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Weekly Digests

Weekly Digest – April 14th 2021

We’ve been spending more of our time staring at electronic screens all day, and rumors abound about the possible negative consequences of that, as this piece in Lifehacker explains. Eyestrain is real, but the blue light from our screens won’t damage eyes. Simply holding your device a bit further from your eyes may reduce just as much blue light as expensive blue-light-blocking glasses. Practicing the 20-20-20 rule may help alleviate many of the eye problems that our electronic world of work can cause: every 20 minutes, look at something 20 feet away for 20 seconds. It also helps to take a real break and go outside for a walk, or just stand up and stretch.

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This sunrise is my choice for “photo” of the week, and I just saved it as my cell phone screen saver.

The construction of new jetties and expansion of the Riis Park jetty is coming along well. The work starts at 7AM, so we need to be on the beach before the crews…

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You know it’s finally spring when it’s warm enough to get into the water on your paddle board (that’s NOT me out there)…

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I am hoping you are able to take time out for yourself each day as well.

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Economic Impact Payments (aka Stimulus Checks)

According to an article in Reuters, Americans plan to save more of their third stimulus payment than in the past. Some of this may be driven by the limited options available, and people may later spend those funds as the economy reopens. On average, surveyed households reported that they will spend 25% and save 42% of their third payments, compared to 29% spent and 37% saved from the first round of payments.

The IRS continues to update its EIP FAQ pages for the third wave of payments. Recent updates include what to do if a check is issued in the name of someone who was deceased prior to January 1, 2021. In this situation, you’ll need to return the payment to the IRS.

According to the IRS, if you didn’t receive your EIP payment as a direct deposit by March 24, you’ll be receiving it in the mail as either a prepaid debit card or a check. Checks and debit cards began going out March 19 and will continue over the next weeks. The best way to track your payment is using the IRS Get My Payment tool which has been updated for third round payments.

If you’re eligible for the first two stimulus payments but did not receive the full amount you’re entitled to, you can receive the additional stimulus payment as a Rebate Recovery Credit on your 2020 tax return.

As we work with our clients on their tax returns we see that most have received the correct amounts.   For those who have not, we prepare the reconciliation and request the additional funds as a refund or Rebate Recovery Credit on their 2020 tax return along with their regular refund.

100% Business Deduction for Restaurant Meals through 2022

Normally, only 50% of the expenses for business related meals are deductible for taxes, but between January 1, 2021 and December 31, 2022 that limitation has been lifted: those eligible meals ordered in from or eaten at restaurants are now 100% deductible. The IRS recently released guidance that explains this deduction. The guidance defines restaurants as businesses or services that prepare food and beverages for immediate consumption, regardless of whether the purchases are consumed on premises or not. This definition means that purchases from businesses that primarily sell pre-packaged foods, such as grocery stores, convenience stores, liquor stores, vending machines, and kiosks, will remain at the 50% deductible limit.  Remember that as this is a business expense it must be ordinary and necessary and supported by appropriate documentation.

Shuttered Venue Operators Grants (SVOG)

The portal for submitting applications opened briefly on April 8, but shut down later that day, and remains closed until technical details that prevent applicants from uploading documents are resolved. When the portal re-opens, the first 14 days will be reserved for businesses that suffered more than a 90% loss in business, with succeeding application windows for businesses with smaller losses. Grants are available for 45% of 2019 gross revenue, up to a maximum of $10 million. The SBA has a dedicated webpage for the SVOG program, which includes eligibility requirements, video tutorials for the application process, and allowable uses of funds.

Paycheck Protection Program (PPP)

Although the deadline for applying for PPP funds was extended to May 31, the SBA projects that funds may run out before the deadline. As of early April, the SBA had only $66 billion in funds remaining out of a total of $292 billion appropriated since December. While expanded guidelines increased the amount that small solo businesses could receive, no additional funds were appropriated, which may leave many eligible recipients out of luck.

As we have been using the AICPA funding portal this time around we have seen the approvals and funding go a bit smoother  for most of our clients.  We still seeing applications got caught up in the SBA error code system which was enhanced in order to prevent more fraud, but have been able to resubmit most of those with good results.

Other Tax Matters

A provision of the CARES Act allows people under the age of 59 ½ to withdraw up to $100,000 from retirement accounts without paying the usual 10% penalty when the withdrawal is COVID-related. Those withdrawals are still subject to income tax, but as a CNBC article explains, the law includes flexible options for paying that tax. The law allows taxpayers to spread the tax over three years or to repay the withdrawn amount over three years. However, whether you plan to repay that withdrawal or not, you will still need to pay tax either on the full distribution or on 1/3 of the withdrawal on your 2020 tax return, depending on the election you make. If you repay the entire distribution over the three-year timeframe, you’ll need to amend your tax returns to get a refund of the taxes previously paid.

Tomorrow is April 15th and it’s still a big deadline day.  Although the individual tax return filing deadline is May 17th, trust, C-Corporation, and Fbar returns are still due April 15th.   On Monday evening (April 12th), the IRS released new guidance regarding the rules for your first 2021 federal estimate which remains due on April 15th.  Your state estimated tax payment (for most states) remains due on April 15th as well.

Unemployment Benefits and Taxes

Under ARPA, the first $10,200 of unemployment benefits is not subject to federal income tax if your MODIFIED ADJUSTED GROSS INCOME is under $150,000. If you filed your tax return before ARPA passed, the IRS has announced that it will be issuing refunds for those returns beginning in May.  Remember, “The IRS is NOT your friend” and will not test scenarios to make sure you are filing the most beneficial way.  If you want to take action on your own, you can do so by filing a corrected tax return before the due date of May 17th 2021.

Not all states follow the same rules for taxing unemployment compensation as the federal government, so Kiplinger put together a state-by-state guide on unemployment.  We here in New York are waiting for the final vote on the legislative bill S512A that would render a final determination if NY will follow the same exclusion rule as the IRS.  Fingers crossed for those who will surely appreciate this added tax relief!

REMOTE WORK

In the remote world, a good part of our personal interactions is on Zoom calls. Marketing guru Seth Godin has ideas for making the experience less exhausting and more intimate. Some tips are free, while others require investing in special equipment. For free, you can adjust the Zoom settings at the beginning of every call to “hide self view” so you’re not fatigued by looking at yourself in a mirror on every call. Rearranging your workspace to that the source of light is not behind you will make it easier for others on the call to see your face. Further investments include a couple of LED lights, a camera, and a microphone, and for maximum quality, a teleprompter setup.

LIFE IN THE POST-PANDEMIC ERA

Now that the pandemic is beginning to ease, some companies are making plans to bring employees back in. While some employers want in-person work to be the norm, they are facing push-back from employees. Besides eliminating the time drag of lengthy commutes, many have found that working remotely improves their productivity by eliminating distractions. Some have health concerns regarding a return to close contact with others in elevators or public transit, while others crave a return for socialization. A hybrid model, with two or three days in the office to connect with team members and the remaining days for focused work at home may become the norm in the future.

Will workplace benefits be the same as before the pandemic as employees are able to return to offices? Not according to Tim Allen, CEO of Care.com, who writes in the Harvard Business Review of the growing importance of childcare and senior care as benefits. On-site childcare is falling out of favor, while flexible work schedules and childcare options, mental health benefits, and senior care are all growing in popularity.

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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