Weekly Digest – April 21st 2021
As the pandemic wears on, many people have been reporting a sense of “brain fog.” Memory problems and an inability to think clearly or to concentrate in meetings may be the brain’s response to the stress of the pandemic, our isolation, and the sameness of our days, according to neuroscientists interviewed by The Guardian. Our brains are wired to respond to novel situations, but the repetitive nature of working from home, isolated from colleagues, may be what’s causing that sluggishness of thought. Combining that with the stress of experiencing a global health emergency may also be desensitizing us to our current situations. The good news is that most people should recover their mental faculties when life returns to a bit more like normal.
I took this all to mean that even though the individual tax filing due date has been extended ,I should take a much needed break and head out to Snowbird ski area in Utah. Our April 2020 plans were cancelled due to the pandemic, but as my fmaily and I have been double vaccanated, airports and airlines as well as the resort we attend have put in strict social distancing rules we felt it was time to go. The conditions were great, spending time away for the office and all the pressures that brings and spending quality time with my family was just what the doctor ordered. We were even able to vist and ski with lomg time friends who have relocated to the Salt Lake City area……
This is truly spring skiing at it’s best, there was even a blizzard the other evening. I am hoping that you will be able to take time to safely vist family or take a “mini vacay” in the near future.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Economic Impact Payments (aka Stimulus Checks)
Payments for VA beneficiaries who do not file tax returns were slated to go out at the end of last week. This means that most people should have already received their stimulus payments or will receive them soon, according to an update from the IRS.
The IRS continues to update its EIP FAQ pages for the third round of stimulus payments. Recent updates include clarification that these payments do not count as income when considering eligibility for benefits, and this third round of payments is not included on the 2020 tax return rebate reconciliation. If you don’t receive the full amount, or the full amount you are eligable for, you’ will complete a rebate reconcilation form when you file your 2021 tax return in 2022, as you did or will do for your 2020 tax return.
The best way to track your payment is using the IRS Get My Payment tool which has been updated for third round payments.
Again for the 2020 and 2021 stimulus funds, if you are eligible for these stimulus payments but did not receive the full amount you’re entitled to, you’ll receive the additional stimulus payment as a Rebate Recovery Credit when you file your 2020 and/or tax return.
Employee Retention Credit (ERC)
The Paycheck Protection Program(s), PPP1 and PPP2) have received the most attention among the business stimulus provisions of the COVID-19 programs. The Employee Retention Credit is extremely valuable, however it is a lot more complicated and the accounting community is still waiting for the much needed guidance for applying both the 2020 and 2021 benefits. This is in fact holding up the filing of many of our business client’s tax returns both at the corporate and individual level. Unfortunately as per a recent survey by Paychex, much of the business community is not even aware of the existance of the ERTC for either year, nor their eligability for these tax credits. This article from Law360 outlines 4 key considerations for employers in relation to the 2020 ERTC and PPP forgiveness. Employers are eligible if they had a 50% decline in gross receipts for any quarter of 2020 as compared to that quarter in 2019, that’s the “quick check” method, other businesses may be eligable based upon government shutdonws and the effect on the pandemic in relatin to office/business operations. Performing the analysis and preparing the supporting documentation for eligability is quite complicated and our firm has attended hours of continuing education seminars as the rules have changed and the guidance has been comming to us in waves. Rules and guidance changed at the end of December and again several time during the last few months of 2021 and now employers who received a PPP loan may also apply for the ERC, but they can’t use the same wages to qualify for both. This changing landscape has coused us much frustration and the need to amend several 2020 payroll tax returns.
Paycheck Protection Program (PPP)
If you’re considering applying for a PPP loan, you should apply sooner rather than later. Funds may run out before the program’s deadline of May 31, and the SBA is no longer requiring companies to wait eight weeks or to spend all of their first-round funding before requesting a second loan. It is possible that Congress will appropriate more funding and will also make some of the recent changes to funding formulas for sole proprietors retroactive.
