Weekly Update – January 20th 2022
Yet again, some people are seeing bare shelves in grocery stores. Our just-in-time supply chain depends on synchrony in all links to keep shelves stocked, but a combination of factors is disrupting the timing. The fast-spreading omicron variant means grocery store workers are calling in sick, as are workers at food producers. Besides workers who are temporarily out sick, grocery stores are dealing with a labor shortage, as people quit over the stress of working in a pandemic. Trucking companies are also dealing with a shortage of drivers. Changing weather patterns and severe weather are impacting the supply of food as well as the ability to move it around.
Just last week Atlanta was hit with a few inches of snow and Elizabeth found that people had stocked up on groceries and the stores were having a hard time keeping staples on hand. Of course those not used to driving in the snow and were able to do so stayed in and sipped hot chocolate by the fire.
Elizabeth sent us this photo of her yard…
Those cold clear days in NYC allow me to bundle up and enjoy a NY winter beach day…
I am hoping that you are able to take time during your day to get out and “smell the roses”, walk though your neighborhood or local park, or take a favorite work-out or class, or walk on the beach like me, even in the snow and cold, just bundle up…
THE AMERICAN RECOVERY PLAN ACT (ARPA)
State Small Business Credit Initiative
As part of the COVID aid package passed last March, the federal government is preparing to hand out $10 billion to help support small companies in their recovery and growth. The funds will be distributed by state, territorial and tribal governments as venture capital for startups or loans for small businesses. The funds are not intended to plug revenue holes, but to support long-term growth and recovery. For more information and application materials, please visit the Treasury’s SSBCI webpage.
Monthly Child Tax Credit Payments
If you received payments from the advance child tax credit, watch your mail for a letter that you’ll need to file your taxes and to get the remainder of the child tax credit that’s owed to you. In December, the IRS began sending out Letter 6419, which contains information on the amount of payments sent out and the number of children that the IRS based their calculations on. If you don’t receive a letter, or if you lose it, you can get the information from the IRS Child Tax Credit Update Portal. For more information on the expanded child tax credits see the IRS FAQs.
The IRS Efile Portal Opens January 24th
The word on the street is that the IRS portal opens Monday, January 24, which means that once again they are accepting efiled tax returns. This is great news for those of you who were given extended time to file your 2020 tax returns due to Hurricane Ida and have taken the extra time to gather the last few items you need in order to file your tax returns.
This also means that the IRS will begin accepting and processing 2021 tax returns. The IRS has announced they have no plans to extend the personal tax filing deadline past Monday, April 18, although retroactive tax changes may cause this to happen once again. While the IRS is still processing tax returns from 2020 and earlier years, taxpayers do not need to wait until those returns have been fully processed to file 2021 returns. Their recent news release also contains links for the IRS Free File program, tips for making filing easier, and key filing season dates.
IRS is “Challenged” in Processing Tax Returns and Manning Their Phone Lines
According to the Taxpayer Advocate’s 2021 Annual Report to Congress, the IRS still has backlogs of 6 million unprocessed individual returns and about 5 million pieces of correspondence. Part of the delay in processing was caused by discrepancies with stimulus payments, which required manual processing and correspondence with some taxpayers. Erin Collins, National Taxpayer Advocate, foresees continuing challenges during the upcoming filing season, as taxpayers will need to reconcile stimulus payments and possibly advance child tax credit payments they received on their returns with data from the IRS. Collins also noted in her report that phone service with the IRS was the worst it has ever been. Only 11 percent of calls were answered with hold times that averaged 23 minutes.
Childcare Expense Credit Cap Raised for 2021 Tax Returns
If you have childcare expenses, you may be glad to know that for 2021 only, the usual cap of $3,000 per child for allowable expenses for the child care tax credit has been raised to $8,000 per child for a total of $16,000 total eligible expenses for two or more children. In addition, the maximum percentage of those expenses allowed as a tax credit has increased from 35% to 50%. This means that a family who spent at least $16,000 on childcare for two or more children could receive a refundable tax credit of up to $8,000.
IRS On-Line Services
The IRS will be requiring anyone who wants to access online services such as the Child Tax Credit Update Portal or their online IRS account to log in using an ID.me account by the summer of 2022. Taxpayers with existing non-ID.me log in credentials can continue to use the old system, but will have to create a new ID.me log in to access IRS services after the change. This change is being made to ensure that access to taxpayer information is only available to the correct person.
