Relief checks: 8 February summary news
Financial news: Live updates
Headlines: 8 February 2023
- IRS delays introduction of 1099-K tax form requirement
- IRS asks filers to wait a few days before submitting 2022 tax return if they received stimulus/inflation relief payment from their state
- Washington State provides new tax credit worth up to $1,200
- Biden says in State of the Union address he will veto any bill that increases healthcare costs
- Wall Street rallied Tuesday after Fed Chair Powell spoke on strong jobs report Friday
- Fed Chair says US labor market remains “extraordinarily strong”
- BP reports $28bn profit, double 2021 number
- Michigan Gov. Whitmer mulls $180 tax rebate for residents
- Treasury Secretary Janet Yellen sees path to lower inflation without entering recession
- Federal stimulus checks ended long ago, but this month some states will send their own payments
The amount of the credit is smaller, and eligibility is more restricted than in 2021, because of the rules established through the 2017 Tax Cuts and Jobs Act (TCJA). These changes will be in effect through the 2025 fiscal year if Congress does not modify the credit before then.
Like last year, taxpayers with eligible children can claim a credit worth up to $2,000 per child. This year the credit is partially refundable, and there is an earnings threshold to start claiming the up to $1,400 portion known as the “Additional Child Tax Credit.”
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Month after month, the Social Security Administration (SSA) sends monthly benefits to retired workers. The administration recommends that workers claim their payments at their full retirement age. People born after 1960 must wait until they are 67 to reach full retirement age and receive maximum benefits.
For 2023, the SSA announced a COLA of 8.7%. With this increase, average payments for all retirees enrolled in the Social Security program increased to approximately $1,827, according to the SSA.
However, the average amount varies depending on age.
Gas prices tick up slightly
Still down from their record high a year ago, gas prices are on the rise. On Monday, the average price for a gallon of gas was $3.44, a $0.35 increase from late December.
Heating requires a lot of energy, which means that often gasoline consumption increases, and if similar boosts in supply are not made, prices will rise.
Biden’s claim on the creation of 800,000 manufacturing jobs
President Biden claimed tonight that 800,000 manufacturing jobs have been created since he took office. While true, the message is a bit misleading.
The pandemic decimated the US manufacturing sector, so when President Biden took office, only 12.19 million workers remained employed in the industry. The 800,000 figure represents the difference between the month Biden took office and today.
During Donald Trump’s tenure, 400,000 manufacturing jobs were added to the economy until the pandemic hit and erased these gains. Last year, the economy added 382,000 jobs to the sector, and at that pace, Biden will surpass President Trump’s tally.
In January 2020, there were 12.79 million workers employed in the manufacturing sector. In January 2023, that figure was 12.99 million. The difference between these two numbers is 200,000, not 800,000.
In January, there were 1.38 million jobs available in the accommodation (hotels, motels, resorts, bed and breakfast, etc,.) and food service industry. This figure has come down from the 1.54 million figure in April 2022.
There are currently 1.86 million employees working in hotels and other types of lodging in the United States; down from 2.11 million in early 2020. In part, this gap relates to the unwillingness of major corporations to pay the wages and salaries necessary to attract and retain workers.
Read our full coverage for details on the jobs available and the average salaries provided for that work.
The housing market is down from its peak in the summer of 2022 cooled by rising borrowing rates and many previously red-hot markets being overvalued. But will the US see a housing market crash in 2023?
While the general downturn is expected to continue, it depends on which market, with four potentially set for a major correction. Other markets though could come through with but a scratch and some even seeing slight gains.
Read our full coverage for more details on the state of the housing market.
When you take out an insurance policy you might chose the deductible, the amount you cover. Whether it’s higher or lower may or may not save you money.
Tax season is in full swing in the United States.
From January 23 to April 18, the IRS will be receiving federal tax returns from individuals and businesses , corresponding to the fiscal year 2022.
According to official estimates from the government agency in charge of tax collection, it is expected that around 168 million Americans will file their respective tax returns this year.
Here’s the quickest way to get your tax refund for your 2022 income tax declaration, according to the IRS.
As part of the proposed Lowering MI Costs plan, Michigan Governor Gretchen Whitmer has proposed repaying income tax-paying residents with a rebate from state funds. The state in the Great Lakes is anticipating a huge budget surplus with billions dollars left unspent, hence the plan to give back.
The “inflationary rebate check” means everyone who filed an tax return for the last fiscal year would be eligible to receive the money. There are scant details but it has been supposed that those filing as couples would only receive one check. There is no information about how dependents relate to the funds.
