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The IRS makes annual inflation adjustments, including changes to the federal income tax brackets, standard deduction and more.
Based on soaring prices, the agency boosted the income thresholds for each bracket for 2023, applying to returns filed in 2024.
“This year’s annual adjustments are more significant than usual,” said Mark Steber, chief tax information officer at Jackson Hewitt.

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After a year of soaring prices, the IRS made annual inflation adjustments for dozens of tax provisions, including the federal income tax brackets for 2023, which may affect next year’s taxes, experts say.
While the rates didn’t change, the brackets show the federal income taxes you’ll owe on each portion of your taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

“This year’s annual adjustments are more significant than usual,” said Mark Steber, chief tax information officer at Jackson Hewitt, noting that “record-setting high inflation” contributed to the change.
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Steber said you’re likely to notice a difference on next year’s tax return.
The goal of yearly inflation adjustments is to offset “tax rate bracket creep,” he said, which happens when you owe more income taxes after wage increases without economic benefit due to inflation.

How the 2023 federal income tax brackets changed

There was roughly a 7% change in the federal income tax brackets from 2022 to 2023, said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute.

“That was a larger increase than usual,” he said. “And that is because inflation has been higher than usual,” explaining that inflation was “very modest” the decade prior to the pandemic.

How other tax provisions changed for 2023

The standard deduction also increased by nearly 7% for 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers may claim $13,850, an increase from $12,950.
With roughly 90% of Americans claiming the standard deduction rather than itemized deductions, the change may have a “large impact on taxpayers’ bottom line in 2023,” Steber said.
There were also boosts for dozens of other tax provisions, including the 401(k) and individual retirement account contribution limits, federal estate tax exemptions and more.
Of course, the impact of these shifts may vary by individual. “Each taxpayer situation is unique and any changes or adjustments can impact taxpayers very differently, depending on their facts and circumstances,” Steber said.
“Overall, it can be good for some, but not as favorable to others,” he added.

How to prepare for 2023 tax bracket changes

With tax law changes going into effect and others being proposed, 2023 may be “another year for the record books in terms of tax complexity and tax refund volatility,” Steber said.
To prepare, he urges taxpayers to “pay close attention to their taxes throughout the year,” including a mid-year check-up and another in December to avoid “refund shock” or a possible surprise balance at tax time.  

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In a race to overcome the Covid learning gap, billions in federal aid are now being put to work.
Still, states and school districts have spent less than half of their Elementary and Secondary School Emergency Relief funds, according to the latest federal data.
A deadline looms: The rest of that money must be allocated or spent by 2024, or it will be lost.

During the coronavirus pandemic, child reading and math competency rates plummeted across the country.
The National Assessment of Educational Progress found two decades of improvements were wiped away. The declines were widespread, but were most pronounced among the students who had already been struggling well before 2020.

In a race to overcome the Covid-19 learning gap, billions in federal aid are now being put to work.
While schools are trying to make up for the educational fallout from such a prolonged period of academic disruption, a deadline looms: States and school districts have now spent less than half of their Elementary and Secondary School Emergency Relief funds, according to the latest federal data — and the rest of that money must be allocated or spent by September 2024, or it will be lost.
“The money is going to be gone in a year or two,” said Bruce Baker, a professor and chair of the Department of Teaching and Learning at the University of Miami.
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“The federal government stepped up big, but that will phase out,” Baker said. The money has helped, he added, but these efforts need to be sustained. “You can’t do this for two or three years and expect things to be all good.”

Those with ‘the greatest need’ had ‘the greatest losses’

In fact, it could take decades for students to fully catch up, according to a January 2023 report by the consulting firm McKinsey & Co.
“For some students it’s going to take a longer period of time,” said Ray Sanchez, superintendent of the Ossining Union Free School District in Ossining, New York.
The pandemic disproportionately impacted the lowest-performance schools and students, the McKinsey report also found, putting them further behind their high-performing peers. 
“The schools that had the greatest need suffered the greatest losses,” Baker said.
Of the Ossining district’s 5,100 students, most are minorities and 70% live in poverty. With the additional resources, the district hired more full-time staff to support students in literacy and math, but Sanchez said he always knew those funds would be short-lived. “It wasn’t something we predicted would have 10 years of funding.”
Now the district must try to integrate what’s working into the general budget, he said. “We are seeking to try and sustain as much as we can.”

