging in the long-term if the debt is wiped in this manner. Any other bankruptcy aside from a Chapter 13 can also mean the lost of other collaterals such as a house mortgage.

However, proving to your lender that bankruptcy is necessary includes proving that the debt is causing you “undue hardship”. This entails the debt preventing you from meeting a “minimal” standard of living and being able to show that this is likely to continue for the full duration of the repayment term.

SOCIAL SECURITY

Social Security double payment in March: who qualifies and how much is it?

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, along with June, September and December in 2023. Another group of beneficiaries always gets double payments as they receive both Social Security and Supplemental Support Income.

Hello and welcome to AS USA's live blog covering financial news and economic relief in the US for Tuesday, 21 February. 

Tax season is underway, and the IRS has informed most residents in states who were distributed stimulus checks that they will not need to pay federal tax on them. Filers have until 18 April to submit their returns. 

This week the Federal Reserve is expected to announce further increases, a move that will likely bring down financial markets later in the week. These increases will come after the news that the economy added over half a million jobs in January, coupled with an increase in consumer prices of 0.5 percent. These datapoints are sure to influence the decision of the Fed when determining future rate increases.