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 |  Bizink  |  American Rescue Plan Act,  ARPA,  covid-19,  IRS form 6419: Advance Child Tax Credit,  IRS Form 6475: 2021 Stimulus Payment,  IRS On-Line Services,  Omicron Variant

Weekly Update – February 3rd 2022

It is being reported that a new strain of the Omicron variant has emerged just as the Omicron surge appears to be peaking in the U.S. The new strain, called BA.2, is said to be more contagious than its sibling Omicron variant, BA.1, but is also less likely to cause severe disease compared with the Delta variant. The new variant is spreading quickly in Denmark, England, and Germany, and has also been detected in parts of the U.S., including California, Texas, and Washington. Fortunately, preliminary data from the U.K. shows that a third shot of COVID-19 vaccine protects against the new BA.2 variant just as well as it does against the BA.1 variant.

We hope that our efforts to remain diligent by wearing masks, washing our hands frequently and limiting social interactions will keep us safe.  Taking care of ourselves or even getting outside for a bit each day can help keep our spirits up.

The first NYC blizzard of 2022, tax season is my excuse for staying in glued to my computer.  I did take breaks to check the temperature and high winds through my window, drink some hot chocolate and plan my trek down to the beach to see the effects…

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frosty rock jetty

The best part is the beautiful blue sky after the storm

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I couldn’t pick just one; it’s always a beach day to me (well maybe not today as we have a steady drizzle and a bit of fog).

I hope you had a chance to get outside to your local  park for a walk, go sledding down a local hill , build a snowman/snowwoman/snow family, or make snow angles with your favorite  “buddies”.

THE AMERICAN RECOVERY PLAN ACT (ARPA)

2020 Recovery Rebate Still Questions More Answers

The IRS has released a set of FAQs for the Recovery Rebate Credit to help people file their 2020 tax returns. Yes there are still people out there that have not filed yet due to Hurricane Ida extension relief.  The fact sheet covers a broad range of topics, from the process for claiming the credit, eligibility, and correcting problems. For example, Question F2 explains the three ways taxpayers can find the amount of the Economic Impact payments they received so they can calculate their Recovery Rebate Credit correctly on their 2020 tax returns.

2021 Recovery Rebate, Reconcile on Your 2021 Tax Return

Some taxpayers may be entitled to additional stimulus payments if their family situations changed during 2021. The 2021 Recovery Rebate Credits were disbursed based on calculations from 2020 or 2019 returns. Taxpayers who had a child in 2021 or who have added an additional dependent such as a parent, nephew, niece, or grandchild may be eligible for an additional payment of $1,400. Payments you are entitled to, but not received will be  treated as a refund on your 2021 tax return according to the reconciliation  you include (similar to the process followed on your 2020 tax return).

Monthly Child Tax Credit Payments

According to the IRS, some people are receiving Child Tax Credit letters (Letter 6419) with incorrect amounts. We have created a worksheet with our annual tax checklist package which will help you trace your actual payments received.  In addition, taxpayers can check their IRS Online Account and use the amount reported in their account to compare the information to their records. Using the correct amount will help ensure that refunds are paid promptly within 21 days. Please note, couples who filed Married Filing Joint will each receive a letter reporting half of the payments received, please provide us with both letters when you upload your original tax documents  to your portal.  For more information on the expanded child tax credits see the IRS FAQs.

TAX MATTERS

IRS Commissioner Chuck Rettig Discussed and Warned About the Challenges Expected for Tax Season 2022

The Internal Revenue Service opened tax season Monday as the e-file portal went back on line.  The IRS still has a backlog of millions of unprocessed 2019 and 2020 tax returns.  They asked that taxpayers and tax preparers be patient, file electronically and accurately, and request direct deposit of tax refunds.   We have been following those guidelines for years and are happy that the Hurricane Ida filing deadline was extended to February 15th so these can be e-filed and not add to the backlog.

