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We survived the first major tax deadline day of tax season 2024 and were able to celebrate a bit last weekend even with the rain on St. Patrick’s Day.  It’s amazing what some dogs will put up with for a bisket or photo opp.  At least they were able to stay inside and pose for “St Patrick’s Day Dog’s on Parade”…

With such changable weather this week, I wasn’t able to catch the sunrise everyday, but on those days I did…

I’m glad I was able to get out on the beach at least few days this week as we are expecting buckets of rain tomorrw.  It seems like a great opportunity to hunker down with a steaming bowl of soup or mug of hot chocolate and organize your tax documents.  Not fun but necessay and at least you won’t be missing some great spring weather!

WEEKLY TAKE AWAY

Personal relationships and connections within our work environment that create positive feelings and respect are key to firms even when most of our staff is working remotely. As a CPA firm we dread the deadlines; we love having them as long as we can meet them successfully.  Last week was our first major deadline of tax season 2024 – dreaded and met with success.  We work remotely as a firm but are still a team so we jump on and off our pre-set, long running “huddle video chat meeting room” daily to review client files, ask for help and discuss and resolve issues.  In the old days we would walk over to someone’s desk, these days there are too many miles between us, so the technology is a welcome necessity.  Thursdays are our usual huddle day but those meetings were suspended for a few weeks due to the March 15^th deadline.  It was so nice to get back to our regular routine as we start each meeting sharing a great or at least positive event of the past week.  We did this yesterday and started our day with a smile and personal reconnection and that was really great.

TAX ISSUES/TAX PLANNING

Capital Gains Tax Rate Hikes at Center of Biden’s Tax Agenda

Here’s an exerpt from a recent article in AccountingToday: “President Joe Biden’s budget proposal — which calls for sweeping tax increases on corporations and the wealthy — is the opening round of a looming tax fight set to consume Washington next year.  Congress will be forced into tough negotiations over the future of the tax code, with large portions of former President Donald Trump’s 2017 cuts (Tax Cuts and Jobs Act TCJA) set to expire at the end of 2025. Many lower- and middle-income households will see a tax increase if lawmakers don’t act, providing motivation for both Democrats and Republicans.”  Can we get them to work together and agree on something before the laws expire?

The Enhanced Child Tax Credit (CTC) Could Impact You This Tax Season

Click through for more from a recent article in AccountingToday:  “Tax season is well underway, but the fate of the $78 billion Tax Relief for American Families and Workers Act, (H.R. 7024) including the enhanced Child Tax Credit, is now in the hands of the Senate. It is unclear when the legislation will cross the finish line, and what impact it may have on tax filing this year.   The version of the Child Tax Credit that was passed by the House in January would make the credit more generous, but not as generous as the version included in the American Rescue Plan Act of 2021, which was fully refundable and temporarily provided monthly checks to lower-income families to help alleviate poverty.  Under current law, the maximum refundable credit is limited to $1,600 per child for 2023. The bill increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024, and $2,000 in tax year 2025.”

IRS Officially Launches Direct File Free Tax-Filing Program

Free isnt always free, but here are the details per an an exerpt from AccountingToday:  “The Internal Revenue Service and the Treasury Department officially launched the Direct File pilot program for free tax filing after weeks of testing in a dozen states.  The IRS began internal testing of the program over a month ago with IRS employees in each of the 12 states before expanding the pilot program to outside users in recent weeks. Now the pilot program is officially launching Tuesday in the 12 states where it’s available: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. So far, over 20,000 people have either started or completed a return using the system.  The early results from Direct File have shown that taxpayers like the ease and convenience,” said IRS Commissioner Danny Werfel during a press conference Tuesday. “Many taxpayers we’ve heard from filed their taxes in less than 30 minutes using Direct File. By opening up this full-scale launch today on IRS.gov, this will give more taxpayers the chance to use this free option.”

ECONOMY

Unemployment Rate Spikes to 2-Year High

As reported in this recent article from Forbes:  “The labor market showed some rare signs of weakness in February, as the unemployment rate unexpectedly rose to its highest level since the Federal Reserve began hiking rates in early 2022, though job growth was above economists’ forecasts.

