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Weekly Digests

Weekly Digest – May 12th 2021

Are you feeling exhausted these days (even those non-accountants out there)? Are you struggling with “brain fog”? According to mental health experts interviewed by NPR, fatigue and brain fog may be a response to the stress and trauma of the last year. Many of us have lost loved ones, our lives have been uprooted, and even if we haven’t been sick, there’s a fear that we might catch this strange new illness.  Even the anticipation of being protected and what that means as we approach vaccine appointments can create a state of restlessness or distraction. As these stressors interfere with our sleep we lose energy and direction. Self-care is essential, but many of our usual remedies – such as seeing friends and family – aren’t yet available. Instead, the experts suggest spending time outside, taking a break from the news, and simply practicing more self-compassion and acceptance.

I am so glad that the weather is cooperating and even though I could not celebrate Mother’s day in person, I was able to have “Sunday Morning Family Breakfast” via video chat.  In the past have celebrated mother’s day with a close friend by starting the day at the Brooklyn Terminal Market where we shop for plants for our gardens. This year we had to postpone; me, because of the tax season count down and her, because of a family situation which called her out of town.  We may be a bit behind with our gardens, but Mother Nature is here to help…

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Horseradish, which probably “planted” itself from a snippet in my compost

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Mint, which comes back every year and is great in tea or Mojito’s

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Last year’s lettuce seeds scattered in the wind and now the leaves are big enough to start harvesting!

I hope to be able to start gardening for real this weekend as we finalize those returns that needed to be extended and take some much needed time off!

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Restaurant Revitalization Fund

After finally opening up on May 3, the SBA received 186,200 applications for grants for the Restaurant Revitalization Fund in just the first two days. For the first 21 days of the program, priority will be given to businesses owned by women, veterans, and socially disadvantaged. According to the SBA, about half of the first group of applications came from these groups.

This $28.6 billion fund will offer grants of up to $5 million to restaurants, bars, caterers, and other food and beverage. For full details and instructions for applying, visit the SBA website, where you can also find a program guide, webinars, and a link to the application portal.

Paycheck Protection Program (PPP)

The SBA has cut off PPP funds to most lenders and is only accepting applications from community financial institutions (CFIs) as funds for this program dry up. The SBA has $8 billion reserved for CFIs and another $6 billion for loans under review. According to the SBA’s latest report, as of May 2, the SBA has approved nearly 11 million loans totaling more than $780 trillion.

We have been using the AICPA funding portal this time around and have seen the approvals and funding go a bit smoother as we track the applications through the system.  We did see that several applications got caught up in the SBA error code system which was enhanced in order to prevent more fraud.  We have been told that they will continue to work through these codes so the in-process applications still have a shot at being funded.  We are so grateful to have been able to help so many of our clients through this process.

FEMA Reimbursing for COVID Funeral Expenses

As part of the December COVID relief bill, FEMA will reimburse up to $9,000 for COVID funeral expenses. To be eligible, the death must have occurred in the US or its territories after January 20, 2020, and the death certificate must state that the death was attributed to COVID. Applications opened on April 12 and must be made by phone. Visit the FEMA website for more information, including the phone number to apply.

Expanded Child Tax Credit

For 2021, a portion of the Child Tax Credit will be paid out in monthly installments of up to $300 per child starting in July. The IRS will use 2020 tax returns as a base to determine eligibility. If the 2020 return has not yet been filed, the IRS will use the 2019 return. The IRS now has a dedicated web page on this credit. Eligible families do not need to do anything to receive this credit. Families who do not want to receive the advance payments will be able to opt out, but that system has not yet been created.

Economic Impact Payments (aka Stimulus Checks)

A seventh batch of around two million stimulus payments went out at the end of April, bringing the total of payments sent by the IRS to around $384 billion. This latest batch of payments went out primarily to two groups. The first group is people for whom the IRS did not have contact information, but who recently filed a tax return. The second group includes people who received stimulus payments based on their 2019 tax returns, but who were eligible for a larger amount, based on a recently filed 2020 tax return. Nearly 730,000 payments in this latest batch were these “plus-up” payments.

The best way to track your payment is using the IRS Get My Payment tool which has been updated for third round payments. If you didn’t receive the full amount of your 2020 stimulus payment, you can claim it as a Recovery Rebate Credit when you file your 2020 tax return.