“This filing season is a unique one,” IRS Commissioner Chuck Rettig said Monday during a conference call with reporters. “There have been many issues tied to the pandemic with processing centers having closed down, and a larger share of our workforce unable to work for reasons of health and safety. As you know, we received quite an array of new responsibilities during the course of the past year or so. I will say, speaking from the commissioner’s perspective, it has been a privilege to be on this journey with so many dedicated individuals during the pandemic, and to be involved with the delivery of stimulus payments and advance Child Tax Credit payments to millions and millions of Americans in need. Beyond the obvious economic benefits, there are emotional benefits as well. The IRS was front and center in delivering a lot of that.”

He warned that this tax season could be a big challenge for taxpayers and practitioners. “The Treasury has previously announced that this could be a very frustrating filing season for both taxpayers and tax professionals,”

IRS Tax Transcript System Update

Starting in summer 2022, taxpayers will need to create an account with the third-party identification company ID.me to access certain information on the IRS website. To verify your identity, you’ll need to provide a government document with a photo such as a driver’s license or passport and take a selfie with your phone or computer. If you already set up an IRS account, it will work until summer, but after that, you will need an account through ID.me to access the Child Tax Credit Update Portal or get your tax transcripts. Identification verification will not be required to file a tax return or to make tax payments. Here’s how to set up your IRS ID.me account.

IRS Identity Theft Protection Identification Numbers

A long awaited and requested process is finally here, for those who have been plagued by tax return identity theft can now apply for a special ID# the IP PIN through this special IRS Portal.

An Identity Protection PIN (IP PIN) is a six-digit number that prevents someone else from filing a tax return using your Social Security number or Individual Taxpayer Identification Number. The IP PIN is known only to you and the IRS. It helps verify your identity when you file your electronic or paper tax return. Even though you may not have a filing requirement, an IP PIN still protects your account.

In order to complete the process you will need to create an account with the third-party identification company ID.me  following the same steps outlined above.  I tested the system last week and found that it takes approximately a half hour to create the account and obtain the unique number, time well spent.

IRS Form 6475: 2021 Stimulus Payment

The IRS has created form 6475 which will provide you with your 2021 stimulus payment.  We will be asked to reconcile your eligible amount with the advance payments you may have received during mid-2021.  This is a similar process with what we were asked to do when submitting our 2020 tax returns.  Again we have created a worksheet with additional guidance to help you gather the necessary information.

PERSONAL FINANCE

If you retire and later return to work after you’ve enrolled in Medicare, you may have the option of dropping Medicare and enrolling in your company’s health insurance plan. Your options depend on the size of the company. If you work at a company with fewer than 20 employees, you will most likely need to continue your Medicare coverage to avoid paying higher premiums later. Depending on the costs, it may not be cost-effective to sign up for your employer’s plan. Employees at larger companies may be able to drop Medicare coverage, but there are additional rules. For example, employees can’t enroll in the company’s HSA unless they drop Medicare Part A, and if an employee is already collecting Social Security payments, they cannot drop Part A unless they also repay all of the Social Security benefits so far received.

GREAT REASSESSMENT/RESIGNATION

Sometimes employees “boomerang” back to former employers, perhaps because the new job wasn’t all they hoped for, or they want to return after learning new skills. Before saying yes, the Harvard Business Review recommends considering five questions:

  • Am I hiring the boomerang employee because it seems like the easy option?
  • Does the boomerang bring the right skills and capabilities to advance the business?
  • Is unconscious bias influencing me? 
  • Have expectations of the “what” and the “how” changed since the employee left?
  • Will I be able to provide opportunities that ensure retention long term?

Repeat the saying “fire fast, hire slow” as you consider how your team, company, culture, and role may have changed since this employee left.

Not everyone who’s taking part in the Great Resignation is immediately jumping into a new job. Many people are taking a sabbatical as a way to rest, recover, and reconsider life goals. According to data from the Society of Human Resource Management, the number of people taking sabbaticals has tripled over the last four years. Some people take the time to travel while others stay home. Some have found new careers and new directions in their lives.

