Relief checks news summary | 16 February 2023
Headlines: Thursday, 16 February 2023
- Initial unemployment claims fell by 1,000 last week to 194,000
- Real wages fell by 0.2 percent in January for a year-over-year decrease of 1.8 percent
- Retail sales beat expectations, increasing 3% in January
- Wall Street leaders predict 'soft landing' of US economy: what does this mean for workers?
- Inflation data for January shows 6.4% price increase year-on-year
- IRS reports a ten percent decrease in the average refund size compared 2022
- Michigan to send $180 inflation relief checks: Who qualifies and when will they arrive?
2023 Tax Season
- Top tips to avoid errors when filing your return
- Take advantage of the IRS' Free File online service
- Who to contact if your tax refund is stolen or never arrives
Read more from AS USA:
During 2022 many states opted to send out one-off payments to residents to help with the rising cost of living. Inflation relief payments became increasingly common, but that raised new questions.
The IRS was initially unsure whether those payments would be subject to taxation, and therefore needed to be cited on tax returns. Finally, however, the tax agency has offered some clarity on the issue...
Federal Reserve could introduce further interest rate hikes
The Federal Reserves, the United States' central bank, may decide to enact further interest rate hikes in a bid to tackle inflation. Increasing interest rates should cool the economy and slow the rate of price increases. However the rate increases have had significant effects for borrowers and has made mortage repayments more expensive.
It's no secret that the United States has experienced a period of sustained high inflation over the past 12 months. Prices are rising well ahead of the Federal Reserve's 2% target, but changes do appear to be moving in the right direction.
“Inflation data received over the past three months show a welcome reduction in the monthly pace of increases,” Fed Chairman Jerome Powell said earlier this month. “And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
We take a look at what's causing high inflation...
What is the average IRS tax refund this year?
Tax season is not a fun time of year for filers, but it does bring the financial bonus of a tax refund for most taxpayers. In recent years the average refund has been bolstered by federal support programs, such as the stimulus checks and boosted Child Tax Credit.
This has been born out in the data so far this year. The IRS has said that the average refund amount so far is $1,963, a 10.8% decrease from the figure of of $2,201 recorded last year.
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Since many pandemic relief aid programs have ended, the Internal Revenue Service (IRS) informed taxpayers that they should expect a smaller refund this year. In just the first few weeks of the 2023 tax season, the average refund has dropped from an average of $2,201 in 2022 to $1,963.
On 3 February, the IRS released a comparison of where the tax authority stands compared to the same period in 2022. While refunds are down, the number of filers is up by over thirteen percent, rising from 16.68 million to 18.94 million.
What is the IRS special schedule for in-person assistance?
At TACs, people can receive in-person help from IRS staff. These centers are not normally open on Saturdays and individuals must make an appointment to receive services. During these Saturday hours, individuals may walk in to receive all services routinely offered in the office, with the exception of cash payments. They can also ask about setting up an Online Account and getting an Identity Protection PIN, among other topics.
According to the statement from the Internal Revenue Service, there will be interpreters for several languages through a translation service over the phone. IRS staff will schedule appointments for a later date for people who are deaf or hard of hearing who need sign language interpreter services.
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As the tax season continues, the IRS announced last week special Saturday hours on select dates over the next several months. This schedule will apply to all Taxpayer Assistance Centers (TACs) throughout the country.
According to a statement from the US tax agency, the special Saturday availability nationwide will take place from 9:00 a.m. to 4:00 p.m., on 11 March,8 April and 13 May. Offices in dozens of states, the District of Columbia and Puerto Rico will be open during this special timetable without an appointment.
IRS Refund Over $10,000: Who Is Eligible & How To Apply
Individuals who are eligible for the Earned Income Tax Credit (EITC) and the California Earned Income Tax Credit (CalEITC) may be able to receive a refund of more than $10,000.