Securing a Strong Retirement Act of 2021 : H.R. 2954

Last week the House Ways and Means Committee passed SECURE ACT 2.0. the Securing a Strong Retirement Act of 2021, the bill is expected to have bipartisan support in the Senate as well. Secure Act 2.0 would need to be considered in the upper chamber before heading to President Biden for his signature later this year.

The key provision of the act changes the age people will be required to begin taking IRA distributions (RMD)  The SECURE Act increased the required minimum distribution age to 72, from 70. The new bill lifts it to 75.

The bill would also modify the tax credit for small employer pension plan startup costs. The three-year small-business start-up credit is currently 50 percent of administrative costs, up to an annual cap of $5,000, but the bill would make changes to the credit by increasing the startup credit from 50 percent to 100 percent for employers with up to 50 employees.

Other Tax Matters

Health Savings Accounts (HSA)

On Monday, the Internal Revenue Service released new guidance on  the limits for health savings accounts and high deductible health plans

For calendar year 2022, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,650 (up from $3,600 in 2021). Also for next year, the annual limitation on deductions for an individual with family coverage under a high-deductible health plan is $7,300 (up from 7,200 in 2021). For 2022, a “high-deductible health plan” is defined as one with an annual deductible no less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) don’t exceed $7,050 for self-only coverage or $14,100 for family coverage (up from $7,000 and $14,000, respectively, in 2021).

Extensions of Time to File

Another reminder to those procrastinators out there, the extended due date for individual tax returns is May 17th; this is an extension of time to file, not an extension of time to pay.  If you have been holding off on reviewing your documents remember when you rush, you are more likely to make mistakes.  We are finalizing our extension submissions by Friday and hope to have acceptance notifications by Monday.

Extension of Time to Contribute to Your IRA

Reminder if you are planning to make a contribution to your 2020 traditional or ROTH IRA, you still have until May 17th as well.  Please be sure to indicate the tax year as 2020 when submitting the documents and payment to your broker or banker.  As always we recommend that you check with your accountant before submitting your paperwork to see if you are eligible and what the tax benefits would be.

Unemployment Benefits and Taxes

We have discussed the tax rules regarding the first $10,200 of unemployment benefits at the federal level. Many states have decoupled from this rule, including New York.  We are still hopeful that NYS Legislative bill S512A which is still active would exclude up to $10,200 of unemployment insurance benefits earned by NYS residents and not just for 2020, forever (or until they change the law again).  We have put the tax returns for those clients affected by this law on extension  and hope to be able to finalize and submit the se returns with a lower New York State tax liability if the law passes.

LIFE IN THE POST-PANDEMIC ERA

Even before the pandemic, employees were demanding more from employers than a paycheck, and COVID-19 accelerated that trend. One tactic for attracting and retaining employees is providing them with the educational and developmental opportunities they need to develop into leaders within an organization, as this article in Entrepreneur points out. Besides providing the soft skills of leadership, communication, and collaboration that employers need in future leaders, training programs must also help employers achieve their own goals and provide employees the opportunities to use their new skills on the job.

Achieving the next normal in the post-pandemic world will require adjustments for employers and employees alike. While this article in the Journal of Accountancy is aimed at accountants in particular, the four recommendations apply to all types of businesses. Be careful about how you describe this next phase: your remote workers are not returning to work or getting back to work: rather, the end of lockdown is providing new opportunities for work. Don’t assume your people feel safe about coming back to the office – they may need extra assurances or measures to raise their confidence level. Take advantage of the disruption to implement lasting changes in how your work gets done. Finally, make sure that remote workers feel like valued team members.

Employers who want their teams to return to the office will need to make some changes to keep their people healthy. This article in The Atlantic includes six questions that employees should ask their employers before returning to the workplace. For example, have any changes been made to improve airflow? Replacing the air four to six times per hour is recommended, or the workplace may need to reduce the number of people allowed in the office. Another important question to ask is the employer’s vaccination policy. Workplaces that require employees to be fully vaccinated may be able to reduce some of the safety measures. Remote work policies are another area for inquiry, to ascertain whether working from home occasionally might be allowable.

GENERAL RESOURCES

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!

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