Relief checks news summary | 31 January 2023
Inflation Relief: Latest Updates
Headlines | Tuesday, 31 January 2023
- As inflation slows and unemployment hit a record low, the Federal Reserve is expected to futher increase interest rates tomorrow.
- 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
As part of the Inflation Reduction Act, the IRS is offering a $7,500 credit when you file, but who is it for and how do you apply? Find out how to apply for the tax credit...
The Internal Revenue Service began accepting and processing 2022 tax returns 23 January, and American taxpayers will have until 18 April 2023. While the agency expects most filers to get a refund, it warned that they might be smaller than in the past couple of years as covid-19 relief programs have come to an end.
However, to make sure that you get all the tax credits and deductions that you have coming your way to potentially increase your refund, or barring that, paying less taxes, there are a number of tax software programs. The top providers have both free and paid versions of their services that can make the process of submitting your 2022 tax return easier. Additionally, many have apps that allow you to use the software on your smartphone or even a tablet.
Read our full coverage for a look at the best software available in 2023 .
Each year the IRS issues a standard mileage rate, which is used by taxpayers who need to drive their own car for business reasons. The rate is used to calculate the deductible costs associated with operating an automobile for business.
For those whose work demands a lot of miles on the road the mileage rate is always important. But after the price of gasoline soared to record highs in 2022 the rate is even more crucial than ever, and can be worth thousands of dollars in tax deductions.
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 to increase retention. The bill, HB202, has been filed but has not been voted on by any committee or the chamber at large.
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Several utility providers in California have warned that natural gas bills will be much higher than usual. Pacific Gas and Electric Company (PG&E) projects residential energy bills to be 32% higher from November to March, compared to the same period last year, according to a statement shared by the company.
Faced with high natural gas bills, the California Public Utilities Commission is considering doling out aid for Californians through so-called Climate Credits, which are part of efforts to fight climate change climate.
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If you are currently working on your tax return for 2022 make sure to remember the standard deduction thresholds to minimise your tax bill. All filers are given a base allowance of 'tax-free' income, before the lowest tax bracket kicks in.
That bottom threshold is adjusted every year to ensure that it stays in line with inflation and got a sizeable increase recently. Here's what you need to know to file taxes...
Can I get an IRS disaster extension?
Filers across the country are getting their tax affairs in order to get their 2022 tax return filed before the 18 April deadline. Failure to do so on time can result in penalty fines, but filers in some areas may have been given extra time if they have been the victim of the winter storms.
The IRS is offering an automatic extension until 15 May for groups affected by the extreme weather. Full information from the IRS....
Biden criticised for debt ceiling stance
President Biden has maintained that he will not negotiate with Congressional Republicans over the debt ceiling, insisting that they must raise the limit without seeking concessions. The raising of the debt ceiling is, normally, a formality but on occasion bipartisan struggles can flare up.
Most notably in 2011 the debt ceiling crisis saw the United States go within a few days of a disastrous first-ever default on its debt obligations.
However Biden's stance has been criticised by Rep. Virginia Foxx, who said that the GOP were committed to finding a "responsible" solution to the debt situation.
If you’re unable to get your Form W-2 from your employer, contact the IRS at 800-TAX-1040. The IRS will contact your employer or payer and request the missing form.
If, after contacting the IRS, you still do not have your form, there are two choices...
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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.
Debt situation a peril but an unlikely one
The debt ceiling has never been exceeded. In history it has been raised 78 times to ensure the US does not default on its debt obligations. With the dollar the world’s currency in 2023 such a move would cripple the US’s role as a reliant bank while damaging economies around the globe. Indeed, economists estimate that the US would lose 6 million jobs, $12 trillion in household wealth and 4% of gross domestic product. The unemployment rate would double to 7%.
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.
After a near-record number of workers quit their jobs last year in search of higher wages and better conditions, many may have to report their income to the IRS using more than one W-2.
Legally, employers are required to send out W-2s to all current and former workers. Today is the last day employers have to send these forms out. If, over the next few days, you are still missing a W-2, you should reach out to the employer and ensure that they have the correct mailing address.
IRS provides tax preparation support to those making under $60,000 a year
Have questions on how to file your tax return? The IRS has a team of certified volunteers, typically retired tax professionals, who are available to help you... FOR FREE! Using the link below, you can schedule an appointment at the office offering these services in your community.
Taxes are due on 18 April, but if you want support from an IRS-certified volunteer, it is best to sign up now, while appointments are still available.
On Wednesday, 1 February, the Chairman of the Federal Reserve, Jerome Powell, is expected to announce further increases to the Federal Funds Rate (FFR).
Financial markets fell on Monday as investors anxiously awaited the Fed’s announcement, as well as quarterly reports from major corporations, including Meta, Alphabet, McDonald’s, and many others.
Read our full coverage for details on how high the Fed's rate hike may go and how the central bank determines the rate.
President Biden's message to Speaker McCarthy: "Show me your budget."
Q What are you going to tell Speaker McCarthy? When he said he wants to negotiate, what do you say?
THE PRESIDENT: Show me your budget, I’ll show you mine.
Emergency allotments, a temporary increase to SNAP payments implemented during the COVID-19 pandemic, will terminate in all states as of the February 2023 distribution.
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.
Read our full coverage on changes you should expect to your benefits.
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.
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%.
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.
Hello, and welcome to our live feed on financial news for Tuesday, 31 January.
Tomorrow, the Federal Reserve is expected to further increase the interest rate. However, most economists believe the rate hike will be lower than others announced by the central bank last year.
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.