From the employers’ point of view, workers can’t be found to fill vacancies at any price. But if you ask job seekers about their experiences, they have a different take, according to a compilation of complaints to Slate’s Direct Report column. A common theme is that employers have not adjusted to the big changes to the job market over the last few years and are expecting high levels of experience while offering low pay and minimal benefit packages. Other employers seem to be compensating for a tight labor market by adding additional skills and responsibilities that are nearly impossible to find in one person.

REMOTE AND HYBRID WORK OPTIONS

What will the future of work be like? This article in the Harvard Business Review outlines 11 trends that will shape work for 2022 and beyond.

  1. Fairness and equity will be the defining issues for organizations.
  2. Despite a strong push from the Biden administration, a significant number of employers will not adopt a vaccine mandate, instead relying on testing to keep their workplaces safe.
  3. To compete in the war for knowledge worker talent, some companies will shorten the work week rather than increase pay.
  4. Employee turnover will continue to increase as hybrid and remote work become the norm for knowledge workers.
  5. Managerial tasks will be automated away, creating space for managers to build more human relationships with their employees.
  6. The tools that we use to work remotely will become the tools that help measure and improve performance.
  7. The complexity of managing a hybrid workforce will drive some employers to require a return to the office.
  8. Wellness will become the newest metric that companies use to understand their employees.
  9. The chief purpose officer will be the next major C-level role.
  10. Sitting is the new smoking.
  11. DE&I outcomes will worsen in a hybrid world without intervention.

This check list makes sense as fairness and equity should be the defining issues for organizations. With a remote or hybrid option staff can create flex hours allowing for a condensed work week, or even a shorter work week with decreased pay.  While many managers and staff have adapted the complexity of managing a hybrid workforce, some are still uncomfortable and will require their employees to return to the office.

Working remotely can make it hard to establish boundaries between work and life. A few helpful strategies can help you remain productive and have a life outside of work:

  • Learn to say no when a boss or coworker asks you to take on work that pushes your capacity beyond its limits
  • Develop routines or rituals that define the start and end of your workday so that you have a transition into and out of work mode.
  • Stick to a schedule so you’re spending your most productive time on the most important tasks.

The tips I shared in this article almost a year ago still hold true for me:

  • Create and follow a schedule just as if you were at your regular office. If you would normally create a to-do list, follow the practice of time blocking, or have a daily routine/work schedule.
  • Start your day taking care of “you” whatever that looks like; for me that’s a workout in my home gym or a walk/run on the beach.  My positive attitude stays with me as I enter my office space and carries me through even the busiest day.
  • Create and use specific spaces or locations for work and daily living. Set up a really great office space in a separate room or out-of-the-way area of your home. Equip it with a comfortable chair, suitable table or desk, computer equipment and peripherals,  as well as other work necessities.
  • Leave your work at work. At the end of your scheduled work day, leave! I know it’s tempting to check emails as you watch your favorite series on your laptop, but if you are sitting in your personal living area, make sure you are in that mindset as well.
  • Check the display on your cell phone to screen work calls that “slip” through during your down time.

Hybrid work schedules have been touted as the best of both worlds: productive time spent at home combined with time in the office for collaboration and meetings. However, many find the frequent switching from remote to in-office exhausting and jarring. Workers who alternate days working at home and in the office have a harder time getting into a regular, productive rhythm of work, especially when they need to transport laptops and other and materials between home and office every day. Hybrid work schedules are most successful when managers and workers discuss what works best for each person.

ECONOMY

U.S. GDP increased at 6.9% during the last quarter of 2021, stronger than the 5.5% rate predicted by economists. Despite a surge in COVID cases at the end of the year, personal and business spending increased, while government spending decreased. Risks of the global pandemic still remain, but the strength of the economy is a testament to the adaptability of government and businesses to the challenges.

A sign of the tight labor market is the 4% increase in wages and benefits that employers spent in 2021, an increase not seen since 2001. However, the increase in pay has not kept up with inflation, which rose by 4.9% in December over the prior year, according to the Federal Reserve’s core personal-consumption expenditures price index. Even though the economy has recovered only about 84% of the pre-pandemic jobs, investors and Federal Reserve policymakers consider the labor market to be nearly at full employment.

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!

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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