Blog

Getting caught up on a week that got away? Here’s your weekly digest of some stories relevant to business and the economy.

Snow storms during tax season when so many of us work remotely are a beautiful distraction , no effect on work schedules, and fewer cars on the roads.  Even so, I was glad to see that the crews were out continuously cleaning and salting the roads. We do love those safe, dry roads banked by frosted trees and the photos of backyards and snowmen that we receive….thank you all for sharing…

The beach was very cold and snow covered on Sunday morning, but I was able to walk safely by the shoreline…

The colors at sunrise this week were amazing, like this shot on Gourdneck Lake MI…

My sister has a wood burning fireplace (mine is gas and easy to use) and this week when I accompanied her to pick up a half cord of wood from a local supplier.it turned into an adventure. We were able to “visit with” the farm animals who were all so cute and friendly …

The goats loved posing for my blog, or were they just looking for some treats ….

The snow storm was fun and at least the snow melted quickly; this weekend we are expecting some warmer weather and some rain, I am hoping you have some great plans and will stay warm and dry.

WEEKLY TAKE AWAY

When you are with the right person even a chore can turn into a fun adventure, make sure you schedule plenty of time, have no expectations and bring your cell phone….

TAX ISSUES/TAX PLANNING

IRS Warns of Lower Tax Refunds This Year

Inflation-hit Americans who filed their taxes early have received, on average, smaller tax refunds this year, according to data published by the Internal Revenue Service (IRS).  A big reason is that there were no stimulus payments from the government to people to help get them through the pandemic in 2022. The last stimulus payments went out in 2021.   In addition, the tax break for charitable deductions allowed for taxpayers who used the standard deduction for 2021 and 2022, expired for 2023 and beyond. (this deduction is still available for those of you who do itemize  your deductions on Schedule A of Form 1040).  Hopefully you were proactive with your tax minimization planning and reviewed your withholding elections at the beginning of 2023, so no surprises this year.

Seven Red Flags of a Bad ERC Claim

Few letters have haunted the post-pandemic business world — and, by association with certain clients, accounting firms — like “ERC.” As the deadline for the voluntary disclosure program (March 22) approaches, the IRS has highlighted seven warning signs that an ERC claim may be questionable.

• Too many quarters claimed
• Government orders that don’t qualify
• Too many employees and wrong calculations
• The “supply chain” crutch
•  Claiming an ERC for too much of a tax period
• A business didn’t pay wages — or didn’t exist
• The Mills: “There’s nothing to lose.”

And if you need to withdraw or voluntarily disclose, speak with your tax advisor for options through IRS programs (check out the details from our February 16 blog post)

What Would YOU do With a $1,000 Refund

An accounting friend was asked to comment on this for a recent news article:

– What’s the number 1 thing someone should do with a tax refund of around $1,000 this year? – And what’s the second most important thing you’d suggest someone do with their refund?

This one is “E-Z Peezy”, just like “teach a man or women to fish they will eat for life, give them a fish, they will have a great meal”…    My recommendation:  Before submitting the return, use the projected refund to hire a really experienced and well-respected tax advisor. Then consult with him or her about additional tax minimization opportunities or 2023 (maybe there are additional tax savings that were missed) and review your expected 2024 financial situation with them for future tax minimization strategies (for instance up your 401K to at least the maximum employee match, or invest in a traditional IRA or Roth IRA for tax savings and tax-free growth).

ECONOMY

How a Government Shutdown Would Impact Your Money: Student Loans, Social Security, Investments, and More

If we were to manage our finances like the US government, we’d pay our utility bills just hours before service was shut off (but that’s why we sucribe to balanced billing and automatic payments). Hopefully you are more proactive with your finances and budgeting and have ended up sitting in the dark. Lawmakers face a March 1 deadline to agree on funding that would prevent a partial shutdown. Another deadline a week later could trigger a full shutdown if Congress doesn’t act to keep the government running.

• A government shutdown can have a major impact on student loan borrowers. The government may temporarily lay off employees — including a majority of those working for the Department of Education.
• Social Security checks and electronic payments would still be delivered even if the government shuts down. Medicare and Medicaid programs are also protected from federal funding shortfalls.
• Many federal workers, including airport security and air traffic control, are considered essential and required to continue furloughed work during a government shutdown. But you should still be prepared for potential delays and slower wait times at the airport.

Fingers crossed on this one, but best to be prepared.

No Soft Landing: The US Economy is Going to Fall into Recession in the Middle of 2024, Citi’s chief economist says

Per this article by Business Insider: The soft-landing dream is over; instead, the US economy is headed for a recession in the middle of 2024, Citi says. “There’s this very powerful and seductive narrative around a soft landing, and we’re just not seeing it in the data,” Citi’s chief US economist, Andrew Hollenhorst, said.

• The US economy is headed for a recession in the middle of 2024, Citi’s chief US economist said.
• The economic data seems strong but is hinting at signs of a decline, as seen in the latest jobs report.
• Credit-card delinquency rates are also on the rise, and retail sales data has shown a drop in activity.

US Wholesale Inflation Accelerated in January in Latest Sign That Prices Picked Up Last Month

Per this article by Associated Press:  Wholesale prices in the United States picked up in January, the latest sign that some inflation pressures in the economy remain elevated.

Consumer Financial Protection Bureau (CFPB)  Report finds large banks charge higher credit card interest rates than small banks and credit unions

The Consumer Financial Protection Bureau (CFPB) recently  reported on the first set of results from the newly updated Terms of Credit Card Plans survey. The survey data reveal that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk.

• Large issuers offered worse rates across credit scores: Whether a person has poor, good, or great credit, large issuers offer higher interest rates. For example, the median interest rate for people with good credit – a credit score between 620 and 719 – was 28.20% for large issuers and 18.15% for small issuers.
• Fifteen issuers reported credit cards with interest rates above 30%: Nine of the largest credit card issuers in the country reported at least one product with a maximum purchase annual percentage rate (APR) over 30%. Many of these high-cost products were private label or co-branded cards offered through retail partnerships.
• Large issuers were more likely to charge annual fees: Among large issuers’ credit cards, 27% carried an annual fee, compared to just 9.5% of small firms. The average annual fee was $157 for the largest issuers, as opposed to $94 for smaller issuers.

Don’t Look Now But Gas Prices are Rising Fast

Per this article from CNN Business: You’re not imagining it: Gasoline prices are moving swiftly higher across the country. The national average has climbed 11 cents in the past week alone, to $3.28 a gallon, according to AAA.

GENERAL RESOURCES