Relief checks news summary | 15 February 2023
US Finance New: Latest Updates
Headlines: Wednesday, 15 February 2023
- Retail sales beat expectations increasing 3% in January
- 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
- Will the Federal Reserve introduce further interest rate hikes?
- Initial unemployment claimsincreasedby13,000 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?
- US trade deficit grew to $67.4 billion in December up from $61 billion a month earlier
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:
Now, in the midst of a continuing public health crisis and a growing federal deficit, is not the time for Moderna to be quadrupling the price of this vaccine. Now is not the time for unacceptable corporate greed.
DADO RUVIC / REUTERS
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.
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.
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.
2023 tax season: IRS special schedule for in-person assistance
The 2023 tax season is underway. The IRS will continue to receive and process tax returns for fiscal year 2022 which are due April 18. Taxpayers who file an extension request can have until October 16 to file their return.
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 throughout the country.
Shannon Stapleton / 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.
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.
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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Year after year, thousands of people are eligible to receive tax credit that can result in a refund. However, not all potential beneficiaries claim the money, leaving thousands of dollars on the table. Here’s how you might be eligible for a refund of more than $10,000 from the IRS, provided you live in California.
The good news from retail, and broadly from the stronger economy, has been mostly priced in. At the same time, that strength has taken market expectations of rate cuts off the table and moved the terminal Fed funds rate a little bit higher.
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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It is no exaggeration to say that the US economy is still wrestling with the fallout from the pandemic. After being forced to shut down in early 2020, businesses then received an influx of fresh cash from various support programs which has turbocharged the recovery.
Like the pandemic itself, the economic recovery was felt differently by different sectors and the US economy is now experiencing growing pains as it returns to normal service. Some industries are thriving while others are floundering, a situation that has pushed the US into a rolling recession.
Read more on the state of the economy and where it may be heading in our full coverage.
White House responds to January Consumer Price Index 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.
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.
New blog from St. Louis Fed explains why prices for certain goods and services rise faster than others
Inflation has hit consumers hard over the last year, primarily because rapid price increases were seen in basic good markets like food, shelter, and energy. Purchasing these goods is unavoidable, and as prices shot up, very little was done to support those struggling to keep their head above water. The blog helps to explain how supply chain shortages that reduced the availability of some goods led consumers to increase spending on services.
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IRS will not tax relief payments in 19 states
During the course of 2022, with the country suffering through a period of sustained high inflation, a number of states and local authorities opted to distribute relief payments to residents. The most wide-spread of the programs was California's Middle Class Tax Refund, but dozens of states passed similar support.
Earlier this month the IRS told filers to delay their submission while it decides whether those payments should be subject to federal taxes. Now the IRS has ruled on the majority of those payments, and its good news for recipients...
On Tuesday morning the Bureau of Labor Statistics (BLS) published the consumer price index (CPI) report for January, the first batch of inflation data for 2023. 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.
More than 8 million tax refunds have been sent out
Tax season can be a stressful time of year for filers, but it does come with the added bonus of a tax refund for a majority of taxpayers. This year the IRS is benefitting from a funding boost that should slash waiting times and get those refunds out more promptly.
By 3 February, the tax agency says that more than 8 million refunds have been distributed with an average value of $1,963. This is down from an average figure of $2,201 at the same point last year.
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Will the Federal Reserve increase interest rates again?
Inflation has undoubtedly been the major economic trend of the past 12 months, and interest rate hikes have become the IRS' tool of choice when it comes to tackling the issue. Albeit a fairly blunt implement, interest rate adjustments can moderate the markets by making borrowing more or less expensive.
So with inflation remaining notably high, the Federal Reserve may well choose to introduce further increases this year.
Where's My Refund?
A majority of tax filers are expected to receive a tax refund this year. For many this annual lump sum of cash is vital to cover the cost of essentials and eligible filers will be waiting anxiously for the payment to arrive.
If you've submitted your return and are waiting for a refund, take advantage of the IRS' Where's My Refund? online tool..
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Sen. Sanders introduces legislation to secure Social Security
The fate of Social Security has been in the nes in recent weeks as lawmakers in Washington look to pass an increase for the national debt ceiling. President Biden wants a clean bill that focuses just on the debt ceiling issue, but Republican members in the House are eager to include future spending restrictions in the package.
The Democrats are moving to secure the future of Social Security, with Sen. Bernie Sanders forwarding a bill to extend the program's solvency through 2096.
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What does the January inflation report mean?
There were few surprises in the Janaury inflation report released on Tuesday with experts' predictions generally coming true. Inflation continued to slow gradually but the rate of price rises remains dangerously high. It is thought that the Federal Reserve will response with further interest rate hikes in the coming months to keep inflation under control.
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 in line with experts' predictions
Yesterday the Bureau of Labor Statistics released the January inflation report, 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.
While progress is still being made the Federal Reserve may still move to raise interest rates once agin in the coming month. The central bank is aiming to get inflation down to an annualised rate of 2%.
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Last year, in response to high inflation in the United States, a number of states opted to approved sending stimulus checks or tax refunds as inflation relief. Although inflation has fallen in recent months, support continues to be sent and it's not too late to claim
Here are the states sending checks or refunds in February...
Should I pay tax on 'special state payments'?
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.
There are 21 states affected
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Good morning and welcome to AS USA!
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!