Weekly Update – July 29 2021
The U.S. economy depends on population growth as a driver, but recent estimates indicate that the COVID-19 pandemic has compounded a decade long fertility slump to result in the lowest population growth rate in history. In half of all states, more people died than were born.
The impact is most acutely felt in rural communities, which frequently lack the jobs, child-care options and housing that young families need. The result in these communities is an aging population and lack of young people. As the pandemic ends, the trend is expected to reverse in many states and result in a surplus of births. Large portions of the country will likely face an aging population and the strain on related resources.
Hopefully this will sort out as people move to more rural areas as a result of remote work capabilities. I am glad that my staff and I have been able to adapt as we continue to update processes and “work out the kinks”. This new system has allowed my staff and I to convert commuting time to “me” time. I love the photos we share with each other from our morning walks and runs, like this one from sunrise the other day…
I am hoping you have been able to convert your commuting time as well.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
As the advance Child Tax Credit payments began arriving a few weeks ago, many parents were surprised to receive a different amount than expected, and many have had questions about the amounts they received. Parents with children who will turn 6 or 18 by the end of the year may be receiving less than expected: only children under the age of 6 are eligible for $300 payments, and only children between the ages of 6 and 17 are eligible for the maximum $250 per month payment.
For those of you who rely on your refunds as a “forced savings” or whose tax filings result in a small refund or balance due, you may be in a VERY DIFFERENT POSITION come April 2022. Those tax credits which act as additional payments will be reduced by these advanced payments. We will be reaching out to those of you who may be effected by this, once we complete our preliminary evaluation. At that point we can help you work through election and withholding options.
If you want to opt out of future payments, you must use the IRS portal for the advance Child Tax Credit by the deadline for the next month’s payment. The next payment is scheduled to go out August 13, and parents must unenroll by August 2 to opt out of that payment. Both spouses must separately unenroll if they file jointly; otherwise, they will receive half of the maximum allowed payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
At present, the portal only allows taxpayers to verify enrollment status, update banking information and to unenroll from payments. Eventually, taxpayers will also be able to update marital status, dependents, and income for 2021 and to re-enroll if they have previously unenrolled. For more information, taxpayers should consult the IRS webpage for this credit.
Unemployment Compensation Exclusion and Tax Issues
The IRS system that automatically generates balance due notices has been sending out erroneous and confusing letters to many people. Many people who received unemployment benefits filed their returns early and were expecting to owe taxes. Then ARPA was passed in mid-March, which exempted a portion of unemployment compensation from federal income tax. This exemption flipped many tax returns from owing tax to receiving a refund, so many of the effected taxpayers did not send a payment to the IRS. However, it appears that the automated system that sends out notices when taxpayers don’t pay the balance due on tax returns was triggered, and some people have reported receiving a balance due notice one week, and a refund shortly afterwards. If you do receive a balance due notice, also known as a “CP14 Notice,” read it carefully and send it promptly to your tax professional, who can help you figure out what, if anything, you need to do.
Paycheck Protection Program (PPP)
Through the PPP, the SBA awarded 11.7 million loans totaling more than $798 billion. So far, almost $395 billion in more than 4 million loans have been forgiven, according to data published by federal watchdogs. Over a million of those loans worth $12.8 million were for businesses with just one employee. The last loans were disbursed on June 30, and no more funds remain in the program.
I am thrilled to report great statistics for our firm and our clients as of today we have assisted in the filing of PPP #1 forgiveness applications for all our clients except for one (due to a bank complication we hope to have sorted by tomorrow). Even better, those have who have been submitted have had a relatively quick response and all for 100% forgiveness!
The sudden shift to remote work gave introverts an opportunity to shine. Introverts tend to be better at expressing empathy and developing personal connections with others, traits that became very important during the pandemic. In many cases, the best salespeople during the pandemic were not the outgoing extroverts, but introverts who were able to get on calls and listen. Virtual meetings have also helped introverts contribute more than in meetings around a conference table, where extroverted team members may tend to dominate the conversation. Accommodating all personality types as people return to the office will mean respecting the needs of some team members for quiet time and offering different ways for team members to contribute.
REOPENING THE OFFICE
If there’s any upside to the events of the last 16 months, it’s that the stigma around mental health conversations in the workplace is diminishing. Just getting vaccinated and going back to work won’t make mental health issues go away, so many employers are stepping up their efforts to address mental health issues in the workplace. Recognizing signs of anxiety or depression such as changes in behavior, mood, productivity or engagement can help managers get team members the support they need. Listening with empathy, being proactive and offering flexibility can also be helpful to team members in distress.
CEOs at many large companies are requiring all employees to return to the office, citing the need for in-person collaboration. For some companies with large and ambitious projects in the works, working remotely slowed progress, with large and unwieldy Zoom meetings and lengthy email chains to resolve questions. Returning to work often means re-configuring workstations and monitors and allowing time for catch-up conversations between team members who have not seen each other in more than a year. However, many other CEOs, particularly in the tech industry, are continuing with remote work or are adopting a hybrid work schedule.
Resuming Business Travel
Now that vaccines are becoming more widespread, business travel is beginning to resume. According to a Korn-Ferry survey performed in mid-March, about three-quarters of respondents feel ready to resume business travel when they are cleared for health reasons. This article in FM has tips for keeping employees safe when they travel for work. For example, COVID restrictions on travelers at both the destination and at home must be monitored to ensure compliance with mask-wearing or the need to quarantine. Researching the risk of the entire trip is essential, from overall infection rates at the destination to safety protocols of airlines to safety measures at conferences and business locations. Travelers should be willing to pivot at the last minute if the risk of travel becomes too high.
According to the National Bureau of Economic Research (NBER), the COVID-19 recession was one of the deepest, but also one of the shortest in U.S. history, lasting only two months, and ending in April 2020. While the conventional definition of a recession is two consecutive quarters of shrinking GDP, the rapid and broad decline in employment and production between February and April caused the NBER to label the downturn as a recession.
While the recovery has so far been uneven and incomplete, some economists are predicting that annualized GDP may exceed 7.5% during the second quarter of 2021.
While continuing claims for unemployment benefits fell to a new pandemic low of 3.24 million, new claims for the week ended July 17 hit 419,000, well above the Dow Jones estimate of 350,000. A gain of 13,000 new claims in Michigan appears linked to continuing shortages of automotive chips, which is derailing auto production. However, on the bright side, there are an estimated 9.8 million job openings for the Labor Department’s tally of 9.48 million unemployed through June.
Meanwhile, the median sale price of an existing home has increased by 23.4% in the year since June 2020, landing at $363,300. The increase in home prices is creating a windfall for homeowners but may put affordable housing out of the reach of many first-time homebuyers.
- 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
- 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.