Weekly Update – April 7th 2022
During my recent trip to Florida I saw that while the mask mandate was still in place in the airports and on our flight most public spaces had dropped the requirement even as the highly transmissibleBA.2 strain of the virus continues to spread and accounts for as much as 70% of US infections. Now health officials are recommending a fourth shot of a COVID-19 vaccine to protect vulnerable groups such as older adults and immunocompromised individuals.
While there is some debate over whether a second booster is necessary, the CDC recently issued new guidance that allows the 1.3 million adults who received the Johnson & Johnson vaccine followed by a Johnson & Johnson booster shot to get either Pfizer or Moderna as a second booster shot to improve protection.
I was glad to return to New York and my daily trips to the beach which clear my head as the countdown to the end of tax season 2022…
My staff and I are looking forward to a break before we tackle those extended business and personal tax returns.
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.
Get an Automatic 6-Month Extension to File
If you’re unable to file your tax return by the April 18 deadline, the IRS has an online option to get more time to complete your return for you DYI’s to request an automatic six-month extension through their IRS Free File.
Remember this is an extension of time to file, not an extension of time to pay! As they say the proof is in the pudding; the real challenge is calculating your balance due and finding the funds to make the required payment.
It’s Time to Contribute to Your IRA
Reminder if you are planning to make a contribution to your 2021 traditional or ROTH IRA, you have until April 18th as well. Please be sure to indicate the tax year as 2021 when submitting the documents and payment to your broker or banker. As always we recommend that you check with your accountant before submitting your paperwork to see if you are eligible and what the tax benefits would be.
Unemployment Benefits and Taxes
You may remember that for your 2020 tax returns their was a special allowance regarding the first $10,200 of unemployment benefits at the federal level. This is NOT the case for 2021 and all unemployment benefits are reportable and subject to tax.
Virtual Currency Reporting
Although we updated our annual engagement letter for the new IRS wording about virtual currency transactions people are still not clear on how to answer: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any interest in any virtual currency?”
This yes/no question should be easy to answer, but even those tempted to answer YES may have the wrong answer. Clarifications from the IRS instruct those taxpayers who owned or bought virtual currency with US dollars during 2021 but did not have any other transactions can answer No. We caution anyone who had other kinds of transactions to answer Yes and include any reportable transactions on their 2021 tax return.
For those of you who are dabbling or playing please remember to check your on-line trading platforms for 2021 Tax reporting Documents. We have been requesting the forms even when the Realized Gain/Loss statements report NO Taxable Transactions to Report: document, document, document.
April FBAR Deadline
The IRS reminds US citizens, resident aliens, and any domestic legal entity that the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15. Lucky for us tax professionals this filing requirement is also able to be extended. Learn more about filing deadlines on the Financial Crimes Enforcement Network’s (FinCEN) website.
Taxpayer Assistance Centers Will Be Open This Saturday
As the federal tax filing deadline approaches later this month, the IRS announced that many Taxpayer Assistance Centers will be open around the country this Saturday, April 9 for face-to-face help. It will be available from 9 a.m. to 4 p.m., and no appointment is needed.
$10 Billion in COVID Aid to Boost Testing
Senate negotiators agreed on a $10-billion spending deal to further fund the country’s response to the pandemic. The package would allow the U.S. to buy supplies, including more tests and vaccines that will be needed to continue to curb the spread of COVID-19 as a new variant rapidly spreads.
The extra funding is good news for businesses, especially for those with employees who frequently get tested. While it’s not required, many businesses are still opting to only allow vaccinated employees into the office, or those who can show a recent negative Covid test. Still other businesses encourage everyone to get tested on a regular basis.
431,000 Jobs Added in March
Nonfarm payrolls expanded by 431,000 in March, while the unemployment rate was down at 3.6%. This is slightly below the forecast of 490,000 and well under February’s upwardly revised 750,000. Leisure and hospitality led the gains, followed by professional and business services and retail trade. During my recent travels to Florida, I noticed that the airports were busier with more available and fuller flights and the hotels were at near capacity supporting the recent reports that the travel industry is coming back.
SEC Plans Greater Oversight of Crypto Markets
SEC Chair Gary Gensler announced that the agency is aiming to exercise greater regulatory oversight of the $2 trillion cryptocurrency market to protect investors from scams. He announced several initiatives to expand investor protections, and that it will partner with the Commodity Futures Trading Commission to address platforms that trade both crypto-based security tokens and commodity tokens.
We accounting professionals have seen a rise in cryptocurrency investments and the IRS is certainly more interested in tracking reportable and non-reportable transactions. We have been recommending that individuals stick to reputable trading platforms and elect to have those firms track their crypto portfolios for ease in meeting IRS reporting requirements.
President Joe Biden has made a major commitment to cybersecurity with his fiscal year 2023 budget, with the proposal including a $5.8 trillion budget for 2023 for cybersecurity-related activities. The increased proposed budget for cybersecurity comes roughly a week after the president urged US companies to boost the security of their systems due to the increasing threat from Russia. It also includes $215 million to protect sensitive agency systems and information.
- 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.