I don’t even know if you were a superintendent how you can sleep at night.

Jen Mendelsohn
co-founder of Braintrust Tutors

“I don’t even know if you were a superintendent how you can sleep at night,” said Jen Mendelsohn, co-founder of Braintrust Tutors.
“For better or worse, Covid created a perfect storm that needed immediate reaction,” Mendelsohn said.
“Schools understand the sense of urgency from a learning gap perspective, but that doesn’t mean they are able to implement a program very quickly and that is a challenge,” she added. “The bureaucracy is real.”

There’s no one-size-fits-all strategy

Not only do learning delays differ by state and region, but the recovery efforts do, as well.
There is no one-size-fits-all strategy. Some school districts have hired additional teachers, tutors, school counselors and psychologists, others have started summer and after-school programs or implemented plans to identify students’ weak spots.
“Each district is so different,” said Kusum Sinha, superintendent of Garden City Public Schools in New York, which is considered high performing.
With federal funding, the Garden City school district hired more staff, added before- and after-school tutoring in math and reading, and created an in-person and online summer program. “If we run out of money, we’re going to have to figure out a way to continue,” Sinha said.
Other districts facing a staffing shortage are also using the funds to avoid layoffs or contracting private tutoring companies, many of which operate online. 

Justin Paget | DigitalVision | Getty Images

‘Tutoring is one of the most promising approaches’

“Tutoring is one of the most promising approaches for accelerating student learning and reducing educational disparities,” according to a working paper of the Annenberg Institute for School Reform at Brown University.
However, there is still little data on which programs are most effective, studies show.
Even when tutoring is available, struggling students are far less likely to opt in than their more-engaged and higher-achieving peers, the Annenberg paper also found.
“Concerns that opt-in resources can increase — instead of reduce — inequality are valid,” Annenberg’s researchers said.
“Research provides evidence that struggling and marginalized students will be less likely to take advantage of elective educational options, leading to the expansion, instead of reduction of educational disparities.”

The economic consequences of learning loss

There are economic repercussions to learning loss, as well.
Students may now face lower lifetime incomes, and a lower-skilled future workforce means states will see less economic activity in the years ahead, according to a research paper on the economic cost of the pandemic based on NAEP data, by Eric Hanushek, a senior fellow at Stanford University’s Hoover Institution.
Although the economic loss depends on both the learning losses suffered by students and the state’s economic standing, the report also said there were “significantly larger impacts on disadvantaged students who tended to fare worse during the pandemic.”
“Extensive research demonstrates a simple fact: those with higher achievement and greater cognitive skills earn more,” Hanushek found.
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There are roughly six weeks until the April 18 federal tax deadline for most Americans.
If you haven’t filed your tax return yet, there are some key things to know, according to tax experts.
“Every tax season has its own unique challenges,” said Mark Jaeger, vice president of tax operations at TaxAct.

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1. Tax refunds may be ‘somewhat lower’ this season

While this year’s tax season kicked off with a flood of returns, early filings have slowed, according to Jaeger.
He believes the change in refunds is the reason why early returns have tapered off. “What we’re seeing is refunds are going down and more people have a balance due,” he said. 

The average refund was $3,079 as of Feb. 24, compared to $3,473 one year prior — about an 11% decline, according to the IRS. Of course, the average may change with millions of returns still to come.

What we’re seeing is refunds are going down and more people have a balance due.