Our firm has been using the AICPA funding portal which is linked to a fintech bank this time around the system allows us to follow the application as it progresses through the submission\approval\funding process. We have seen the approvals and funding go a bit smoother for most of our clients however, we are still seeing some applications got caught up in the SBA error code system which was enhanced in order to prevent more fraud. Fingers crossed that these get resolved before the funds run out again.
Shuttered Venue Operators Grants (SVOG)
Technical issues forced the SBA to shut down its portal for the SVOG the day it opened, but the agency hopes to re-launch by the end of the week of April 18. When the portal re-opens, the first 14 days will be reserved for businesses that suffered more than a 90% loss in business, with succeeding application windows for businesses with smaller losses. Grants are available for 45% of 2019 gross revenue, up to a maximum of $10 million. The SBA has a dedicated webpage for the SVOG program, which includes eligibility requirements, video tutorials for the application process, and allowable uses of funds.
Expanded Child Tax Credit
Instead of receiving the child tax credit in one lump sum at tax time, the latest stimulus package allows families to receive this credit in monthly installments, which the IRS pledges to begin in July. The agency plans to have a dedicated portal in place by July 1 and will also accept paper applications. Through 2021, parents can receive up to $3,600 for each child under the age of 6 and $3,000 for children between 6 and 17. This credit will also be fully refundable for the first time.
To find out how much you may be eligible for, CNet has created an online child tax credit calculator. The IRS portal will also allow people to update income and the number of eligible children they have. If your income during 2021 bumps you out of the window of eligibility, you may have to repay any excess you receive when you file your 2021 tax return.
Other Tax Matters
The filing deadline for 2020 individual tax returns has been extended to May 17th, for those of you procratinators, please remember that we need all of your information as well as final guidance in order to prepare your returns. That being said on Monday we are starting to prepare extensions and will need you to forward your completed worksheets and original documents through our secure portal. As of several years ago, we need to include your valid driver’s license in order to submit either your return or extension via the file either system.
A reminder there is still time through May 17th for those of you who are intending to make IRA contributions for your 2020 tax return (even if you are going on extension). Please check with us as to your eligibility for traditional deductible, non-deductible, or ROTH IRA contributions.
Unemployment Benefits and Taxes
As discussed in prior blogs and newsletters, under ARPA, the first $10,200 of unemployment benefits is not subject to federal income tax if your MODIFIED ADJUSTED GROSS INCOME is under $150,000.
Not all states follow the same rules for taxing unemployment compensation as the federal government. We here in New York are waiting for the final vote on the legislative bill S512A that would render a final determination if NY will follow the same exclusion rule as the IRS. Those tax returns which include unemployment benefits are still on hold waiting for the final vote. Fingers crossed for those who will surely appreciate this added tax relief!
Office gossip may get a bad rap as a conduit for malicious rumors and wasting time, but also used to fill an important gap in workplace knowledge. Getting the entire context of a decision, rather than just the official version enabled employees to make sense of their workplaces. Leaders can gauge the overall sentiment of their teams by monitoring feedback reported to trusted team members. However, the remote and hybrid workplace has made casual conversations between co-workers challenging. Recreating that degree of intimate sharing is more difficult in a Zoom chat or via email, where leaving a digital trail of rumors can be frightening. However, some employees are recreating that lost intimacy by keeping Zoom windows open or using Slack or phones.
LIFE IN THE POST-PANDEMIC ERA
Working from home during the pandemic magnified the burdens that parents face, and many parents will be demanding more support from employers in the future. That’s according to a survey of working parents as reported in USA Today. Flexible work hours, remote work, and expanded options for childcare are among the expectations parents will have when they consider staying with a current employer or when choosing a new place to work. Nearly six in ten employees who went remote at the beginning of the pandemic want to continue with that arrangement, and 46% of parents want their employers to offer childcare either consistently or in emergencies.
- IRS resources for stimulus payments:
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- The CDC also has recommendations for businesses and employers
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Atlantic has a state-by-state coronavirus tracker
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
Complementary Discovery Session
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.