If you are eligible to collect both credits, you will need to claim them through your prospective tax return. The exact amount depends on the total number of qualifying children, as well as your annual income.
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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.
Moderna reverses plan to quadruple price of covid-19 vaccine
The federal emergency for the covid-19 pandemic is set to end 11 May which will mean the ceasing of additional government funding to health programs that remain in place. With the oncoming change, Moderna had said that it planned to up the price of its covid-19 vaccine from $26 per dose to between $110 and $130, a more than four-fold increase.
However, after Senator Bernie Sanders announced that he had called on Moderna CEO Stéphane Bancel to testify about the price increase, as well as the pharmaceutical industry in general, the maker of one of the most widely used covid-19 vaccines changed course and wouldn’t raise the price.
“Everyone in the United States will have access to Moderna’s COVID-19 vaccine regardless of their ability to pay,” the pharmaceutical company said in a statement.
BLS reports that real wages fell almost two percent in 2022
In nominal terms, wages are increasing (i.e., paychecks are showing a greater number than they did in 2021). However, in real terms, average incomes are falling.
The BLS has reported that in 2022, real income fell by 1.8 percent. Any nominal gains were absorbed by inflation, and disposable income fell. Last month saw a 0.2 percent decrease in real wages, showing that inflation continues to outpace any nominal increases.
This news comes as the Federal Reserve blames inflation on low unemployment and a tight labor market.
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Federal Reserve Chairmen Jerome Powell has warned that the impacts of the central bank’s rate hikes have not begun to impact the US economy. Regardless, inflation is falling, leading financial markets to rally after a turbulent 2022. The renewed strength of the stock market has some leaders of the financial sector, like Goldman Sachs CEO David Solomon, predicting that the economy could stabilize without a disruptive recession.
Solomon sees the performance of stocks in recent weeks as evidence that “the market has a sense that we’re putting inflation in the rearview mirror.” There are still likely to be ‘twists and turns,’ but the executive believes the “chance of a softer landing feels better now than it felt six to nine months ago.”
Read our full coverage for more on how such a path would impact workers.
How many people are claiming unemployment benefits in the United States?
Initial unemployment claims fell by 1,000 last week to 194,000. This brings the 4-week moving average to 189,500.
The total number of beneficiaries was 1,696,000, down from 2,063,573 recorded during the same week in 2022. States with the highest percentage of workers receiving UI benefits for the week ending on 28 January were New Jersey (2.6), Rhode Island (2.5), California (2.3), Minnesota (2.3), Alaska (2.2), Massachusetts (2.2), Montana (2.1), Illinois (2.0), Puerto Rico (2.0), Connecticut (1.9), and New York (1.9).
While there are major issues that plague the Social Security Disability Insurance (SSDI) program in the United States, modest support is available to some workers who qualify.
The SSDI program began making payments in 1956, and currently, more than 8.7 million disabled workers and 1.2 million family members depend on these benefits. In January 2023, the average monthly payment was $1,483.11 or $17,869 a year.
Read our full coverage for details on what happens when an SSDI beneficiary reaches their full retirement age.
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, 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.
US retail sales see positive growth
A Commerce Department report showed retail sales surged 3% in January as purchases of motor vehicles and other goods pushed the number well past the 1.8% estimate from economists polled by Reuters.
This follows the inflation data released on Tuesday which would suggest a few more interest rate hikes this year.
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FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo / MIKE SEGAR / REUTERS
Wall Street rallies boosted by better-than-expected retail sales data
Retail sales were up 3% in January a Commerce Department report on Wednesday showed, outpacing the estimated 1.8% forecast. The better-than-expected increase was on the back of motor vehicles purchases and other goods. All three major Wall Street indexes finished the day higher with Nasdaq making the most gains, up 0.92% at the end of trading.
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Hello and welcome to AS USA, your home for financial news and information this filing season. We have the latest advice and guidance from the IRS to help you submit taxes, along with information on the January inflation report and much more!