Mark Jaeger
Vice president of tax operations at TaxAct

Typically, you receive a federal refund when you overpay the year’s taxes or withhold more than what you owe. The IRS warned in January that refunds this year may be “somewhat lower” than last year due to expiring pandemic relief that delivered tax breaks in 2021. 
In 2021, many families got a boost from the enhanced child tax credit, worth up to $3,600 per child, and child and dependent care tax credit of up to $4,000 per dependent. But those tax breaks, among others, have reverted to previous levels.
“Now you’re seeing this drop-off because you have people who are either less sure because they maybe getting a smaller refund,” Jaeger said. “Or they actually owe the IRS money … nobody really wants to pay that balance due until April 18.”

2. Avoid refund delays with a complete, accurate return

One of the best ways to avoid refund delays is by filing a complete and accurate return, according to the IRS. Typically, the agency issues refunds within 21 days for error-free, electronically filed returns with direct deposit for the payment.
However, experts say it’s critical to have all your tax forms ready before sending your return. Employers and financial institutions send tax forms every year, with a copy going to taxpayers and the IRS.

“If anything is furnished on a tax statement, the IRS knows it’s coming,” said Nicole DeRosa, senior tax manager at accounting firm Wiss, noting the missing information may trigger a tax notice from the agency, along with possible penalties and interest.
You can make a checklist of the forms you may need by reviewing last year’s tax return, experts suggest. If you’re still not ready by April 18, you can file for an extension, Jaeger said. But you still must pay your balance due by the tax deadline to avoid racking up penalties and interest.

3. There’s a one-year delay for 1099-K reporting

Whether you’re a gig economy worker, online seller or transfer money between family and friends, payments from apps like Venmo or PayPal have become a confusing tax topic.  
Although business income has always been taxable, individuals and the IRS shouldn’t receive Form 1099-K unless 2022 payments crossed a threshold of more than 200 transactions worth an aggregate above $20,000.
If you receive the form by mistake, the IRS says to contact the issuer immediately. But tax professionals say to include the form’s details on your return to avoid a mismatch at the agency. “If you did get one, you want to report it,” Jaeger said.

Originally, the threshold for 1099-K reporting was set to change for 2022, dropping to $600 for even a single transaction. This means many more filers would have received Form 1099-K this season — but the IRS delayed the reporting change until 2023.
However, even if you don’t receive the form for 2022 business payments, you still need to include that income on your tax return, DeRosa said.

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NVIDIA President and CEO Jen-Hsun Huang
Robert Galbraith | Reuters

Recession risk is on the minds of investors, particularly as the Federal Reserve remains resolute in hiking interest rates.
In these tough times, investors would be well advised to find stocks that are positioned to navigate a potential economic downturn.

related investing news

To help with the process, here are five stocks chosen by Wall Street’s top professionals, according to TipRanks, a platform that ranks analysts based on their past performance.

Nvidia

Chip giant Nvidia (NVDA) has been under pressure due to the slump in the PC gaming market. Revenue and earnings declined in the fiscal fourth quarter compared to the prior year, but the company managed to beat Wall Street’s expectations due to the year-over-year rise in data center revenues.
Investors cheered Nvidia’s first-quarter revenue guidance and CEO Jensen Huang’s commentary about how the company is well-positioned to benefit from the heightened interest in generative artificial intelligence (AI).   
Jefferies analyst Mark Lipacis expects Nvidia’s data center revenues to reaccelerate year-over-year beyond the first quarter and grow 28% in 2023 and 30% in 2024, supported by higher AI spend. (See Nvidia Stock Chart on TipRanks) 
Lipacis said, “In contrast to INTC/AMD noting cloud inventory builds, NVDA discussed a positive H100 ramp (already crossing over A100 in just second quarter after launch), accelerating DC [data center] revs YY beyond C1Q23, and alluded to better visibility and more optimism for the year due to increasing activity around AI infrastructure, LLMs [large language models], and generative AI.”

The analyst views Nvidia as a “top pick” following the recent results, and reiterated a buy rating. He raised the price target for NVDA stock to $300 from $275.
Lipacis is ranked No. 2 among more than 8,300 analysts on TipRanks. His ratings have been profitable 73% of the time, with each rating delivering a return of 27.6%, on average.

