Weekly Digest – March 24 2022
Just as we were seeing news of the omicron variant surge subsiding, up pops the BA.2. Researchers are keeping a close eye on this subvariant BA.2 reporting that this variant is more transmissible, but its rapid spread overseas also coincides with a drop in protection measures in Europe and low rates of effective immunization in Hong Kong. This variant may not result in a new surge in the US because vaccines and boosters plus antibodies from previous infections appear to be protective. Additionally, the illness this variant causes does not appear to be severe, we can only hope.
Meanwhile tax season is in full swing, we made it through the March 15th deadline and are working towards April 15. For me, the great stress relief are my walks along the beach, even on a drizzly, overcast day…
So much better than sitting in the office dreaming of some nice spring weather.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Economic Injury Disaster Loans (EIDL)
The SBA has extended the deferment period for Covid-related EIDL loans for the third time in the last year. In a news release, the SBA announced that small businesses and non-for-profits do not have to begin repayment of loans until 30 months after the date of the loan. Previously, the SBA had extended the deferral period of EIDL loans 24 months.
Our healthcare business clients were so relived to receive additional grant funds during 2020, 2021 an early 2022. Now the deadline for the reports detailing spending is approaching and we are again grateful to have adaptable accounting software. Our cloud based software has enabled us to create yet another process to assist our clients with this requirement. We do have to ask why are all these deadlines so close together though.
Employee Retention Credit (ERC) Funding
Over the past few weeks our clients have begun to receive the tax credit checks for ERC’s we applied for back in mid 2021. We filed 95% of the amended payroll tax reports via our payroll provider efile portal. I am glad that the process is moving forward and the IRS can accurately determine the filing date. The checks we have seen so far include interest for up to 202 days!
Monthly Child Tax Credit Payments
If you have questions about the advance Child Tax Credits for 2021, the two best sources are the instructions for Schedule 8812, which is used to calculate and report the credit on your 2021 tax return, and the IRS FAQs. Before filing your tax return, check your IRS Online Account to be sure you report the correct amount of any advance Child Tax Credit payments received during 2021. This will help ensure that refunds are paid promptly within 21 days. As a reminder, couples who filed Married Filing Joint will each receive a letter reporting half of the payments received. When filing 2021 tax returns, married couples will need to combine both amounts when they file their joint return.
Our clients have taken our advise and included the IRS forms, their bank statements showing the deposits and filled out the worksheet; this has been really helpful and we are confidant we are reporting correct information on these 2021 tax returns.
Virtual Currency Reporting
Although we updated our annual engagement letter for the new IRS wording about virtual currency transactions people are still not clear on how to answer: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any interest in any virtual currency?”
This yes/no question should be easy to answer, but even those tempted to answer YES may have the wrong answer. Clarifications from the IRS instruct those taxpayers who owned or bought virtual currency with US dollars during 2021 but did not have any other transactions can answer No. We caution anyone who had other kinds of transactions to answer Yes and include any reportable transactions on their 2021 tax return.
IRS Tax Return and Document Processing Delays
It seems that each week the news gets bleaker, the count is now up to 17.6 million unprocessed prior year tax returns and 6 million pieces of unprocessed correspondence. It’s hard to be patient, but the good news is that the “date stamp” on prior year’s efiled tax returns allow the IRS to accurately calculate and include interest on refunds.
Business email compromise attacks continue to be a common form of fraud. In the fourth quarter of 2021, our firewall cybersecurity vendor Kaspersky reported preventing 80,000 of these types of attacks. This type of fraud involves emails that appear to be from a trusted executive or representative of a company that request that the recipient transfer funds or install malware. Frequently, these requests are preceded with correspondence that may be a continuation of previous email conversations between the two parties. The best defense is for employees to remain vigilant and to avoid clicking on suspicious appearing links.
One of the best methods for protecting an online account is two-factor authentication, where users are prompted to enter codes sent via apps or a text in addition to a password. However, if you change your cell phone number or lose access to your phone, you may be locked out of that account. To prevent this from happening, adding a second verification method, such as an email or a verification app in addition to a cell phone number can help. Recovery codes can also help users regain access. These are usually shown when two-factor-authentication is first turned on. Storing those backup codes in a wallet or with a passport can help travelers recover access if their phone is lost or stolen.
Phased retirement programs allow employees to cut back on hours while retaining reduced pay and benefits. Sounds good to me after 2 years of non-stop tax law changes and client stimulus support work. This option seems to be growing in popularity since the start of the pandemic. These programs allow organizations to slow the brain drain and to manage talent shortages while also providing financial and psychological benefits to workers as they transition from work to retirement.
According to a recent survey by Nationwide Retirement Institute, inflation is causing many older workers to postpone or consider delaying their plans to retire. However, some advisors point out that retirees tend to spend less on transportation, food, and housing until age 80, so inflation may pay less of a role in a retiree’s finances.
THE GREAT REASSESSMENT/RESIGNATION
Finding talent is challenging in a tight labor market, but the best way to solve that problem is to first focus on retention. Paying competitive salaries is the first step. Ensuring that company culture and the workplace environment are conducive to productive work is also essential. Conducting “stay interviews” to find out what’s top of mind for your employees can also point to things that can be fixed before people leave. Finally, investing in managers by ensuring that they are leading their teams well helps prevent employees from quitting a manager when they’d prefer to stay with the company.
REMOTE AND HYBRID WORK OPTIONS
While some companies are trying to figure out the future of work, a few began allowing employees to work anytime, from wherever they want years ago. The founder and CEO of the company behind WordPress, Matt Mullenweg, has allowed flexibility since the company began in 2005. Its 1,876 employees in 97 countries work according to their own schedules while relying on written communication to keep everyone updated. Mullenweg believes that eventually hybrid work models will die out as the benefits of allowing people to work according to their own schedules, and the ability to find talent from outside a local area become more important.
For our firm members remote work options has been a lifesaver, allowing us to maintain our amazing staff as their needs change. Our technology and processes helped us pivot successfully during those first few days and weeks of the Covid-19 pandemic back in March of 2020.
The US labor market continues to tighten, with jobless claims for the week ended March 12 coming in at the lowest level all year, with a drop of 15,000 to land at 214,000. However, there are still nearly 5 million more jobs than available workers, even as wages increase sharply and inflation is at its highest point since the 1980s.
Last week, the Federal Reserve raised its short-term benchmark rate by one-quarter of a percentage point, but what will the impact of that rate hike be for consumers? Mortgage rates will increase slightly. Interest rates for CDs and savings accounts may increase slightly. Auto loans will be more expensive. Borrowers will pay more credit card and student loan interest.
New analysis by the Labor Department indicates that women in low-paying industries are losing billions of dollars every year. Many of the jobs with the lowest pay are dominated by women, while most of the highest-paying jobs are held chiefly by men, a dynamic called “economic segregation.” Black and Hispanic women appear to be the most susceptible. Even with increasing education, women still earn less: women with MBAs earn only 76 cents for every dollar earned by men with MBAs. The pandemic exacerbated this problem because women tended to suffer the most layoffs in hard-hit industries such as retail.
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- 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 Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
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!
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.