Relief checks: 14 February summary news
US Inflation Relief: Latest News
Headlines: Tuesday, 14 February 2023
- Inflation data for January shows annual 6.4% price increase
- 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:
In October the SSA announced a historic cost of living adjustment increase raising the amount beneficiaries will receive each month in 2023.
The increase applies to all benefits, including those for disability.
The 2023 tax season is in full swing and there are plenty of tax credits available. One could fetch a refund of more than $10,000. Here’s a look…
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The 2023 IRS tax season continues. This year, the tax agency began receiving and processing tax returns for fiscal year 2022 starting 23 January. The deadline to file the return is April 18 or October 16 if an extension is requested and taxes are paid before April 18.
The IRS encourages taxpayers to have all their tax documents on hand to file an accurate tax return and receive their refund as soon as possible.
Every year, by law, taxpayers must file their tax return. However, most Americans must go to a third party in order to do so or pay for any tax filing software program. However, we will share some free options with you.
Several states made a variety of special payments to residents during 2022 in the form of tax refunds or assistance for lingering consequences of the pandemic. While the financial boost to household incomes was welcome there were doubts about how they should be treated for federal tax purposes.
For this reason the IRS had asked Americans that received any such payments to hold off filing their 2022 tax return. On Friday, the agency announced that it and the Treasury had resolved “this unique and complex situation.”
“While in general payments made by states are includable in income for federal tax purposes,” the IRS had good news for millions of beneficiaries of special payments last year.
JONATHAN ERNST / REUTERS
President Joe Biden on January CPI report
"Inflation in America is continuing to come down, which is good news for families and businesses across the country. Today’s data confirm that annual inflation has fallen for seven straight months.
"Inflation for food at the grocery store came down again last month. Gas prices are down about $1.60 from their peak last year. And real wages for working Americans are up over the last seven months, delivering welcome breathing room for American families.
"We are seeing this progress even as unemployment remains at its lowest level since 1969 and job growth remains resilient.
"There is still more work to do as we make this transition to more steady, stable growth, and there could be setbacks along the way. That is why my unwavering focus is on continuing to lower costs for families, rebuild our supply chains, and invest in America."
Statement from President Joe Biden
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.
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.
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Tax filers will be eager to know if and when they will be receiving a tax refund. Filing a tax return as soon as possible is the best way to make sure your return is processed promptly; the IRS will be sifting through tens of millions of tax returns on a first-come-first-served basis.
Typically the IRS is able to distribute a tax refund within 21 days so long as the return is filed electronically. Those who file with paper may have to wait up to six months to receive their refund.
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...
What goods and services saw prices increase in January?
After prices fell slightly in December, the Consumer Price Index (CPI) tracked an increase of 0.5 percent in the cost of goods and services in January.
The bump brings the year-over-year increase in the CPI to 6.4 percent, a drop of 0.1 percent over that which was calculated from December 2021-2022.
While a slightly positive step, the January CPI report still raises concerns for many because major increases were seen in the price of basic goods like energy, food, and shelter.
The cost of rent or a homeowner's mortgage rose 0.7 percent, groceries rose 0.4 percent, and gasoline rose a whopping 2.4 percent. The Federal Reserve has raised interest rates to slow inflation, but a rate of 0.5 percent does not put the country on track to meet the two percent target.
Inflationary pressures will remain, Fed chief warns
There were more tentative signs that inflation is fading in the United States this morning, but price rises remain a real concern for the Federal Reserve. The US central bank is thought to be considering another round of interest rate hikes, despite the rates being at the highest level recorded since 2007.
The Fed is aiming to get inflation down to an annualised rate of 2%, but today's January CPI report found that the rate in January was a hefty 6.4%.
The January inflation report, released earlier today, showed a slight fall in the rate of price rises in the United States. But inflation still remains worryingly high and Federal Reserve chair Jerome Powell has warned that more interest rate hikes may be required.
“There has been an expectation that it will go away quickly and painlessly — and I don’t think that’s at all guaranteed; that’s not the base case,” Powell told the Economic Club last week.
“The base case for me is that it will take some time, and we’ll have to do more rate increases, and then we’ll have to look around and see whether we’ve done enough.”