Ross Stores

Ross Stores (ROST) delivered upbeat results for the fourth quarter of fiscal 2022, as the off-price retailer’s value offerings continued to attract customers. However, the company issued conservative guidance for fiscal 2023 due to the impact of high inflation on its low-to-moderate income customers.
Following the results, Guggenheim analyst Robert Drbul, who is ranked 306th among the analysts on TipRanks, lowered his fiscal 2023 earnings per share estimate for Ross Stores to reflect the impact of persistent macro headwinds.
Nonetheless, he expects Ross Stores’ earnings to return to double-digit growth in fiscal 2023, driven by a higher operating margin, the accelerated opening of new stores and the company’s share buyback program.
Drbul reiterated a buy rating for Ross Stores and a price target of $125, citing “the favorable environment for the company given greater supply of branded goods in the marketplace, stronger value proposition, and broader assortment compared to pandemic levels.”
Drbul has delivered profitable ratings 63% of the time, and his ratings have generated an average return of 9.1%. (See Ross Stores Hedge Fund Trading Activity on TipRanks)

Kontoor Brands

Next on our list is another consumer discretionary company – Kontoor Brands (KTB), which owns the iconic Wrangler and Lee Brands. Shares of the clothing company rallied on the day it reported solid fourth-quarter results and issued a strong outlook for 2023.   
Williams Trading analyst Sam Poser noted that the demand for Wrangler and Lee continues to improve, fueled by the company’s brand-enhancing initiatives. Further, he thinks that Kontoor’s fiscal 2023 outlook “will likely prove conservative.” He expects the company’s revenue growth in China to turn positive in the second quarter and sequentially accelerate thereafter.
Poser raised his fiscal 2023 and 2024 earnings per share estimates, reiterated his buy rating for Kontoor Brands and increased the price target to $60 from $53. (See Kontoor Brands Insider Trading Activity on TipRanks)
“The combination of better than expected 4Q22 results, led by a 20% increase in U.S. DTC [direct-to-consumer] revenue, ongoing improvements in the positioning of both the Wrangler & Lee brands, and reasonable guidance, are indicative of ongoing improvements in KTB’s consumer facing capabilities and its overall operations,” said Poser.  
Poser is ranked 134th among the analysts tracked by TipRanks. Further, 55% of his ratings have been successful, generating a return of 17.7%, on average.

Fiserv

Fiserv (FISV), a provider of payments and financial services technology solutions, is also on our list this week. Last month, the company announced its fourth-quarter results and assured investors about being well-poised to deliver its 38th consecutive year of double-digit adjusted earnings per share growth, supported by recent client additions, solid recurring revenue and productivity efforts.
Tigress Financial analyst Ivan Feinseth noted that Fiserv continues to experience strong business momentum, thanks to the performance of its payments product portfolio and the strength in Clover, the company’s cloud-based point-of-sale and business management platform. (See Fiserv Financial Statements on TipRanks)
“FISV’s diversified product portfolio and industry-leading technology position it at the forefront of the ongoing secular shift to electronic payments and the growing use of connected devices to deliver payment processing services and financial data access,” said Feinseth. The analyst reiterated a buy rating for FISV stock and raised the price target to $154 from $152.
Feinseth holds the 176th position among more than 8,300 analysts tracked on the site. Moreover, 62% of his ratings have been profitable, his ratings generating an average return of 12.3%.

Workday

Workday (WDAY), a provider of cloud-based finance and human resources applications, issued a subdued outlook for fiscal 2024, which overshadowed better-than-anticipated results for the fourth quarter of fiscal 2023.
Baird analyst Mark Marcon noted that Workday continues to gain market share in human capital management and financial management solutions in the enterprise space, though its pace of growth ahead is “slightly tempered by macro uncertainty.”
Marcon also noted that despite elongated enterprise sales cycles due to macro pressures, Workday gained seven new Fortune 500 and 11 new Global 2000 customers in the fiscal fourth quarter. The analyst said that the new co-CEO Carl Eschenbach is “quickly making a mark on WDAY” and that the company is expected to reaccelerate subscription revenue growth to the 20% level once the macro backdrop is normalized.
“While our near-term expectations are more muted, we believe the valuation relative to the long-term potential continues to be attractive considering WDAY’s high net revenue retention (over 100%), high GAAP gross margins, strong FCF [free cash flow] and strong growth potential given financials moving to the cloud,” said Marcon.
The analyst slightly lowered his price target for Workday stock to $220 from $223 to reflect near-term pressures. He reiterated a buy rating, given the company’s long-term growth potential.
Marcon ranks 444th out of the analysts followed on TipRanks. His ratings have been profitable 60% of the time, generating a 13.5% average return. (See Workday Blogger Opinions & Sentiment on TipRanks)

