Relief checks news summary | 30 January 2023
Inflation Relief: Latest Updates
Headlines | Monday, 30 January 2023
- Federal Reserve to announce further rate hikes on Wednesday
- Newly introduced bill in Texas would provide a $10,000 raise to some of the state’s workers
- Gas prices could fall to an average of $3.10/gallon by 2024
- Aid is now available to Californians who need assistance paying their gas bill
- Republicans circulate a proposal to replace federal income tax with a massive sales tax
- What will the standard deduction be for 2023?
- Housing market:Will home prices drop in 2023 in California?
- SNAP benefit checks expected to decrease next month
- Concerns that interest rate hikes could lead to increases in unemployment
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The difference between a tax deduction and a tax credit
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.
Out-of-pocket expenses for charity work can be claimed as a tax deductible, saving the cost of cupcake ingredients for example.
Tax credits: In contrast, credits are solely 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.
One of the most notable examples relates to electric cars. The tax credit can claim back thousands of dollars if people purchase a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) from 2023 onwards. The credit can be worth up to $7,500.
Tax credits are regarded to be better than deductions as credits reduce your bill by dollars rather than your taxable income.
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You can save thousands of dollars by taking advantage of the various deductions and tax credits that are available to filers. They are sometimes referred to interchangeably, but deductions and credits are completely different.
House Speaker Kevin McCarthy's full interview
It was thought that the GOP was leaning towards the route of cutting Social Security support. Laid out in the Republican Study Committee budget is a list of cost-saving measures such as raising retirement age. While McCarthy’s statement likely means no changes during debt ceiling negotiations, it does not mean they are unlikely to be tampered with in future.
Social Security makes up 21% of federal spending while Medicare, and its associated support, make up another 25%.
Republicans have said they do not want the debt ceiling cap lifted but are instead going to force the government to cut spending. Where these savings will be found is not to be social security it seems, if a new interview with McCarthy is to be believed.
“If you read our Commitment to America, all we talk about is strengthening Medicare and Social Security,” McCarthy told CBS’s Face the Nation.
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The IRS had intended to make 1099-K forms mandatory for taxpayers who receive more than $600 in earnings from services like Venmo, PayPal, Cash App and Zelle. However the agency felt that it would not be feasible to introduce the new forms this year.
Last month Doug O’Donnell, acting IRS commissioner, confirmed that the changes will not be enacted for this filing season: “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes.”
New federal effort to boost housing availability
The White House has announced details of a new executive action to improve conditions for renters in the US housing market. The pandemic caused great economic uncertainty and that, for renters, can be disastrous.
The Biden administration wrote in a White House fact sheet that "rental housing has become less affordable with some landlords taking advantage of market conditions to pursue egregious rent increases."
It promised to ensure accountability for "those who exploit market realities at the cost of renters’ housing access and stability."
Who is eligible for a tax return deadline extension?
The IRS tax return deadline for 2023 is Tuesday, 18 April, by which point you need to ensure your tax filing is up to date to avoid being hit with penalty fines. Every year, however, the tax agency offers automatic extensions for residents in regions hit by disasters. Victims of recent winter storms in Alabama, California and Georgia are all eligible for an extension, but only in certain worst-hit parts of the state.
According to data released by CAR, in December property prices in California decreased. But January’s most recent numbers indicate prices are again finding support in one of the world's most competitive housing markets.
What can you expect from housing prices in the Golden State in 2023? We take a look...
Owners of electric vehicles could be in for a significant windfall when they come to file taxes, benefitting from a new tax credit that is worth up to $7,500. The credit is part of the Inflation Reduction Act passed by President Joe Biden last year.
This legislation provides more than $370 billion in subsidies for solar, wind and electrical industries. The law went into effect on 1 January; here's everything you need to know...
When will a debt ceiling increase be approved?
The United States has reached the upper threshold of debt allowed by Congress, forcing the Treasury Department to enact 'extraordinary measures' to avert a damaging debt default. The Republicans in Washington are insisting that future spending cuts are tied in with the debt ceiling increase, but President Biden is determined to avoid any limits. Biden and new House Speaker Rep. Kevin McCarthy will meet on Wednesday to discuss options.
Personal income grew in December, as did the personal savings rate
The Bureau of Economic Analysis reported that in December, personal income in the US grew by $49.5 billion, or 0.2 percent at a monthly rate. Consumer spending, however, fell for the second month in a row, by $41.6 billion, or 0.2 percent.
Household saving, as a person of disposable income, has increased in recent months, climbing back to 3.4 percent, the highest rate seen since May 2022. The current rate is one of the lowest recorded by the BEA since the 2008 Financial Crisis.
Confronted by high turnover within the Texas state government, lawmakers are looking to pass a bill that would provide a $10,000 salary increase for state workers, in an attempt to increase retention. The bill, HB202, has been filed but has not been voted on by any committee or the chamber at large.
Democrat, Rep. John Bucy III, who introduced the bill has described the steady increase in the number of resignations within state agencies as an “unsustainable crisis.” In 2022, the state’s employee turnover rate reached 22.7 percent – the highest recorded in over a decade. Some of the most cited reasons for leaving the public sector included “poor pay and insufficient benefits.”
Read our full coverage for details on which workers were included and excluded from this funding bill.
On Friday, the Biden administration said that more than 16 million people’s applications for federal student debt forgiveness had been “completely accepted” and forwarded to loan servicers.
Until the U.S. Supreme Court ruled on the program’s constitutionality, the government released a breakdown of the number of borrowers in each state who have filed for and been authorized under the program’s expansive debt relief provisions.
Read more on the case in our full coverage.
Investors expect a rough week on Wall Street
With the Federal Reserve set to adjust interest rates later this week, investors are preparing for what could end up being one of Wall Street's worst weeks this year.
With the December inflation numbers coming in lower than those seen previously, the rate increase may be a bit lower, perhaps around 0.25 percent.
Additionally, major companies like Mcdonald's, Amazon, Meta are slated to release their most recent quarterly reports, which will likely influence markets later in the week.
Last spring, the Social Security Trustees reported that the Trust Funds that pay part of the benefits to retirees and survivors of contributors would be exhausted by 2034. However, a recent report from the Congressional Budget Office (CBO) shortened that timeline by a year.
Now this doesn’t mean that the Social Security Administration would stop making payments to recipients, but benefits would be reduced. That is unless action is taken to shore up the programs that provide a vital financial lifeline to millions of Americans.
Read more in our full coverage on the CBO's report on the financial solvency of Social Security.
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.
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...
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.
Hello, and welcome to our live feed on financial news for Monday, 30 January.
Earlier this month, over a hundred companies announced layoffs, including major names in the tech sector.
The Bureau of Labor Statistics has reported decreases in the national unemployment rate and inflation for December. Unemployment has reached its lowest level in recent memory but is expected to increase as the effects of Federal Reserve wage hikes take effect. Consumer prices are continuing to rise but at a slower rate than what was seen in 2022. Over the coming weeks, the data from January will be available, providing greater insights into the state of the economy.
The fate of President Biden's student debt relief is set to be decided by the Supreme Court next month. Millions have applied for cancellation of up to $20,000 of their loans.