Angus Mordant / REUTERS
Could oil hit $100 per barrel again? Iran’s OPEC rep thinks so
Crude oil futures at $78 per barrel are down a little more than $11 from where it was a year ago and around $45 lower than its peak last March. The price of the vital commodity soared after Russia invaded Ukraine and sanctions were impose on its exports. Weak demand from China playing whack-a-mole with outbreaks as part of the nation’s zero covid-19 policy helped take pressure off the price going higher.
However, the Asian giant has dropped its restrictive policies and its economy is expected grow in the coming months as well as its appetite for oil. That could send the price upwards again as supply becomes tighter. OPEC voted to cut its production target by 2 million barrels a day (bpd), about 2% of world demand, last year. The move was done to stabilize the price of oil because it was not very optimistic there would be sufficient demand.
For this reason, Iran's OPEC representative Afshin Javan told reporters on Wednesday that he sees the price per barrel rebounding to $100 in the second half of the year.
Residents of the Evergreen State now have a new annual tax credit available to them that could be worth up to $1,200. On 1 February the Washington State Department of Revenue launched the Working Families Tax Credit (WFTC) which refunds residents a portion of sales tax paid each year.
The WFTC is targeted at low-to-moderate-income households to help provide financial stability. Up to 400,00 eligible Washington workers and their families may receive money back this year. The credit is modeled after the federal Earned Income Tax Credit (EITC) program, considered one of the best tools for reducing poverty nationwide.
After three years of pandemic-affected tax seasons, the IRS is hoping to start of 2023 on the front foot. The agency is benefitting from $80 billion in new funding to help clear the backlog of unprocessed returns from previous years. To speed up the process the IRS had planned to implement new tax rules governing the reporting of online payment services, but this has now been delayed until next year.
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If you live in a state that offered tax rebates to residents during 2022, the IRS is advising that you delay filing your federal tax return for a few more days. States like California and Colorado passed legislation providing one-off payments in the form of tax refunds to residents to help deal with high inflation.
Are you looking for more support with your taxes from the Internal Revenue Service? Well you are in luck, as new measures are being brought in, with the IRS announcing special Saturday hours for the following four months. These will be available at Taxpayer Assistance Centers (TACs) across the nation as part of an ongoing effort to improve service during current tax season.
POOL / via REUTERS
New taxes on share buybacks could spur corporate shift to paying more dividends
President Biden gave his second State of the Union address on Tuesday evening. One of the features of his speech that caught investors attention was his call to quadruple the 1% tax on corporate stock buybacks signed into law last year. He also called for higher taxes on billionaires. “No billionaire should pay a lower tax rate than a school teacher or a firefighter,” said Biden.
There is little chance that either proposal would pass Congress with the House of Representatives controlled by Republicans. Even if such taxes were imminent, companies might be spurred into speeding up buybacks before it could pass. After that, there would most likely be a shift toward paying shareholders dividends instead.
Co-founder and chief investment officer at Cresset Capital, Jack Ablin, told Reuters that such a scenario would possibly boost both earnings and equity prices in 2023. "If this tax encourages companies to raise their dividends instead of buying back shares, all in all, it's not a bad thing," said Ablin.
POOL / via REUTERS
“No billionaire should pay a lower tax rate than a school teacher or a firefighter”
"You may have noticed that Big Oil just reported record profits. Last year, they made $200 billion in the midst of a global energy crisis. It’s outrageous.
"They invested too little of that profit to increase domestic production and keep gas prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders. Corporations ought to do the right thing.
"That's why I propose that we quadruple the tax on corporate stock buybacks to encourage long term investments instead. They will still make a considerable profit.
"Let's finish the job and close the loopholes that allow the very wealthy to avoid paying their taxes."
President Joe Biden during his 2023 State of the Union address
US in the very early stages of disinflation says Fed Chair Powell
The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector. But it has a long way to go. These are the very early stages of disinflation.
Fed Chair Jerome Powell speaks about “extraordinarily strong” US jobs report
"We didn't expect it to be this strong," Fed chief Jerome Powell said about the January jobs report, but it "shows why we think this will be a process that takes quite a bit of time."
Powell declined several times to say that the addition of 517,000 new jobs would necessarily force the Fed's benchmark interest rate higher than the 5% to 5.25% range currently anticipated.
Inflation has been a global problem because of the pandemic that disrupted supply chains and Putin’s war that disrupted energy and food supplies. But we’re better positioned than any country on Earth.