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The New Road to Retirement

Without action from Congress, Social Security may only be able to pay full benefits for another decade.
As lawmakers weigh potential fixes, getting bipartisan agreement won’t be easy.

Pascal Broze | Onoky | Getty Images

To be sure, other changes may be on the table.
Sens. Angus King, I-Maine, and Bill Cassidy, R-La., are reportedly leading a bipartisan coalition to propose changes including raising the retirement age to 70. Their plan also reportedly calls for the creation of a sovereign wealth fund that could invest Social Security’s funds in stocks. If the returns on those funds fell short, that could trigger more wages to be subject to payroll taxes, as well as higher rates on those levies.
Spokesmen for the Cassidy and King declined to provide further details, noting the plan is not finalized.

Meanwhile, Senate Democrats led by Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., last month reintroduced legislation that calls for reapplying the Social Security payroll tax on wages over $250,000. It would also require wealthy individuals to pay a 12.4% tax on business and investment income. The plan would also add $2,400 per year to benefits.
Discussion about how to shore up Social Security has increased since President Joe Biden’s State of the Union address, during which he prompted both sides of the aisle to promise not to cut the program.

“I will not cut a single Social Security or Medicare benefit,” the president vowed later that same week at an event in Florida.
Yet the clock is ticking to shore up the program.
A recent Congressional Budget Office report projected Social Security’s combined funds may run out in 2033, two years sooner than the Social Security actuaries estimated last year. Once those depletion dates are reached, that would mean benefit cuts of 23% or 20%, respectively.
Changes to prevent those cuts may have profound effects on Americans’ retirements and the U.S. wealth distribution.

Raising retirement age may be a 20% benefit cut

The Social Security full retirement age is gradually changing to 67, based on changes enacted in 1983.
Lawmakers are considering raising the full retirement age again to age 70.
“This absolutely is a benefit cut,” said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.
The change would result in a 20% benefit cut across the board to lifetime benefits, she noted.
People who retire at 62, the earliest eligibility age, would see a 43% reduction from their full benefit, according to Romig. A $1,000 benefit, for example, would be reduced to $570.
“It would be hard for people to absorb that cut,” she said.

More from The New Road to Retirement:

Here’s a look at more retirement news.

While delaying benefits could help increase a beneficiary’s monthly checks, many people are not able to do that.
In 2021, 3 in 10 Social Security beneficiaries claimed at age 62. Of those who claimed at that age, about a quarter had already stopped working, Romig noted.
The most common reasons for retiring early were job losses, health issues or caregiving responsibilities.
Current beneficiaries and near retirees would likely be spared from any retirement age changes. But younger generations may feel the pinch. The Republican Study Committee budget, put forward by House leaders, has called for raising the full retirement age to 70 for people born in 1978 or later.

