Weekly Update – January 13th 2022
With the more contagious Omicron variant rapidly becoming the dominant strain, many experts are recommending upgrading from cloth to N95 masks. This article in Popular Science explains what to look for in a mask, how long they can be worn, how to safely reuse them, and when they should be discarded. Masks designated as KF94, N95, or in the FPP family are all subject to strict government oversight and quality control. However, KN95 masks may not meet minimum US standards.
These days even a cold, the sniffles or a sore throat can head you for the drug store for a rapid test kit, Sunday I was in that situation and I am happy to say I located some kits at our local pharmacy and my test was negative. Many pots of tea and bowls of chicken soup latter I am feeling back to myself.
I have stayed inside this week and slept late but I did get to workout and snap these photo’s on Friday and Saturday before my cold set in….
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
Preparing your tax returns this year may be even more challenging than previous years. Through the end of January, recipients of the advance child tax credit payments will be receiving Letter 6419 from the IRS, which will be needed in order to reconcile the amount received with the amount a family is eligible for. Refunds will not be paid out until the IRS receives the reconciliation which in most cases will be via properly filled out form 8812 as part of the tax return you submit to the IRS. For more information on the expanded child tax credits see the IRS FAQs.
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
Extended Filing Relief for Disaster Victims
Victims of the recent wildfires in Boulder County, Colorado have until May 16, 2022 to file various individual and business tax returns, according to IR-2022-01, released on January 3. Tax payments and tax filings that would normally be due between December 30, 2021, and April 18, 2022, will be due on May 16, 2022. This includes individual tax returns, estimated tax payments, payroll tax returns, and excise tax returns.
2021: Tax Refunds May be Smaller this Year
Tax refunds may be smaller this year than in previous years due to a combination of factors:
- recipients of advance child tax credit payments may have already received half of the total they are eligible for
- The pause in student loan payments may mean a loss of the usual tax deduction for interest
- Some mutual funds have made large year-end payments of capital gains distributions to investors, which may result in a higher tax bill
IRS On-Line Services
The IRS will be requiring anyone who wants to access online services such as the Child Tax Credit Update Portal or their online IRS account to log in using an ID.me account by the summer of 2022. Taxpayers with existing non-ID.me log in credentials can continue to use the old system, but will have to create a new ID.me log in to access IRS services after the change. This change is being made to ensure that access to taxpayer information is only available to the correct person.
Worst Tax Season Ever Predicted (Yet Again)
The IRS is drastically understaffed, it’s even hit or miss most days if we can get through to the IRS through our tax practitioners hot line – set up specifically so that we accountants can resolve issues more quickly via a phone call. The IRS is still behind in processing prior year amended paper returns as well as 2019 and 2020 original paper returns. Yet another reason to prepare your documents early and make sure all necessary information is available and provided to your accountant prior to your appointment.
The “Great” Crypto Question
This year the IRS asks and we must answer a “simple” question about our involvement with crypto currency transactions. Not so simple and not so easy to track and report either.
The 2021 Form 1040 continues to ask a cryptocurrency question ”At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in cryptocurrency?”
The 2020 version asked “At any time during 2020, did you receive, sell,
send, exchange, or otherwise acquire any financial interest in any
Guess what, those seemingly simple transactions may create a huge amount of work in order to report properly and here’s a heads up for the future:
The Infrastructure Investment and Jobs Act added two cryptocurrency reporting requirements which will apply to returns and statements for 2023 tax reporting:
- A broker under §6045 includes “any person who (for
consideration) is responsible for regularly providing any service
effectuating transfers of digital assets on behalf of another
person” must comply with reporting requirements.
- Any trade or business that receives more than $10,000 in digital
assets in one transaction (or two or more related transactions) is
required to report the transaction under §6050I.
January is the month when most people review their investment portfolios and update their financial goals for the year. When updating your investment plan for the year, Kiplinger has several questions and recommendations to consider:
- Is your portfolio still invested correctly? You may need to rebalance your investments to match your retirement horizon.
- Have any of your plans or goals changed?
- Do you need to consider the financial needs of other family members who may need your support in the future?
- What are your projected expenses after retirement?
