Weekly Update – May 26th 2021
It seems crazy that a year ago, consumers were snapping up essentials like cleaning wipes and toilet paper in a panic-driven frenzy. Today, as economies around the world reopen, businesses are in a similar panic-driven frenzy to stock up. Supply lines have not yet recovered to pre-pandemic capacity, and recent events, including the Suez Canal blockage, a deep freeze in the southeast, and disruption of an East coast pipeline from hacking, are all combining to create shortages resulting in higher prices for products all over the world. A little-known index, the Logistics Managers Index, seems to be forecasting an increase to inflation as inventory, transportation, and warehouse expenses all increase as a response to consumer demand. For example the cost of building products has been reported to have increased four fold since the start of the pandemic. Shortages of key components are forcing manufacturers to produce based on availability of key components rather than the usual forecasts of demand.
On the bright side, as more of us are vaccinated and restrictions are eased, this weekend we look forward to celebrating our brave veterans with parades and bar-b-ques. We are expecting to see our beach visitors return as guidance from the CDC study indicates that the spread of the virus at outdoor gatherings is lower than 10%.
I love to start my day with a trip down the block to watch the sun rise over the ocean.
I am hoping you too are getting out for a walk, run or bicycle ride or just to sit in the sun and enjoy this nice weather.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Restaurant Revitalization Fund
In just three weeks, the SBA received more than 303,000 applications for more than twice the $28.6 allocated to this program. Consequently, the Restaurant Revitalization Fund shut down on Monday, May 24. The demand for funds speaks to the tremendous losses suffered by restaurants and bars during the pandemic.
It is not clear whether Congress will authorize additional funds for this program. For full details and instructions for applying, visit the SBA website, where you can also find a program guide, webinars, and a link to the application portal.
Enhanced Child Tax Credit Payments
The American Rescue Plan increased the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17. This is expected to affect roughly 39 million households, covering 88% of children in the United States. Eligible families are slated to begin receiving monthly payments without any further action required. They will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above. Check out this IRS link for more information as it becomes available. You can read more in this recent article from Tax Practice Advisor.
Third Round of Economic Impact Payments Status Available
In March 2021, the third round of economic impact payments beginning hitting bank accounts causing some confusion as to the method of calculation. The funds amounts were determined based upon your most recently filed tax returns and with the extended due date of May 17th 2021, this could mean your tax return for the 2019 tax year.
In addition you might receive a plus-up payment as discussed in this recent IRS news release.
Plus-up payments are additional payments the IRS is sending to people who:
- Already received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA
- May be eligible for a larger amount based on their 2020 tax return
So relax, the IRS has informed us they will automatically evaluate your eligibility for a plus-up payment using your 2020 return. You can use this link to view the status of your payment(s).
Emergency Broadband Benefit Program
Online access has become a necessity of modern life, and the pandemic has made it even more essential. A provision in ARPA will make broadband service more affordable to qualifying households by offering $50 monthly coupons for online access. Eligible households qualify if they meet at least one of these criteria:
- Recipient of Medicaid or food stamps
- Child in free or reduced-price school lunch program
- Income below 135% of federal poverty guidelines
- Substantial loss of income since February 29, 2020
In addition, eligible households may receive a $100 discount towards the purchase of a laptop or tablet. Tribal members may qualify for $75 per month in broadband assistance. Funds may run out quickly, so apply soon if this applies to you. Full details and application information can be found on this dedicated website.
Other Tax Matters
Extended Tax Returns Still Need to be Filed
The extended due date for individual tax returns of May 17th has come and gone. It is now time to search for or request the “open items email” we sent you and start putting together those missing pieces of information. I know that the nice weather beckons you, but we would not be asking for this additional information unless we felt it would help reduce your tax liability.
Remember this was an extension of time to file, not an extension of time to pay, and October 15th will be here before you know it.
Unemployment Benefits and Taxes
As discussed in prior blogs and newsletters, 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. Those who filed early, before ARPA was passed in March, will get an automatic adjustment to their federal refund.
We here in New York are still hopeful that NYS Legislative bill S512A which is still active would exclude up to $10,200 of unemployment insurance benefits earned by NYS residents and not just for 2020, forever (or until they change the law again). We have put the tax returns for those clients affected by this law on extension and hope to be able to finalize and submit these returns with a lower New York State tax liability if the law passes.
Just over a year ago many of us shifted to a remote work world. Early reports indicated an increase in productivity and the advantage that a zero commute had on our personal lives. However, as the work-at-home experiment morphs into a permanent option, managers need to be aware of and proactively mitigate bad habits which some remote workers may have fallen into. For example, some team members may be intentionally hiding out during video meetings by keeping their video cameras off. Setting clear expectations that cameras are to be on with mics off and making a point of asking each participant for their point of view can help break that habit.
While most companies report that working remotely was largely successful, some managers are not convinced that those who want to work remotely are as committed to the company as those who prefer coming in to the office. As this article in the Wall Street Journal points out, several prominent business leaders, including the CEO of WeWork, have publicly stated that the most engaged employees want to be in the office. However, the article also points out that while managing a remote team is different that managing a team in the office, many examples of workplaces that combine remote work and opportunities for career advancement exist. As remote work will likely become more of the norm than exception that it was pre-pandemic, team members and business leaders alike will need to adjust their approach if they want to keep their best people.
LIFE IN THE POST-PANDEMIC ERA
Identifying the best candidates for your company
Even before the pandemic, the ability to learn new skills was beginning to be seen as the key to success in today’s rapidly changing world. Lifelong learners tend to be the highest performers over the long run, but how do you identify these candidates? An article in Harvard Business Review suggests asking a simple question: How do you learn? Asking this question during the interview process and as part of an annual performance review helps companies find, hire, and retain the best team members.
Even as the pandemic appears to be waning, many employers report having a difficult time finding enough candidates to fill needed positions. In Connecticut, Governor Ted Lamont is taking a novel approach by offering long-term unemployed a $1,000 bonus after eight weeks at a new job. Lamont hopes that the extra funds will make it easier for people to pay for childcare, transportation, or whatever they may need to return to the workplace.
Even as companies are adjusting to an all-remote or hybrid workplace, college graduates from the class of 2021 prefer in-person work and in-person job interviews. These new candidates want to develop relationships and network on the job and crave in-person collaboration. Some may not have an appropriate area or the right equipment for working remotely. Employers may need to be creative in developing a collaborative and rich work environment for their newest team members.
How to keep your vaccination card on your phone
Vaccine cards don’t fit easily in wallets alongside credit cards and drivers’ licenses, and with the ever-changing rules, it’s not clear when or if you might have to produce yours. This article in PC Magazine explains how to keep yours on your phone.
- IRS resources for stimulus payments:
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- The CDC also has recommendations for businesses and employers
- 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 Atlantic has a state-by-state coronavirus tracker
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.