Payroll tax changes could target wealth inequality

In 1983, 90% of earnings were subject to Social Security taxes, which was a record high following the reforms Congress put in place, according to the Economic Policy Institute. In 2021, 81.4% of all wages were subject to Social Security taxes, as income inequality has led more earnings of high wage workers to fall over the cap.
That drop has caused big revenue declines for Social Security.
Cumulative losses since 1983 mean the Social Security trust fund had 50% fewer reserves, or $1.4 trillion less, as of 2022, according to the Economic Policy Institute. Between 2019 and 2021, about $26 billion in revenue was lost.
“It’s pretty clear that we need to tax higher earners’ wages that are spilling over that Social Security cap,” said Elise Gould, senior economist at the Economic Policy Institute.
In 2023, $160,200 of earnings are subject to Social Security payroll taxes. The tax rate is 6.2% for both employees and employers, or 12.4% for workers who are self-employed.
Warren and Sanders are calling for reapplying the Social Security payroll tax to income over $250,000, while also taxing certain business and investment income at 12.4%.
At a minimum, lawmakers should consider lifting the earnings cap to a level that results in 90% of earnings being subject to Social Security taxes, the Economic Policy Institute recommends.
“If we were back to that 90%, that would significantly increase revenues,” Gould said.

Leaders face tough trade-offs as debt ceiling looms

As Democrats resist benefit cuts, and Republicans oppose higher taxes, finding a compromise to fix the program will not be easy.
It will be crucial to look at the effects of any reform package in its entirely, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
A higher retirement age may be accompanied by other changes like a robust minimum benefit, for example, that can protect people at the bottom of the income distribution, Akabas said.
Just raising payroll taxes — without any benefit cuts — could provide enough money to shore up the program.
But some experts question whether that would be responsible when other tax increases are needed to pay for the country’s needs.
“If we rely only on more revenue from high income people to fix this problem, we’re not going to be able to tap that endlessly for other priorities that we have as a country, like a massive federal debt,” Akabas said.
It’s “dangerous” to think about Social Security without looking at the entire budget, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
“It’s very easy for people to pretend there’s [an] infinity [of] resources in our budget, and there are not,” she said. More

Flexible spending accounts let you stash away pre-tax money to cover your health care expenses (or, separately, dependent-care expenses).
Last year, individuals could have contributed as much as $2,850 to their health care FSA.
If you had a balance remaining on Dec. 31, you may still be able to use the money, depending on your employer’s FSA rules.

Joos Mind | Photodisc | Getty Images

Workers who use health-care flexible spending accounts likely have at least one important deadline approaching.
FSAs, as they’re called, let you stash away pre-tax money to cover your health-care expenses (or, separately, dependent-care expenses). Last year, individuals could have contributed as much as $2,850 to their health-care FSA. The limit for 2023 is $3,050.

Yet most companies have a “use it or lose it” policy — meaning that if you have a balance remaining on Dec. 31, you’ll end up forfeiting that money if your health-care expenses during the year were lower than your contributions.
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However, you might still have options for using your 2022 FSA balance, depending on your employer’s rules.
Here’s what to know.

You may still have time to submit 2022 expenses

If you have proof of 2022 expenses that qualify but you haven’t yet submitted them for reimbursement, most employers give you extra time to do so — a so-called “run-out” period.

“It’s optional, but almost all employers offer it,” said Lisa Myers, director of client services and benefits accounts for consultant Willis Towers Watson. “It just gives [workers] extra time to get reimbursed for expenses incurred last year.”
The most common deadline for this is March 31, she said, although some companies may give you six or 10 months.

Be aware that any documentation you submit to substantiate your claim must include five key things, Myers said: date of service, patient name, the provider’s name (i.e., your doctor or dentist), the type of service and the amount. Otherwise, the claim may get kicked back to you.

Some offer a grace period or carryover amount

Meanwhile, some employers also provide a grace period to spend any remaining 2022 FSA money — meaning qualifying 2023 health-care expenses also can be applied against last year’s balance. This period typically ends March 15.
“You can think of it as a two and half-month extension of your 2022 plan,” Myers said. 
And other companies allow you to carry over up to a certain amount from the previous year. For 2022 carryovers to 2023, that limit is $570 — although your company may have a lower cap.

Among workers who are allowed to carry over money, 49% end up forfeiting all or part of it, according to the Employee Benefit Research Institute. For those with a grace period, that share is 37%. Additionally, 48% with a traditional Dec. 31 deadline forfeit money, as well.

