Weekly Update – February 24th, 2023
Sometimes my only incentive for getting up at 6AM is to walk on the beach at sunrise. Even when I know the clouds will block the sun like this week on President’s Day, when many people celebrated with an extra day off and some extra sleep. Even with no sun I was able to take some cool photos and my phone showed them as black and white…
With talk about stormy weather I expected a cloudy red sunrise; I was certainly glad it was low tide, and even with the sun streaming through the cloud cover it was a beautiful morning…
It’s the heat of tax season so I am planning to work for a few hours over the weekend, but I am hoping that the weather will allow for at least a quick walk on the beach. I am hoping you have a great weekend and get out during the warmer hours as the “weatherbug” predicts some snow on Saturday and then warmer sunny weather here on Sunday…
WEEKLY TAKE AWAY
We’ve heard expressions like “it made my blood boil”, or seen cartoons with someone whose head was exploding. Sometimes I hear or see something that makes me so angry that I feel like my face turns red. I googled the Idiom “It makes my blood boil” and found that the term originated in the 1600th century and that scientists believed that a person’s blood actually boiled. I also googled and found that neurologic flushing (blushing) can happen when you are angry or embarrassed. Just this week Elizabeth suggested that instead of holding in my anger, or biting my tongue, that I stop, disengage from the conversation, and try counting to 10 so I don’t let my frustration get the better of me. I have been trying her technique all week and it works.
TAX ISSUES/TAX PLANNING
Forms K-2/K-3 Reporting Responsibility for for Pass-Through Entities
Per the IRS, the new schedules K-2 and K-3 were created to provide consistency in the reporting to partners and shareholders. It was hoped that adding these forms would reduce unnecessary inquiries and examinations that might arise due to inconsistent reporting of partnership and S corporation items. In general, the information contained on form K-2/K-3 relates to foreign source income, foreign taxes paid or accrued.
Although required for 2021 tax returns IRS granted transition relief which exempted most small business entities from this filing requirement. For 2022 a pass-through entity which meets the Domestic Filing Exception rules (DFE) does not have to file.
One small issue that is not widely discussed or known is when the client situation facts and circumstances indicates they meet the DFE; as such they do not include the K-2/K-1 forms in their submission and may risk the statute of limitations not running on that return. In English, best practices indicate that filing these forms with $-0- line items gives our clients extra protection from audit.
Special State Payments and Rebates Don’t Need to be Reported
The IRS has ruled that for certain individual taxpayers who, during 2022 were the recipient of a variety of state programs would not have to report these payments as income. There was some initial confusion about this, and with clarification, for some taxpayers in some states there are requirements that need to be meet in order to qualify. Here is the link to the IRS chart listing the state and the payments, be sure to check as you would not want to assume and then receive a penalty and interest notice in the mail.
Hardship Accommodation Plan for COVID-19 Economic Injury Disaster Loan (EIDL)
The U.S. Small Business Administration (SBA) is offering a Hardship Accommodation Plan for COVID-19 Economic Injury Disaster Loan (EIDL) borrowers experiencing short-term financial challenges. Borrowers eligible for this plan may be able to make reduced payments for six months. Interest will continue to accrue, which may increase (or create) a balloon payment due at the end of the loan term. You can follow this link to the SBA.gov site to see terms and options.
- During the Hardship Accommodation period, you can voluntarily make larger payments
- Your regular monthly payment amount will resume and be required in full after the six-month Hardship Accommodation period ends
- You’ll be required to pay at least 10% of your monthly payment amount (with a $25 minimum), for six months
Oil Prices Rise to Start the Week
As the Chinese economy appears to strengthen, the price of oil has begun to rise in anticipation of an increase in demand.
Asia Markets Rise as Lending Rate Holds Steady
The People’s Bank of China left its’ 1 and 5 year prime loan rates unchanged, leading to a higher opening for Asia-Pacific markets on Monday as investors awaited economic date due by the end of this week.
Is it a Good Time to Invest in Bitcoin?
It seems that “everyone is” watching as Bitcoin continues to make steady gains in 2023, even with the recent lawsuits against FTX. But will it climb back to $20K? Cointelegraph made a list of 5 things to know about Bitcoin this week. This article from November 2022 published by the Motley Fool also lists their thoughts on why it still might be a good time to buy…
- 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 here for you.
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.
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