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 |  Bizink  |  American Rescue Plan Act,  ARPA,  covid-19,  identity theft,  IRS form 6419: Advance Child Tax Credit,  IRS Form 6475: 2021 Stimulus Payment,  tax advice for 2021,  Tax Season 2022

Weekly Update – March 3rd 2022

One of the side effects of the pandemic has been the expansion of online grocery shopping and speedy delivery. But in large cities, many online grocery purchases are fulfilled by businesses that have taken over retail storefronts to become “ghost stores” or “dark stores.” These are small scale fulfillment centers that serve only ecommerce customers, with most orders being delivered by bike. These dark stores have the potential to reshape urban neighborhoods, by replacing stores open to the public, which attract walkers and which serve as informal community meeting places with fulfillment centers that are closed to the public and which increase traffic by bike delivery workers and restocking vans.

As I walk, cycle or drive through my neighborhood I am thrilled to see this is NOT the case.  Ferries arrive hourly from Manhattan after stopping in Brooklyn to collect and dispatch riders, who are enjoying the NYC waterways and out for a day at the beach.  Many new “cool” shops, restaurants and bakeries have sprung up; some even have secondary summer concessions on the boardwalk.  Of course we still love our deliveries of take-out and on line shopping, but I am grateful to have other options.

The boardwalk does not reach my block, but just yesterday the weather was a mild 43 degrees with no wind and I was able to take a short beach walk between my spin and elliptical workout…

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I was also greeted by a cute little black and white bulldog who ran up to me, sat on my feet and waited for a few pets and admiring words, I’ll have to ask her owner if she can pose for a beach shot I can share with you, I know I’ll hear some ahs…

Now back to work as the IRS, NYS, and NYC are updating and releasing 2021 required filing forms for us to use over the next few weeks and months…

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Recovery Rebate Credit

The IRS has released a fact sheet with updates to its FAQs to help people claim their Recovery Rebate Credit on their tax returns. Anyone who did not receive their third Economic Impact Payment (aka stimulus check) or did not receive the full amount they are eligible for can claim the full remaining amount when they file their 2021 tax return. Included in the updates is information about Letter 6475, which the IRS will be sending out through March 2022 with information about the amount that a person received.

Monthly Child Tax Credit Payments

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. For more information on the expanded child tax credits see the IRS FAQs.

TAX ISSUES

Recovery Rebate Credit

The IRS has released a fact sheet with updates to its FAQs to help people claim their Recovery Rebate Credit on their tax returns. Anyone who did not receive their third Economic Impact Payment (aka stimulus check) or did not receive the full amount they are eligible for can claim the full remaining amount when they file their 2021 tax return. Included in the updates is information about Letter 6475, which the IRS will be sending out through March 2022 with information about the amount that a person received.

Monthly Child Tax Credit Payments

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. For more information on the expanded child tax credits see the IRS FAQs.

TAX ISSUES

Increased Child and Dependent Care Credits for 2021

If you paid for childcare during 2021, you may be eligible for a tax credit of up to $8,000. The child and dependent care tax credit was expanded in several ways. First, the cap on eligible expenses was increased from $3,000 per child to $8,000 for one child and $16,000 for two children or more. The percentage of expenses available as a credit increased from 35% to 50%, so a family with two or more children who spent at least $16,000 could get a refundable credit of $8,000. Additionally, the phase out limits have increased from $15,000 to $125,000, so more families will be eligible for the full amount than in previous years.

Consider Making an IRA Payment by April 15th to Reduce your 2021 Taxes

Even though we are starting the third month of 2022, there are still ways to cut your 2021 tax bill. If you haven’t maxed out your 2021 IRA contribution, you can still add funds up until April 15. If one member of a couple is working, a non-working spouse can contribute to a spousal IRA based on the earnings of the working spouse.

Take Advantage of Employee Benefits Now for 2022 Tax Savings

If your employer offers it, you can also still add funds to a health savings account. With an HSA, you get a deduction for the contribution, and the earnings can be withdrawn in later years tax-free as long as the funds are used for medical expenses.