We have more to do, but here at home, inflation is coming down. Here at home, gas prices are down $1.50 a gallon since their peak. Food inflation is coming down. Inflation has fallen every month for the last six months while take home pay has gone up.
The US economy and the State of the Union
Inflation continues to be one of President Biden’s most pressing economic problems, and while price growth is slowing, it is still increasing.
Compared to March 2020, prices are on average fifteen percent higher across goods and services included in the Consumer Price Index.
Since January 2020, on average, families are spending 23.3 percent more at the grocery store, renters are paying 13.6 more for housing, and the price of health insurance has risen almost nine percent. Meanwhile, average wages have fallen by three percent, in real terms, over the same period.
McCarthy wants to "find compromise" on debt ceiling negotiations
We must commit to finding common ground on a responsible debt limit increase. Finding compromise is exactly how governing in America is supposed to work, and exactly what the American people voted for just three months ago. Defaulting on our debt is not an option, but neither is a future of higher taxes, higher interest rates and an economy that doesn’t work.
House Speaker Kevin McCarthy has reiterated his calls for spending cuts from the Biden administration for the debt ceiling negotiations that look set to dominate political discussions on Capitol Hill for the next few months.
Republican control of the lower house gives the party the power to flex its muscles again after two years out in the cold. In that time much of the platform President Biden ran on in 2020 has collapsed in the House or Senate due to Democrat infighting. The prospect of any legislation, especially progressive, being passed before the next presidential elections in 2024 is very slight.
The United States is in full tax season for the 2022 fiscal year.
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.
Stimulus checks feel like a long distant memory, the thought drifting away like trying to remember last night’s dream.
While there are no federal financial support plans announced, especially with most ending definitively with the expected announcement of the ‘end’ of the pandemic coming in May, individual states and cities are. These range from tax refund to trials of universal basic income. Many of these programmes is no longer accepting applications.
However, at the state level, relief remains available.Check out our full coverage for the details.
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Last year, inflation in the United States reached historic levels.
Given the rising prices, particularly of staple goods, a number of government institutions approved sending stimulus checks or tax refunds as inflation relief for hard working Americans. Although inflation has fallen in recent months, support continues to be sent.
Here are the states sending checks or refunds in February and what the amounts are.
The housing market is down from its peak in the summer of 2022 cooled by rising borrowing rates and many previously red-hot markets being overvalued. But will the US see a housing market crash in 2023?
While the general downturn is expected to continue, it depends on which market, with four potentially set for a major correction. Other markets though could come through with but a scratch and some even seeing slight gains.
Michigan’s government has a dilemma. It is expected to produce a budget surplus of nearly $9 billion by the end of the budget year of 30 September. $6 billion of that will need to be spent this year and the state government has been considering its options.
The Democrat governor, Gretchen Whitmer, announced on Monday that she intends to get a $180 check to Michigan residents. As a part of the ‘Lowering MI Cost Plan,’ the checks would need to be agreed through the upper and lower legislative houses. At present these are both controlled by Democrats which could make negotiations a formality.
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Having a retirement plan is essential. Millions of workers in the US have a 401(k) plan. However, when changing jobs and being fired, a worker must know what happens or what to do with it. We share the options and some tips.
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 and they are nearly out of time to send the forms for the 2023 tax season. If you have not received yours, here is what you can do.
The state began distributing the Middle-Class Tax Refund in late October and to date 7.1 million have been sent out via through direct deposit, with an additional 9.4 million on pre-paid debit cards.
The California Franchise Tax Board (CFTB) estimates that in total more than 31 million residents have benefited from the tax credit and that the program cost the state just over $9 billion. If you are yet to receive yours, there is one more batch of payments to be sent.
Here's when that money could arrive...
Month after month, the Social Security Administration (SSA) sends monthly benefits to retired workers. The administration recommends that workers claim their payments at their full retirement age. People born after 1960 must wait until they are 67 to reach full retirement age and receive maximum benefits.
However, workers can retire and start receiving benefits at age 62, or delay their claim until age 70 to receive more money each month.
Hello and welcome to AS USA's live feed on financial news for Wednesday, 8 February.
Fears of a recession have receded for now as the US economy continues to power forward. However, inflation still remains uncomfortably higher than policymakers would like who have signaled that interest rate hikes will continue.
Wall Street rallied on Tuesday after federal Reserve Chairman Jerome Powell commented on “extraordinarily strong” jobs report that came out Friday. However, he said that he expects 2023 to be a year of "significant declines in inflation."
We'll keep you up to date on what is happening in the markets and what's being done to help Americans cope with inflation along with other financial news.