Inflation Comes in Higher than Expected for Fourth Straight Month

As reported in this recent article from Forbes:  “Inflation was worse than anticipated in February, even as underlying metrics show signs of progress in the war against price increases.”

Inflation Surges: Rent Costs Skyrocket, Dampening Hopes for Interest Rate Cuts

As reported in this recent article from News GPT:  “Inflation in the US has been a hot topic, with recent data indicating a higher than expected increase last month, causing a stir in the markets and raising concerns that the Federal Reserve may not lower interest rates this year. A significant factor contributing to this inflation is the rising cost of shelter, particularly rent, which has seen a significant increase over the past year. Despite efforts by the Federal Reserve to control it, rent isn’t budging as quickly as expected.

Last month’s Consumer Price Index (CPI) showed that shelter costs had increased by 6% since last year. While this is a decrease from the peak annual increase of 8.1% in February 2023, it’s still alarmingly high. Shelter costs, which make up about 30% of CPI, are one of the biggest drivers of services inflation and one of the most significant and essential costs for Americans. Over the past year, about two-thirds of the increase in core CPI came from shelter alone.

Despite optimism from Federal Reserve Chair Jerome Powell, who anticipates an ease in shelter prices, some economists don’t expect a drop anytime soon. The belief is that once rent prices increase, they tend to stay up. This phenomenon, referred to as “Greedflation,” has seen landlords across the country using inflation as an excuse to raise rents exorbitantly without real cause.

Some economists argue that the CPI data is skewed and can paint a false picture of how high inflation currently is. The CPI tracks rents that renters pay, but the majority of shelter costs in the index come from something called owners’ equivalent rent. This attempts to factor in how much rent homeowners would pay if they rented rather than owned their home, which can create a false equivalency.”

Small Businesses are Cutting Jobs; A Warning Sign for the US Economy.

As reported in this recent press release from Intuit:  Information via the 2023 Intuit QuickBooks Small Business Index Annual Report. “Developed in collaboration with leading global economist Professor Ufuk Akcigit and his co-authors, the report reveals how macroeconomic pressures like inflation and higher interest rates are affecting small businesses’ ability to create jobs and get the funding they need to grow.  The report finds that in 2023, while overall employment levels have trended upward in the US, Canada, and UK, small business employment has been less resilient. Using anonymized data from more than 3.4 million Intuit QuickBooks customers and surveys of more than 5,000 small businesses in the US, Canada, and the UK, the report looks at how small businesses are responding to these challenges, and examines the relationships between small business growth, access to capital, and use of digital technology. Key findings include:

• With elevated inflation and high-interest rates, small businesses have increasingly depended on their credit cards, with the current spending being 20% higher, on average, than they were before the pandemic. At the same time, their monthly credit card payments, which include interest charges, are up by 26% on average.
• These pressures are affecting jobs: small business employment rates declined in the first five months of 2023 in the US and in seven of the first eight months of 2023 in Canada. Similarly, in the UK, small business job vacancy growth rates declined in all of the first eight months of 2023.
• The rise of the solopreneur (non-employer businesses) shows entrepreneurship is stronger than ever; however, in the US and Canada fewer new businesses are creating jobs, a concerning trend because in the US, more than a third of all jobs are with small businesses while in Canada and the UK it’s more than two in five.
• Access to funding is essential for small business growth, but roughly half of small businesses in the US, Canada, and the UK are self-funded by the owner. New businesses and businesses owned by women or members of underrepresented racial groups often face greater funding challenges.
• Despite inflation declining over the past year, small businesses in the US, Canada, and the UK say rising costs are still the number-one challenge they face.”

GENERAL RESOURCES

• News about the Child Tax Credit
• The best source for up-to-date and accurate health information is the Center for Disease Control (CDC) 
• Our prior blog posts, videos and prior weekly newsletters 
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams 
• 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 
• How to create a strong password