IRS Identity Theft Ptin Options

After facing Congressional backlash over its use of facial recognition, the IRS will be offering taxpayers another option to verify their online identities. The IRS plans to transition away from using the third-party service, ID.me, over the next few years, and to begin using Login.gov, which many Americans already use to access federal websites. Taxpayers can still choose to use facial recognition to verify their identities but can also choose to have a live on-line interview with an ID.me representative for identity verification.

File Timely and Use the E-file System

We are getting continued reports of those individuals who missed the e-file deadlines in prior years.  They mailed their returns or hand delivered them to a local IRS office. Those individuals are now receiving notices that there is NO record of them filing those tax returns.  We have been hearing of the lag in processing which seems to increase by 10,000 pieces of correspondence (including tax returns) per week.

NYS PTET Tax Returns and Elections

It’s raining taxes (not men like the song by The Weather Girls, which was a good thing).  We are thrilled that NYS came partly to their senses and is now allowing accounting professionals to file the annual PTET tax returns, extensions and estimated payments.  We still cant make the elections, so we are analyzing the pros and cons and then where it makes sense setting up video chat meetings to assist our clients in making the 2022 annual elections.  Right during a busy busy time!

FRAUD

American consumers reported losing more than $5.8 billion to fraud during 2021, an increase of 70% over the previous year, where fraud losses were $3.4 billion. The total amount lost is likely higher because not all fraudulent losses are reported, and the total does not include losses for identity theft. Losses included con artists who peddled fake health remedies or who stole identities to claim unemployment benefits. While younger Americans were targeted more frequently, those in their 70s and older lost more money.

THE GREAT REASSESSMENT/RESIGNATION

Just a few years ago, people were not necessarily motivated to leave their jobs just for a promise of better pay or better work-life balance. But today, those two factors have become the biggest priorities for employees who might consider seeking a new job, according to a recent Gallup poll. The current labor market favors job seekers over employers, so employees are willing to ask for more pay and more flexibility than in the past. Paying attention to what the highest performing employees like most about a workplace and tailoring offers to reflect those preferences can help employers attract the best talent.  My daughter Emily is currently weighing several job offers and most appealing to her is the opportunity to learn and perform more advanced techniques as well as opening a satellite pain management office in a needy rural Michigan area.  I joke that she seems to be living in a hallmark movie or house hunting in Green Acres with Zsa Zsa Gabor!

For many companies, March 1 has been the date to return to the office. But some economists are predicting that pressure from inflation combined with a sudden loss of autonomy may result in a new wave of resignations. People who are required to return to the office may seek other work with greater flexibility and more pay. Employers may need to expand remote work options or to offer other creative perks, in addition to raises in pay in order to retain their valued employees.

REMOTE AND HYBRID WORK OPTIONS

Although Americans are returning to restaurants, movies, and travel as pandemic restrictions ease, many are still not returning to the office. Employers who had hoped for loyalty from employees who were kept on the payroll even at the height of the pandemic are instead seeing empty seats. Research indicates that the reluctance to return to the office is less about COVID-19 and more about convenience. More than half (61%) of people who telecommute most of the time are doing so by choice.

Most or our office staff are working remotely, and most from different states: Myriam in Florida (over 20 years), Monica in New Jersey (think about how many hours saved by not driving through Statin Island), Elizabeth a recent Georgia resident  and Ramona (living in Queens, but more available for her elementary age daughter).  Raquel and I hold down the fort most days and complain about having to scan in paper documents – so use our secure portal and save a tree and postage!

ECONOMY

The Federal Reserve’s preferred measure of inflation rose 5.2% in January over the previous year, a rate not seen since 1983. The personal-consumption-expenditures (PCE) index measures costs paid by consumers and those who spend on behalf of consumers for a hypothetical basket of goods across rural and urban areas. It excludes volatile food and energy costs, but also includes the costs of employer-sponsored health care plans. We have seen a huge increase of business related services, our software and office essentials.  The continuing trend of rising inflation adds pressure for the Fed to raise interest rates this spring.

Despite inflation pressures, the US economy continues to grow, according to the Purchasing Managers Index, which rose to a two-month high. However, according to a survey by the Conference Board, consumer confidence has fallen over the last two months. Inflationary pressures are discouraging people from making big purchases, such as homes, cars, major appliances, and vacations. However, a strong labor market and higher home valuations have made most Americans wealthier than they were before the pandemic.

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!

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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