Weekly Digest – March 24th 2021
In our office we love the expression “it’s not a problem, it’s an opportunity”. Those “lessons learned in the aftermath of Hurricane Sandy have been serving us well during this pandemic. A year into the COVID-19 pandemic, and we have certainly had plenty of experiences to learn from. The New York Times asked scientists, public health experts, and health advocates about the lessons we should learn for the next pandemic. One interesting lesson is that health care providers who had a nimble approach to keeping people healthy, including deploying telehealth and closely monitoring patients at home, were better equipped to handle the pandemic than those with rigid business models relying on patient volume.
On a lighter note I continue to take “me time” most days and to take and share photos…
The army core of engineers is working on preserving our beach with an upgrade to existing rock jetties and additional groins along our beach in Rockaway, Queens.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Economic Impact Payments (aka Stimulus Checks)
As of March 17, the IRS announced that they had already sent out more than 90 million payments via direct deposit. If the IRS has your current banking information, you will likely receive your payment as a direct deposit. Otherwise, your payment will go out as a paper check or prepaid debit card. The best way to track your payment is using the IRS Get My Payment tool which has been updated for third round payments. However, that tool won’t tell you how much money you should be getting, and it’s not clear what some of the response mean. This article on CNet explains those responses and offers suggestions on actions you may need to take.
A few people have already reported that their payments may have been stolen. Although this article in Kiplinger hasn’t been updated to reflect the third stimulus payment, it does offer excellent advice on actions to take if your payment is lost or stolen. Before contacting the IRS, collect documentation that shows your payment was sent to you, and that you never received it.
Myths about this round of stimulus payments has been floating around, but this article in Money lays out the facts. For example, many believe the IRS will claw back your payment if you receive more than you’re actually entitled to. This is not true – the only changes the IRS will make to any of the stimulus payments is to give you more money if you didn’t receive all that you were entitled to.
If you’re eligible for the first two stimulus payments but did not receive the full amount you’re entitled to, you can receive the additional stimulus payment as a Rebate Recovery Credit on your 2020 tax return. The same will be true for any third round payment, but again those will be reconciled on your 2021 tax return.
Unemployment benefits and taxes
Normally, unemployment benefits are subject to federal income tax, but a provision of ARPA exempts up to $10,200 of benefits for those with “Modified Adjusted Gross Income” under $150,000. New guidance for calculating the exclusion and eligibility was issued yesterday March 23rd. We continue to review the new guidance and wait for the states to finalize their stance as our tax preparation software providers work to reflect those changes. Feel free to follow this link to the IRS’ detailed instructions and worksheet on how to calculate the amount that will be taxable.
For those who filed tax returns before the law was passed, the IRS has indicated that they will be making the adjustment on their end and issuing refunds automatically. Based upon your situation, it may not be necessary to file an amended tax return to receive the maximum benefit from this new development. As we have seen these past months, laws are adopted and then we get “trickle down guidance”. Our office is holding those returns containing potential tax savings from unemployment insurance income benefits until further guidance, especially those with potential eligibility depending on filing status elections.
This exclusion was enacted by the federal government; as of this morning we continue to monitor the news for New York and other states conformity.
Paycheck Protection Program (PPP)
As of March 21, the SBA had approved more than 8 million loans totaling over $718 trillion for the entire loan program. So far this year, 3 million loans totaling nearly $196 million have been approved. However, with the program due to expire at the end of this month, Congress is working to extend the program to May 31. I was so grateful to have had the opportunity to contribute “real life client stories” and detail our office experience to the testimony and be acknowledged in quotes in the Journal of Accounting article last week and by several other news outlets. The vote in congress passed 415-3; the senate has a hearing on this set for today. It is exciting to see that we can make an impact. As the application deadline looms, we wait for action by the senate and president on this bill.
H.R. 1799, the ARPA increased the amount that sole proprietors could request by making the loan calculation based on gross revenue instead of net income. However, for many solo entrepreneurs the change came too late, and the difference cost them thousands. The SBA has not indicated they plan to make that change retroactive to loans that have been funded and we see that many banks are not even accepting these applications. These and other eligible businesses have few options unless the deadline is extended.
During the rush to approve PPP loans last spring, the SBA turned off controls in its electronic loan approval process that resulted in more than 4,000 duplicate loans being paid out, according to a report from the SBA’s Office of the Inspector General. Recipients who received duplicate loans will not be eligible for loan forgiveness until they repay the extra loan they received.
Tax Deadline Extended
Last week, the IRS announced the deadline for filing of 2020 tax year individual tax returns has been extended from April 15 to May 17. Although this will give individuals more time to file their 2020 tax returns amid mid-season changes I do not feel this extension goes far enough, as we still wait for guidance on several issues, a sentiment echoed by many and summarized in this article from AccountingToday.
I am glad that New York State followed soon after with the same announcement and as of this morning we continue to monitor our guidance links to see what other states are doing.
Trust tax returns and some corporate tax returns are still due to the IRS on April 15, as are first quarter estimates for 2021 taxes. Individual tax returns that have been extended will still be due October 15.
With many employers extending remote work for the foreseeable future, many are finding that making the investment to create a permanent home office is well worth the effort. Setting up a dedicated space to do the work can make it easier to feel motivated to do the work and to establish boundaries between work and home. A good supportive chair is only one part of an ergonomic workspace. Other components may include an additional monitor and keyboard for a laptop and arranging a source of natural light from the side.
With the rise of remote work, many of us are relying more and more on email to stay in close contact with our co-workers. But that volume of emails means our inboxes are filled to overflowing. One solution is to develop a compassionate email culture. A basic first element is to think about the content and the recipients first. Keeping emails concise and specific makes responses easier. Limiting recipients to just those who need to be kept in the loop limits how many emails everyone receives. Proper use of BCC options also helps, as long as this is not used as a tactic to eavesdrop on what should be private conversations. Using BCC also means that when recipients respond, they’re not responding automatically to the entire pool of recipients. Making sure that recipients receive emails during normal working hours means they don’t feel obligated to respond when they should be off duty.
- 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.