Check with your employer about its FSA rules

It’s common for workers to not know what their employer’s FSA rules are. If you’re uncertain, reach out to your company’s human resources department.
Alternatively, you can check your online FSA portal (if your company has one) for information. There also should be a phone number for customer service on the back of your FSA debit card that you can call.

The list of FSA-eligible items is lengthy

If you discover you’ve only got until March 15 to spend down remaining 2022 funds and are unsure how to use the money, there’s a broad range of services and products that qualify.
“Most people are surprised to learn everything that’s eligible,” said Rachel Rouleau, chief compliance officer for Health-E Commerce, parent company of FSAstore.com.
For starters, over-the-counter drugs don’t need a prescription to qualify. This includes things such as cold medicines, anti-inflammatories and allergy medicine.

Most people are surprised to learn everything that’s eligible.

Rachel Rouleau
Chief compliance officer for Health-E Commerce

Additionally, menstrual care products are eligible, as are items that became pertinent during the pandemic, such as at-home Covid tests, masks, hand sanitizer and other personal protection equipment used to combat the virus.
Other products that qualify include sunscreen, thermometers, eye-care products, baby monitors and pregnancy tests. FSAstore.com has a list of eligible items if you are uncertain whether something would qualify.
Be aware that the IRS does not allow stockpiling, which generally means you can’t buy more of a product at one time than you can use in that tax year. The specifics, though, are determined by FSA administrators.

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Now that the Supreme Court has heard oral arguments over Biden’s student loan forgiveness plan, here’s what borrowers can expect next.
Experts say a decision may come by late June.

A sign calling for student loan debt relief is seen in front of the Supreme Court as the justices are scheduled to hear oral arguments in two cases involving President Joe Biden’s bid to reinstate his plan to cancel billions of dollars in student debt in Washington, U.S., February 28, 2023. 
Nathan Howard | Reuters

Now that the Supreme Court has heard oral arguments over student loan forgiveness, borrowers may be wondering: What’s next?
Oral arguments last only a day, but the justices can take months to reach a decision, experts say. In an analysis of the last Supreme Court’s term, higher education expert Mark Kantrowitz found that half of the decisions were issued in June.

For many borrowers, that may be an agonizing wait: More than 26 million people applied for the Biden administration’s relief program before the U.S. Department of Education had to close its application portal amid legal challenges. The decision reached by the nine justices will determine whether those borrowers get up to $20,000 of their debt canceled.
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“For many people, this is life and death,” said Thomas Gokey, co-founder of the Debt Collective, a national union of debtors. “What’s at stake is being forced to choose between paying for student loans or being able to buy groceries, make rent and pay medical bills.”
Here’s what borrowers need to know while they wait for the Supreme Court’s ruling on student loan forgiveness.

Experts say the ruling could go either way

President Joe Biden’s plan has faced at least six lawsuits since it was rolled out in August.

The nine justices on Tuesday considered two of those legal challenges: one from six GOP-led states —Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — and another backed by the Job Creators Network Foundation, a conservative advocacy organization.
Prior to the oral arguments, legal experts expected Biden’s plan to face tough odds with the justices. However, they then lobbed praise on Solicitor General Elizabeth Prelogar, the lawyer who represented the Biden administration in front of the highest court, for her performance, and some changed their tune.
“The Biden administration now seems more likely than not to win the cases,” Kantrowitz said.
University of Illinois Chicago law professor Steven Schwinn said Prelogar “knocked it out of the park.”
“I do think she could have influenced or even changed the thinking of two justices, maybe more,” he added.

The plaintiffs argued that the president doesn’t have the power to wipe out $400 billion in student debt without the authorization of Congress. The government attorney defending the policy countered that the Education Department can make changes to the federal student loan system, including debt forgiveness, during national emergencies.
A top Education Department official recently warned that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation plan is necessary to stave off a historic rise in delinquencies and defaults.
At times, the justices seemed skeptical that those emergency powers included the kind of sweeping loan forgiveness the president is trying to carry out. But they also seemed doubtful at points that the plaintiffs had successfully proven they’d be harmed by the plan, which is typically a requirement to have standing to sue.

