Weekly Update – March 17th 2022
After two years of pandemic disruptions, I am reading about people who have developed unhealthy habits and may need a reboot. Data from Nielsen shows that sales of alcohol are higher now than before the pandemic (this could be due to the ease of on-line ordering and binge watching series in the evenings while munching on popcorn). In addition fitness trackers show that people are on the average taking fewer steps, I can picture fewer people driving to work and walking from distant parking spots as a contributing factor. In another study, volunteer participants gained about 1.5 pounds per month. Rebooting daily habits can begin with something as simple as setting up time on your calendar to exercise. Combining exercise with a fun activity can also help to make the habit sticky.
In our office we have enjoyed expanded remote work options and swapped out that daily commute with a daily workout so I am not sure why others have not embraced this. As I check the weather and see a forecast for a sunny morning with lite winds I plan an early spin and then a walk on the beach to take advantage (sometimes I brave the winds just to get outside for a while before heading to my desk).
Daylight savings time March 2022, worth getting up an hour early for…
Piping plovers playing in the cold Rockaway beach surf…
I hope you have converted your commuting time to “me time” and have added steps to your day.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
If you have questions about the advance Child Tax Credits for 2021, the two best sources are the instructions for Schedule 8812, which is used to calculate and report the credit on your 2021 tax return, and the IRS FAQs. Before filing your tax return, check your IRS Online Account to be sure you report the correct amount of any advance Child Tax Credit payments received during 2021. This will help ensure that refunds are paid promptly within 21 days. As a reminder, couples who filed Married Filing Joint will each receive a letter reporting half of the payments received. When filing 2021 tax returns, married couples will need to combine both amounts when they file their joint return.
Our clients have taken our advise and included the IRS forms, their bank statements showing the deposits and filled out the worksheet; this has been really helpful and we are confidant we are reporting correct information on these 2021 tax returns.
The IRS is still dealing with a backlog of 22 million pieces of unprocessed and incompletely processed returns and correspondence. A perfect storm of the pandemic shut-down, additional responsibilities in getting stimulus and advance child tax credit payments, and years of budget cuts have left the IRS “thinly strapped,” in the words of former IRS commissioner Mark Everson. Millions of people are still waiting on their 2020 tax refunds, even as the deadline for filing 2021 returns approaches.
Tens of thousands of businesses are waiting to receive funds for the employee retention credit six months after applying. The best way to get your refund faster is to request direct deposit, and to ensure that all the numbers – especially those related to stimulus payments and the child tax credit – are correct.
That is great advice and the correct way to approach IRS filings, but in the last few weeks we have seen:
- 2020 ERC checks showing between 195-202 days of interest and we filed those 2020 amended tax returns on line through our payroll provider. We felt lucky to be using the one provider with an on-line submission option. But why the delay?
- requests from clients asking if we had any idea why they had not yet received their 2020 tax return refunds. Again we file most personal tax returns via efile through our tax software provider, so why the delay?
- 2019 amended person tax returns requesting refunds which were paper filed just now hitting the system with those checks or direct deposits showing months of interest in addition to the requested refunds.
What if these funds were needed by these businesses to stay afloat or individuals in order to make mortgage payments…better late than never?
At the end of their career, many business owners discover that the business they planned on selling to finance their retirement isn’t worth nearly as much as they hoped for, resulting in a substantial wealth gap. This article in Kiplinger explains how to calculate that wealth gap. One way to finance that wealth gap is to work on your business well before you plan to retire to create an asset that can be sold to bridge the wealth gap. It is also important to plan for retirement funds for both you and your employees, deferring current earnings; creating current tax minimization and future funds to draw on in retirement.
THE GREAT REASSESSMENT/RESIGNATION
Many employers are trying to lure workers back with higher pay, but some who quit during the Great Resignation did not cite their rate of pay as their main reason to leave their job. According to a survey from McKinsey, the top three reasons were unsustainable workloads, uncaring leaders, and a lack of career development options. Many companies still have the same revenue goals, but with fewer employees to do the work, so those who remain face burnout. For those who have returned to work, workplace flexibility was the top reason reported. But many of those who have returned might leave again due to lack of career development, inadequate compensation, and a lack of meaningful work.
What should an employer do if a valuable employee decides to leave?
- Find out why they are considering quitting and find ways to resolve the issue, perhaps by assigning them different tasks or to a different part of the company.
- Talk to your staff regularly about non-work topics and express gratitude for their contributions – that should be a given no mater what.
- Make sure to part on good terms. Find out why they left, and keep in touch so they are welcome to return if they want to.
Many people who quit during the Great Resignation are trying out life without a steady paycheck. Some started their own businesses, while others are freelancers or contractors. Being self-employed can mean taking a financial hit, so planning ahead and building up a cash reserve or developing a strict budget can help to get through lean times.
REMOTE AND HYBRID WORK OPTIONS
What do you need to be productive when you have a hybrid work schedule? This article from the Wall Street Journal lists the must-have tech for hybrid employees. Keeping a backpack loaded with a small laptop plus charger and long power cord, corded headphones, and a subscription to a VPN service makes it easy to work at a coffee shop. Tablets can make commuting by train easier, while multiple large screens at home make work more pleasant.
A new trend is “workcations,” where remote workers leave their home base to travel for leisure while managing their full workload. For example, one person spent time in England’s Lake District caring for family members while also performing work duties. People who have done this report improved productivity and creativity, as well as stress relief and a recharge to mental batteries. Integrating work and life may be more realistic than achieving work-life balance. Combining work and vacation successfully requires advance planning and understanding that a workcation won’t be as restful as a completely unplugged vacation.
While some bosses may be eager to bring everyone back to the office, there’s a disconnect with employees, who may have had a better experience working at home than they had in the office. For many employees, remote work put them on an even footing with others and created a stronger sense of belonging to workplace culture. The preference for working in the office may be based on outdated myths of chance meetings in hallways and at water coolers and the need of older executives to communicate face-to-face. Some business leaders may simply miss seeing people.
We have been so fortunate that our strong bond was forged over many years and many shared experiences. When the opportunity arose to work either fully or partly remotely we embraced this model. We are fortunate that we already had a system in place and several remote staff members, so with a bit of help from our IT firm we were able to make a smooth transition. Now Elizabeth works from her home in Georgia, Myriam is remote from Florida, Monica’s home office is in New Jersey and even Ramona in Queens and Raquel in Brooklyn have remote setups for those days they choose to work from home.
Rising energy, food and service prices pushed inflation for February to 7.9%, a four-decade high, but the crisis in Ukraine may push prices even higher. Persistent shipping bottlenecks and supply shortages in the wake of increased consumer demand continue to push prices higher, while a tight labor market makes it difficult for employers to hire enough workers to keep up with demand. Prices for used cars and trucks have the biggest increase over the last year, at more than 40%, with gasoline costs close behind at 38% more than a year ago. The outbreak of war in Ukraine has increased prices for oil, wheat, and precious metals. While some businesses are able to pass price increases on to consumers, those who signed contracts months ago have limited recourse. While wages have gone up over the last year, those increases are not always keeping up with inflation.
There are signs that the big raises of the last year may be slowly tapering off. Although average pay rose by 5.1% over the last year, hourly earnings rose only by a penny in February. As the most serious impacts of the pandemic wane, workers are reentering the workforce, with 678,000 new jobs added to the economy in February. As more workers return to work, they may lose their bargaining power, bringing wages down. Even with higher pay, wages haven’t kept up with inflation. In January, the consumer price index rose by 7.5%.
- 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 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.