Business Update – March 24 2021
The greatest benefit of unpleasant experiences is the lessons we learn from them. A year into the COVID-19 pandemic, and we have certainly had plenty of experiences to learn from. The New York Times asked scientists, public health experts, and health advocates about the lessons we should learn for the next pandemic. One interesting lesson is that health care providers who had a nimble approach to keeping people healthy, including deploying telehealth and closely monitoring patients at home, were better equipped to handle the pandemic than those with rigid business models relying on patient volume.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Economic Impact Payments (aka Stimulus Checks)
As of March 17, the IRS announced that they had already sent out more than 90 million payments via direct deposit. If the IRS has your current banking information, you will likely receive your payment as a direct deposit. Otherwise, your payment will go out as a paper check or prepaid debit card. The best way to track your payment is using the IRS Get My Payment tool which has been updated for third-round payments. However, that tool won’t tell you how much money you should be getting, and it’s not clear what some of the responses mean. This article on CNet explains those responses and offers suggestions on actions you may need to take.
A few people have already reported that their payments may have been stolen. Although this article in Kiplinger hasn’t been updated to reflect the third stimulus payment, it does offer excellent advice on actions to take if your payment is lost or stolen. Before contacting the IRS, collect documentation that shows your payment was sent to you, and that you never received it.
Myths about this round of stimulus payments have been floating around, but this article in Money lays out the facts. For example, many believe the IRS will claw back your payment if you receive more than you’re actually entitled to. This is not true – the only change the IRS will make to any of the stimulus payments is to give you more money if you didn’t receive all that you were entitled to.
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.
Unemployment benefits and taxes
Normally, unemployment benefits are subject to federal income tax, but a provision of ARPA exempts up to $10,200 of benefits for those with income under $150,000. Tax preparation software may or may not yet reflect those changes, so the IRS has provided detailed instructions and a worksheet on how to calculate the exact amount that will be taxable.
For those who filed tax returns before the law was passed, the IRS has indicated that they will be making the adjustment on their end and issuing refunds automatically. It will not be necessary to file an amended tax return to receive this benefit.
Paycheck Protection Program (PPP)
As of March 21, the SBA had approved more than 8 million loans totaling over $718 trillion for the entire loan program. So far this year, 3 million loans totaling nearly $196 million have been approved. However, with the program due to expire at the end of this month, Congress is working to extend the program to May 31.
ARPA increased the amount that sole proprietors could request by making the loan calculation based on gross revenue instead of net income. However, for many solo entrepreneurs, the change came too late, and the difference cost them thousands. While the SBA is not at this time making any plans to make that change retroactive, solo businesses have a few options if they have not yet received their funds. If the loan has not yet been disbursed, they can withdraw the existing application and submit a new application with the increased funding amount. If the loan has been disbursed, some borrowers may be able to repay their existing loan and apply for a new larger loan amount, but only if the lender has not yet submitted certain paperwork to the SBA.
During the rush to approve PPP loans last spring, the SBA turned off controls in its electronic loan approval process that resulted in more than 4,000 duplicate loans being paid out, according to a report from the SBA’s Office of the Inspector General. Recipients who received duplicate loans will not be eligible for loan forgiveness until they repay the extra loan they received.
Tax Deadline Extended
The IRS announced that the deadline for filing individual tax returns has been extended from April 15 to May 17. This will give individuals more time to file their tax returns amid mid-season changes, such as making a portion of unemployment benefits exempt from federal taxes. This extension does not apply to state tax returns, where the due dates are determined by the states. Corporate tax returns are still due on April 15, as are first-quarter estimates for 2021 taxes. Individual tax returns that have been extended will still be due on October 15.
The extra time is helpful because we are all continuing to adapt to the unusual circumstances resulting from the pandemic. Even with the new deadline, we encourage you to get your taxes done as soon as possible. We process taxes on a first-come-first-serve basis. The sooner you get your tax data to us, the sooner we can get your 2020 taxes processed and completed for you.
As a reminder, we try to make it easy and convenient to get your data to us. You can upload your tax data to your private and secure portal at any time, 24/7/365. If you would prefer to drop off your tax data in person, our Pinckney office is open MON – FRI, 9:00 am through 5:00 pm.
With many employers extending remote work for the foreseeable future, many are finding that making the investment to create a permanent home office is well worth the effort. Setting up a dedicated space to do the work can make it easier to feel motivated to do the work and to establish boundaries between work and home. A good supportive chair is only one part of an ergonomic workspace. Other components may include an additional monitor and keyboard for a laptop and arranging a source of natural light from the side.
With the rise of remote work, many of us are relying more and more on email to stay in close contact with our co-workers. But that volume of emails means our inboxes are filled to overflowing. One solution is to develop a compassionate email culture. A basic first element is to think about the content and the recipients first. Keeping emails concise and specific makes responses easier. Limiting recipients to just those who need to be kept in the loop limits how many emails everyone receives. Proper use of BCC options also helps, as long as this is not used as a tactic to eavesdrop on what should be private conversations. Using BCC also means that when recipients respond, they’re not responding automatically to the entire pool of recipients. Making sure that recipients receive emails during normal working hours means they don’t feel obligated to respond when they should be off duty.
- How to find a COVID-19 vaccination appointment in Michigan
- 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
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- The Atlantic has a state-by-state coronavirus tracker
We greatly appreciate your business! We are excited to speak with you in person again soon, and we look forward to continuing to serve your tax and accounting needs in the years ahead.
Your team at Lepper & Company, LLC