The “Great Resignation” is providing employees an opportunity to improve their work and financial situations, but what happens when you’re the boss and all your employees decide to leave? Before making decisions that you may regret down the road, take some time to consider these four questions:
- What do you want your company to look like? Remote work is here to stay, so this could be the time to shift to an all-remote workforce.
- How can you create a personalized strategy for retaining your most valuable employees? Identify your most valuable employees and work with them to find ways to keep them happy.
- Are their concerns valid? If a large chunk of your team is leaving, that could be a sign that employee engagement is lacking, or that compensation isn’t competitive.
- Should you leave, too? If your company isn’t treating team members well, and there’s no desire among senior leaders to change, this may be a sign that you should leave as well.
Sometimes the solution to burnout and exhaustion is taking a sabbatical. Extended leaves aren’t common in the US, but employers are turning to them as a means to reenergize people and allow them to fully disconnect from their jobs. Offering sabbaticals can help attract and retain top talent. Tech companies such as Asana and Adobe have been offering sabbaticals for years or even decades. Distributing work across other team members can help ensure that sabbaticals are not overly burdensome and can help spread skills and knowledge across a company.
REMOTE AND HYBRID WORK OPTIONS
Some business experts believe that remote work is doing a disservice to younger employees by depriving them of experiences that are easiest in an office environment. Forming relationships and learning from observing the interactions of others is much harder in a remote environment; this may deprive younger employees of valuable career-building skills. According to a recent poll of college students and recent graduates, 40% prefer working in-person, and 70% miss having an office community. If remote work is unavoidable, young employees should actively seek out and create networking and learning opportunities. Asking supervisors for feedback via email or a quick phone call can help establish vital relationships, as does participating in virtual happy hours.
Before the pandemic, companies organized off-site retreats to energize team members, develop strategy, and to form strong interpersonal bonds. In the remote and hybrid work world, on-site retreats may become the new off-sites. Creating a successful on-site event requires attention to three elements. Events should be centered around the organization’s values by developing content that reflects those values. Including professional development with lunch-and-learns, book clubs, or outside speakers can help to retain employees. Including or creating shared rituals such as an ice-breaker question or lunch as a group help bring team members together.
Many employees are finding that they prefer full-time remote work to working in the office. But as some companies begin returning to the office, asking your boss for permission to work remotely full-time can be difficult. Developing a proposal that explains how remote work will benefit your boss, team, and company is critical. Include evidence that demonstrates your value to the company as well as statistics on remote work productivity plus case studies on successful remote work. Address how you will remain connected to your team and be available for collaboration when needed.
The highly contagious Omicron variant is forcing many companies to temporarily shut down or reduce services as employees are out sick or are forced to juggle child care as schools and day care facilities shut down. We just saw this happen over the Christmas – New Year holiday break as thousands of flights were cancelled. Shutting down for days or curtailing hours results in a financial hit. Companies that are already short-staffed due to the tight talent are facing additional challenges. Nearly half (48%) of small business owners report they had job openings in November they were unable to fill. Other businesses manage to keep open by shifting healthy employees to different roles.
While nonfarm payrolls grew by only 199,000 in December, according to the Bureau of Labor Statistics, unemployment fell to 3.9%, a pandemic era low, and near the 50-year pre-pandemic low of 3.5% in February 2020. However, total employment for December was still 2.9 million short of February 2020 levels. These numbers were recorded before the Omicron variant began to spread widely, so the impact of a more contagious strain is unknown. Labor shortages are improving, but as of November, there were still 4 million more job openings than unemployed workers. The BLS data conflicts with a report from payroll processing firm ADP, which said that 807,000 new jobs were added to private payrolls.
A silver lining to the pandemic is the impact of trillions of dollars of government stimulus spending which has improved the finances of many Americans. Stimulus payments lifted 11.7 million people out of poverty and helped Americans accumulate $2.7 million in extra savings. Increasing wages on top of the additional savings may provide new-found financial stability for many. However, improvements in financial well-being are not evenly distributed. White-collar workers who were able to work from home did better than those who lost their jobs. While people across all income levels were able to put more cash away in savings, that additional savings is still meager for those at the bottom, who may have less than $1,000 in their bank accounts.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on 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!
Complementary Discovery Session
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.