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 |  Bizink  |  American Rescue Plan Act,  APRA,  covid-19,  tax advice for 2021

Weekly Update – July 15th 2021

In the wake of the pandemic, many families may find themselves with medical debt from COVID-related hospitalizations. This article from Acorns has four steps to take to reduce damage to credit scores from medical debt. First, review the bill to make sure it’s accurate. See if you can set up a payment plan with the provider. Try to negotiate with the provider to accept rates that are closer to Medicare rates. Finally, review your credit report frequently for bills that have been sent to collections; due to the pandemic, you can request a weekly credit report through April 2022.

On a lighter note, it seems with the number of vaccinated people increasing and the advent of warmer weather, in-person events are starting to “pop” up.  It was great to be able to celebrate a business milestone for and with one of my friends and see other colleagues at a recent indoor/outdoor event…

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Glad the balloons made the cut

It seems that we forget how nice it is to see and hug the people we care about and to be able to catch up on what’s important in each other’s lives.  I am hoping you too will be able to catch up with friends, family and colleagues in the next few months.

 

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Monthly Child Tax Credit Payments

Starting this week, the first of the advance Child Tax Credit payments will be going out. However, some families are opting out of receiving payments. Unlike the other stimulus payments, these payments are advances on the Child Tax Credit that will be calculated on your 2021 tax return. This means that those who receive excess payments will have to repay any excess. The IRS is basing payments on 2020 or 2019 tax returns, so if your situation will be different in 2021, you may want to consider unenrolling from the automatic payments.

This includes taxpayers in these situations:

  • Taxpayers whose income will be higher in 2021 and who will exceed the phase-out thresholds.
  • Families with children who will turn 18 by the end of 2021.
  • Anyone who generally owes tax when they file their tax returns.
  • Recently divorced couples who filed a joint return in 2020 or 2019.
  • Divorced couples with split custody arrangements who claim their children in alternating years.

Those who want to opt out must do so using the IRS portal for the advance Child Tax Credit before the deadline for the next month’s payment, which can be found in Question J2 of the IRS FAQs. At present, the portal only allows taxpayers to verify enrollment status, update banking information and to unenroll from payments. Later this summer, taxpayers will also be able to update marital status, dependents, and income for 2021 and to re-enroll if they have previously unenrolled. Both spouses must separately unenroll if they file jointly and want to opt out as a family; otherwise, payments based on half of the total Child Tax Credit for the family will be sent out. For more information, taxpayers should consult the IRS webpage for this credit.

Restaurant Revitalization Fund

Just a month after the program began, the SBA announced in a news release that it had awarded all of the $28.6 billion allocated to the Restaurant Revitalization Fund. Requests for more than twice the total amount available had been submitted before the program was shut down on July 2. In all, approximately 101,000 grants were awarded out of more than 278,000 applications.

TAX DELAYS

Are you still waiting on your tax refund from 2020? As this article from CNet explains, a combination of pandemic lockdowns, additional work by the IRS to process stimulus payments, and last-minute changes to tax law created a perfect storm that led to a backlog of 35 million returns still to be processed. Calling the IRS can be frustrating, with lengthy hold times or abrupt disconnections. The IRS has an online Where’s My Refund tool and a mobile IRS2Go app, which can be used to check on status of refunds, but unfortunately, these tools do not provide many details about when to expect a refund.

REOPENING THE OFFICE

Spending a year working remotely has changed employees from the way they were before the pandemic. For the last year, employees have adjusted their working hours, managed their tasks without oversight, and juggled work and personal demands. They may not need as much managing when they come back and will likely expect more autonomy and freedom. Because employees may have acquired new skills during the pandemic, some experts suggest treating all returning employees as if they are fresh hires to assess their new capabilities and their specific needs for supervision. In a hybrid environment, taking a team-centric approach may mean bringing all team members into the office on the same two or three days so that in-person meetings can be held on those days.

Some employees may be anxious about returning to the office. Perhaps they have health issues that put them at risk or caretaking responsibilities that make returning to the office challenging. Some may be more productive and happier working at home without a lengthy commute. This article in Harvard Business Review outlines strategies that can help your team members overcome those anxieties. For example, finding out how people feel about a return to the office via an anonymous survey can help them feel heard and can identify ways to make them feel better about coming back to the office. Offering flexibility and explaining why upper management wants people to return to the office can also help reduce anxiety.

Even before the pandemic, employee burnout was a widespread problem, and the pandemic and its aftermath have made that problem worse. Workers are leaving their jobs at a high rate, with many citing burnout as a reason. A sustainable, long-term solution must address the underlying causes of employee burnout, not merely help employees deal with workplace stress. Reducing burnout will require leadership to model healthy behaviors such as limiting emails to normal working hours, and to set realistic expectations. The objective should be creating a workplace that people want to be a part of.

ECONOMY

The post-pandemic recovery is happening faster than any prior recovery after a downturn. Consumers are eager to spend, new businesses are popping up, and workers are leaving jobs at a high rate. Some economists predict that the economy’s size this quarter will surpass pre-pandemic levels. One reason for the speedy recovery is that this recession resulted from a natural disaster – a spreading pandemic – rather than a disruption from financial factors. Quick action from Congress and the Federal Reserve limited economic damage and set the stage for a quicker recovery.

While continuing claims for unemployment continue to decrease, the jobs report for the week ending July 3 showed a surprising uptick in initial claims for unemployment. This may indicate that job growth may be slowing. Meanwhile, there are about as many job openings as job seekers. In May, the ratio of vacancies to unemployed dropped to the pre-pandemic low when unemployment was at a 50-year low. Employers may need to offer bonuses and other perks to fill their openings.

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!

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.

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