Inflation report confirms prior expectations
The Bureau of Labor Statistics released the January inflation report this morning, finding that inflation is continuing to gradually slow in the United States. Prices in January were 6.4% higher than they were at the same point in 2022 but the inflation rate continued to fall.
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.
Economists discuss the inflation data
The headline inflation number of 6.4% is higher than general expectations, and a sign that the pathway to the Fed’s target 2% is going to take a while. As the Fed earlier indicated, they have more work to do, but we believe their new 25 basis point level of hikes stays on course.
While inflation in the US continues its gradual march back down from its recent highs, it cannot be claimed to be job done just yet for the Federal Reserve as the print comes in above expectations. This data shows that markets would be wise not to get ahead of themselves.
Reaction to the inflation report news
There had been predictions that the latest CPI inflation data would show a greater reduction in price rises, but this was not the case.
The All-Items Consumer Price Index, produced by the US Bureau of Labor Statistics, represents the smallest 12-month increase since October 2021. However, not all economists pleased and are demanding the Federal Reserve do more to bring it down.
The first inflation data for 2023 was released on Tuesday morning as the Bureau of Labor Statistics (BLS) published the consumer price index (CPI) report for January. The report found that inflation was running at an annualised rate of 6.4%, and a 0.5% increase on typical prices one month earlier.
The BLS report confirmed that prices “rose 0.5 percent in January on a seasonally adjusted basis, after increasing 0.1 percent in December”. This suggests that the inflationary pressures still pose a considerable threat to the economy and could prompt the Federal Reserve into implementing more interest rate hikes to address the trend.
IRS says which inflation relief and disaster payments will not be taxed
The IRS announced that people in a number of states will not need to pay tax on state disaster payments on their tax return. These payments include the Middle Class Tax Refund in California which was sent out from the summer to the winter of last year. It was not known until this statement was released whether payments like this would count as taxable income.
“The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation,” the IRS said Friday evening in a statement.
Binance stablecoin backer ordered to stop issuing cryptocurrency token
The New York Department of Financial Services has ordered Paxos Trust Company to stop minting Binance USD citing "unresolved issues" in its relationship oversight with Binance. Binance USD, with roughly $16 billion in circulation, is the third-biggest stablecoin, digital tokens typically backed by traditional assets like the US dollar. The move by the chief financial regulator in New York is a major setback for Binance to gain against its main stablecoin rivals like Tether and USD Coin.
Paxos told Reuters that it will cease to issue new Binance USD as of 21 February, but will continue to support and redeem the tokens until at least February 2024.
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 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.
Stock markets make gains ahead of January CPI inflation report
All three major Wall Street indexes made gains on Monday ahead of the Labor Department’s Consumer Price Index report on inflation for January. After dipping 0.1% in December, economists are predicting headline inflation to rise 0.5% last month. The past three months have seen inflation come in below forecasts, but a higher-than-expected reading could stymie a rally by stocks and bonds after taking a beating last year.
Currently, markets are confident that the Federal Reserve can pull off a “soft landing” as they pull back from the fastest pace of rate hikes since the 1980s, the last time inflation reached such heights as have been experienced over the past year. Tuesday’s CPI data will help investors parse out what any possible direction the central bank will take going forward to wrestle down rising prices back to policymakers target of 2%.
Residents of the Evergreen State now have a new annual tax credit available to them that could be worth up to $1,200. On 1 February the Washington State Department of Revenue launched the Working Families Tax Credit (WFTC) which refunds residents a portion of sales tax paid each year.
The WFTC is targeted at low-to-moderate-income households to help provide financial stability. Up to 400,00 eligible Washington workers and their families may receive money back this year. The credit is modeled after the federal Earned Income Tax Credit (EITC) program, considered one of the best tools for reducing poverty nationwide.
Despite inflation demand is expected to remain strong this Valentine's Day
Prices have been rising at a blistering pace over the past year across all sectors of the economy but that hasn't deterred consumers yet. It appears Valentine's Day will be no different with the National Retail Federation forecasting that on average Americans will spend almost $200 each for their Valentine.
The association estimates that total spending for the holiday will increase around 8.3% in 2023 to just shy of $26 billion up from less than $24 billion last year.
Happy Valentine's Day!
Hello and welcome to AS USA's live feed on financial news for Tuesday, 14 February.