IRS Form 6475: 2021 Stimulus Payment
The IRS has created form 6475 which will provide you with your 2021 stimulus payment. We will be asked to reconcile your eligible amount with the advance payments you may have received during mid-2021. This is a similar process with what we were asked to do when submitting our 2020 tax returns.
IRS Identity Theft Protection Identification Numbers
A long awaited and requested process is finally here, for those who have been plagued by tax return identity theft can now apply for a special ID# the IP PIN through this special IRS Portal.
An Identity Protection PIN (IP PIN) is a six-digit number that prevents someone else from filing a tax return using your Social Security number or Individual Taxpayer Identification Number. The IP PIN is known only to you and the IRS. It helps verify your identity when you file your electronic or paper tax return. Even though you may not have a filing requirement, an IP PIN still protects your account.
If you recently tried to fix an error on your credit report, but were unsuccessful, you’re not alone. According to a recent report by the Consumer Financial Protection Bureau (CFPB), only 2% of the more than 800,000 complaints received between January 2020 and September 2021 were resolved. According to the report, one cause of the small proportion of error resolution has been the increase in third-party credit monitoring and repair apps. While federal law allows consumers to use third parties to initiate disputes, the three credit monitoring agencies routinely ignore complaints submitted by third parties. A possible crackdown on credit monitoring bureaus may include fines or other enforcement actions for what may be violations of the Fair Credit Reporting Act.
While school administrators are working to keep schools open, those efforts are being hampered by a big drop in attendance as children are out sick or are being kept home by their parents. In New York City, overall attendance dropped below 70% when students returned after the winter holidays. Low attendance rates make teaching a challenge for teachers, who struggle to keep everyone caught up, and for students who fall behind when they miss school. Staffing shortages compound the problem as teachers and school staff stay home sick.
A year ago, Professor Anthony Klotz from Texas A&M University predicted the Great Resignation, a term he unwittingly coined. In an interview with Barron’s, Dr. Klotz discusses the reasons for the large wave of quits that continues to disrupt the economy. One reason is that many people who were planning to quit their jobs in 2020 postponed those plans until 2021 when vaccines became available, and the economy began to revive. Another reason is widespread burnout among frontline workers who worked long hours under difficult conditions during the first stage of the pandemic. Many others made life pivots as they confronted the death and illness brought on by the pandemic.
REMOTE AND HYBRID WORK OPTIONS
For some companies, a hybrid or flexible work schedule works better than an all-remote option, as the CEO of Nexkey found. Some issues are easier to solve in person than via lengthy Slack exchanges or email chains, and the camaraderie from working side by side can help with team building and productivity.
Before the pandemic, working remotely was the exception, not the norm, a perk often doled out in exchange for lower pay or fewer advancement opportunities. Because women have often chosen part-time or remote work as a way to balance work, childcare, and school schedules, this may have contributed to the gender pay gap. But as remote and hybrid work arrangements become the norm, the stigma associated with working from home is diminishing, and it is hoped that the penalty for remote work will diminish over time.
This may be the year that employees get raises: according to a recent survey of human resources leaders, 51% said their organizations plan to award average merit increases of more than 5%, and 68% said they had increased the number of employees eligible for cash bonuses. A New York based think-tank, The Conference Board, is predicting a 3.9% increase in wages for companies, the highest increase since 2008. People who change jobs tend to get larger salary increases than those who stay. Some people may be willing to accept salary cuts in exchange for flexibility.
As COVID-19 flares up across China, manufacturers are shutting down factories, and workers are in short supply as city lockdowns are imposed across the country. China’s zero-tolerance strategy for confining the virus is heightening fears of continuing supply chain disruptions. Companies including Samsung, Toyota, Volkswagen, Nike, and Adidas are experiencing challenges.
Despite trillions of pandemic relief, more than two-thirds of Americans say their financial situation has gotten worse over the last year. Stimulus payments allowed Americans to pay off a record $83 billion in credit card debt, but household income is not keeping up with inflation. The average U.S. household now owes $155,622 in combined credit card, mortgages, car loans, student loans and other debt.
- 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.