Payment pause on federal student loans is still ongoing

Federal student loan payments have been on pause since March 2020, when the coronavirus pandemic first hit the U.S. and crippled the economy. When the bills restart depends on how long the Supreme Court justices take to issue a decision, Kantrowitz said.
The Education Department in November said the bills would resume 60 days after the litigation over its student loan forgiveness plan resolves.
If the legal issues with the administration’s forgiveness plan are still unfolding by the end of June, or if it’s not allowed to move forward with forgiving student debt by then, payments will pick up at the end of August.
If the justices allow student loan forgiveness to go through, many borrowers will never have to restart payments. According to a White House estimate, roughly 20 million people could have their debt entirely cleared under the president’s plan.
“Sixty days will be enough to forgive student loan debt if the president’s plan survives,” Kantrowitz said. “They’ve already approved forgiveness for 16 million borrowers, so they just need to transmit this information to the loan servicers.”
He added: “It should take one to two weeks for the servicers to implement.”

A ruling against student loan forgiveness isn’t the end

Experts say that should the justices rule against the student loan forgiveness plan, the Biden administration could look for other ways to deliver its relief. The administration also could try to keep the payment pause in place for longer while it figures out those next steps.

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Smart Tax Planning

The Senate Finance Committee this week voted to advance Daniel Werfel’s nomination to become IRS commissioner.
The nomination process comes amid fierce debate over the agency’s $80 billion in new funding. 
The bipartisan committee vote was the final step before a full Senate vote on confirmation. 

Sen. Ron Wyden, D-Ore., speaks during a Senate Finance Committee nomination hearing on Feb. 23, 2021.
Greg Nash | Pool | Reuters

The Senate Finance Committee this week voted to advance Daniel Werfel’s nomination to become IRS commissioner amid fierce debate over the agency’s $80 billion in new funding. 
Following a confirmation hearing on Feb. 15, the bipartisan committee vote was the final step before a full Senate vote on confirmation.

Senate Finance Committee Chair Ron Wyden, D-Ore., said Werfel’s February testimony demonstrated he’s a “rule follower” who will work with “both sides of the committee.”  

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“He’s going to go through, I believe, in a matter of weeks,” said Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup, noting there is support from both sides of the aisle. 
“There’s a great deal of contention about the proper role of the IRS and tax administration in terms of its role on wealth distribution and a host of other issues,” he said. “But there’s agreement that you need a competent, accountable commissioner running this vital organ of government — and Danny Werfel is that person.”
Prior to Werfel’s role at Boston Consulting Group, he served former President George W. Bush as acting controller of the Office of Management and Budget. Under former President Barack Obama, he become permanent OMB controller, and later served as acting IRS commissioner.

Oversight of IRS funding is a priority for Republicans

The Senate Finance Committee vote comes amid continued scrutiny of the $80 billion in IRS funding allocated in August through the Inflation Reduction Act.

After months of disapproval, House Republicans in January voted to rescind the funding. But without support from the Democrat-controlled Senate or the White House, the bill was largely seen as political messaging.
And a group of House Republicans in January revisited the Fair Tax Act, which aimed to replace certain federal levies with a national sales tax and to decentralize the IRS. But policy experts say the fair tax has never been a mainstream idea.

In February, the Republican-led House Ways and Means Committee announced oversight priorities, with the $80 billion IRS funding “at the top of the list,” according to Chairman Jason Smith, R-Mo.  
Meanwhile, the IRS missed the six-month deadline to submit a plan for the funding on Feb. 17, as requested by Treasury Secretary Janet Yellen in August. Her priorities focused on taxpayer service, such as clearing the backlog of unprocessed tax returns, boosting customer service, overhauling technology and hiring workers.
Sen. John Cornyn, R-Texas, a member of the Senate Finance Committee, on Thursday spoke about the missed deadline during his opening statement, noting it’s “not inspiring when it comes to regaining the confidence of the American people.”
However, Everson believes the delay is an intentional choice from the agency.
“It would only muddy the waters because it would potentially give rise to another round of questions for the nominee,” he said.   More