Relief checks news summary | 29 January 2023
Headlines | Sunday, 29 January 2023
- Concerns that interest rate hikes could lead to increases in unemployment
- Texas is one of many states seeing egg prices rise rapidly, what factors are contributing to the increase?
- Social Security Adminstration begins sending out larger benefit checks
- The Department of Education received the highest number of applications for student debt relief from California and Texas.
- New York offers residents a debt relief program for those who completed their undergraduate degree at an institution in the state.
- Congressional Budget Office shortens its timeline for exhaustion of Social Security funds
- IRS informs the public that their tax refunds may be lower than those received over the past two years.
Biden refuses to negotiate on debt ceiling
Congress is once again being tasked with agreeing an increase on the debt ceiling to avoid a catastrophic default on the nation's obligations. This is typically done with bipartisan support in Washington - with the 2011 debt ceiling crisis a notable exception - but Republican lawmakers appear set on extracting concessions from President Biden in return for the support. Biden has insisted that he is unwilling to negotiate on the matter.
Am I eligible for the Earned Income Tax Credit?
Tax season can bring with it a sense of dread, but if you know how to take advantage of the various federal financial relief programs it can actually be a very profitable time of year. A majority of filers are expected to receive a tax refund this year and you can boost your payment by registering for the Earned Income Tax Credit.
For more information on the credit and how to apply, check out this handy video from the IRS...
McCarthy confirms debt ceiling talks set for Wednesday
Recently-installed House Speaker Rep. Kevin McCarthy confirmed that he will meet with President Biden on Wednesday to discuss raising the debt ceiling. Biden, for his part, has insisted that future spending will not be involved in negotiations for a debt ceiling authorisation but McCarthy has said that it is on the table.
A group of Republicans in the House of Representatives are looking to reignite the debate on federal taxation, calling for the decentralisation of the IRS and introduction of a national sales tax.
Similar proposals were first tabled in 1999 but they have never made it to the floor in either House of Congress. However the Republicans now hold a slim lead in the House and Speaker Rep. Kevin McCarthy may feel he needs to allow the bill to be debated to help appease elements of his fragmented caucus.
"Last week was the two-year anniversary of the day I was sworn in as President. And at the time I was sworn in, the pandemic was raging and the economy was reeling. Millions of you were out of work through no fault of your own. Millions more kept their jobs, but they saw their hours and their paychecks cut. Millions of millions of Americans."
"In the last two years - my administration - we cut the deficit by $1.7 trillion, the largest reduction in debt in American history."
GOP members push for Fair Tax Act debate
Members of the House Freedom Caucus are thought to be pushing for a debate on controversial national sales tax proposals, despite the fact that the vast majority of Republicans are unwilling to countenance such sweeping change to the tax system.
The right-wing group with the Republican Party secured significant concessions from Rep Kevin McCarthy in his eventually successful House Speakership election. McCarthy has said publically that he does not support the changes outlined in the Fair Tax Act. However he will need to ensure that his members who do want a national sales tax feel heard within the party.
Use of third-party payment platforms like Venmo and PayPal is becoming increasingly widespread, with many now using the easy service to conduct business transactions. The IRS is seeking to update its processes to make it easier for filers to list payments in a filing.
However a late decision from the IRS means that the changes have been delayed...
Top tips for tax returns
More than 165 million individuals are expected to submit tax returns to the IRS this year. The tax agency has been overstretched in recent years as it battles to administrate the various pandemic-era relief programs.
However the IRS should be considerably swifter this filing season and hopes to distribute tax refunds within three weeks of the return being filed. Here's a few ways you can speed up the process...
Each year the Internal Revenue Service (IRS) amends the income thresholds and increases the standard deduction to keep tax burdens in line with inflation. While the actualy brackets have stayed the same, the amount of tax paid within each bracket has changed.
The theory is that groups with less income should not be required to contribute as much, though it is much easier for the super-rich to navigate tax loopholes to end up paying much less than someone on the lowest tax bracket.
For married joint filers the 22% tax bracket is up to $89,450.
Numbers has been released in a freedom of information request about the number of students that applied for the Biden administration’s debt forgiveness plan. Politico made the request and have released the data publicly.
In total the Education Department received 25,031,094 applications. This does not include those who were automatically enrolled but this data has not been released. The White House anticipated that as many as 40 million people could be eligible to sign up for the programme.
Of these 25 million applicants, 16,485,454 had their requests confirmed meaning around 66% of applications were accepted.
Senate GOP refuses to support debt ceiling increase
Nearly half of all Republicans in the Senate have signed an open letter demanding that significant spending cuts are included in debt ceiling talks. The Democrats hold a majority in the Senate so do not need to find a bipartisan solution, but this letter shows the strength of the feeling amongst Republican members.
What is the difference between deductions and tax credits?
Tax deductions: Deductions allow filers to reduce their eligible income before calculating the tax liability. Reducing the amount of qualifying income helps to reduce how much tax you are required to pay.
Tax credits: In contrast, credits are used to reduce your eventual tax liability. Once your tax balance has been calculated credits subtract a set dollar amount from your outstanding balance, which reduces your bill or increases your refund.
The term ‘standard deduction’ is the earnings threshold below which you will not have to pay tax on your income. This either means that you can reduce your tax bill, or it could free you from income tax entirely.
The standard deduction increases in 2023 is $13,850 for single filer or married but filing separately, $20,800 for head of households and $27,700 for married taxpayers filing jointly.
For recipients of Medicare, being incarcerated for even a brief period of time can raise some major questions about coverage. Do you need to health insurance to get treatment in prison, and can you retain coverage from Medicare while incarcerated?
By law, all federal and county prisons have to provide medical care and prescriptions as required by prisoners. The cost for the service, in almost all cases, is covered by the institution.
To assist low-income people and families in coping with the difficulties of the COVID-19 outbreak, Congress temporarily granted SNAP emergency allotments. After the February 2023 issue, emergency appropriations will no longer be made under the Consolidated Appropriations Act 2023. As a result, benefits for all SNAP families will revert to their pre-enhancement levels by March 2023.
Those supplemental emergency payments will no longer be available in 17 states as of January 2023. According to the Food and Nutrition Service of the United States Department of Agriculture, these are the following states:
Passing widespread student loan debt forgiveness was one of Joe Biden's big pledges while on the campaign trail in 2020. Last summer he was finally able to pass a significant package that would be worth up to $20,000 per borrower, but his efforts have been blocked by a series of legal challenges.
The Biden administration has taken matter to the Supreme Court, who are set to begin hearing arguments in the coming weeks.
How to use the IRS Free File tool
For around 70% of filers, the IRS offers a handy Free File online tool to simplify the process of filing a tax return. Individuals earning less than $73,000 per year can take advantage of the tool to submit their returns.
Here's everything you need to know to get set up...
I will not let anyone use the full faith and credit of the United States as a bargaining chip. In the United States of America, we pay our debts.
They seem intent on being the party of chaos and catastrophe.
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We'll be keeping you in the loop about tax credits, applicable deductions and other tips and tricks for income tax filing.