Rapid vaccine rollout across the U.S. is helping the economy here recover months ahead of European economies, as a Reuters study of data across many platforms shows. Bookings on OpenTable show that the U.S. is gradually returning to nearly normal, while those in Europe are still flatlining. Air travel is increasing, and commercial activity is also improving, especially as stimulus payments hit bank accounts.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Economic Impact Payments (aka Stimulus Checks)
The IRS continues to update its EIP FAQ pages for the third wave of payments. Recent updates include reconciling the payments on your 2020 tax return. If you didn’t receive a third payment or didn’t receive the full amount, you will need to include this on your tax return so you can get the remaining amount as a Rebate Recovery Credit. Like the previous two payments, the third payment is not taxable income, and you do not need to pay it back if you receive more than you are eligible for based on your 2020 income.
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.
Unemployment Benefits and Taxes
Under ARPA, the first $10,200 of unemployment benefits is not subject to federal income tax if your 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. No action is needed on the part of taxpayers. The IRS will start with simple returns where only one person received unemployment benefits and progressing through the more complex returns. Some people may become newly eligible for the Earned Income Tax Credit, or for a larger EITC refund. Those changes will also happen automatically. The IRS has provided detailed instructions and a worksheet on how to calculate the exact amount of unemployment benefits that will be taxable.
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.
Paycheck Protection Program (PPP)
On March 30, President Biden signed the legislation to extend the PPP to May 31. No additional funds were added to the program, but funds are still available. As of March 28, the SBA has disbursed a total of $734 billion in loans for the entire program. So far in 2021, nearly $212 billion in loans have gone out. Of the total amount of loans, $209 billion has so far been forgiven.
Tax Deadline Extended
Last week, the IRS posted guidance on what else is extended to May 17, besides individual 1040s, which are normally due April 15. Contributions to IRAs, HSAs, MSAs, and Coverdell ESAs for the 2020 tax year have all been extended to May 17. Anyone who has not filed a 2017 tax return and who is owed a refund on that return has until May 17, or the refund will be gone forever. This extension is automatic for all taxpayers. However, the due date for first quarter estimated tax payments for 2021 has not been extended and is still April 15. This list from the AICPA explains which states have extended their income tax return due dates so far.
Other Tax Matters
Many small businesses receive payments from customer who pay by credit card. Starting in 2022, more of those payments will be reported to the IRS on Form 1099-K. Under current law, credit card processers did not have to provide information to the IRS until a business received at least $20,000 in total credit card payments in 200 or more separate transactions. However, a provision in ARPA requires that starting in 2022, that threshold will drop to $600. This means that more people who sell through platforms such as Etsy or Ebay may be receiving a Form 1099-K in early 2023 with amounts that need to be reported on their 2022 tax returns.
If you resent the quasi-mandatory Zoom happy hours that many workplaces have substituted for in-person gatherings at a local watering hole, you’re not alone. Holding a remote happy hour may seem like a decent team building activity, but the characteristics of Zoom make it impossible to have the kinds of intimate, small-group discussions that really do build connections. Often these become extensions of the workday with most conversation centered around work, and so become nearly mandatory. But as researchers in Australia found, the benefits of team-building exercises vanish if they’re not truly voluntary. A better approach may be to encourage but not require team members to engage in small groups.
LIFE IN THE POST-PANDEMIC ERA
The connection between social isolation and poor health has been known for decades, but what is not yet known is what happens in our brains during isolation. Experiments that subject people to complete isolation have demonstrated detrimental cognitive impacts, but only recently have researchers been able to tap into the reasons why loneliness seems to be so damaging. The need for social contact seems to trigger a response akin to the craving for food or drink. What is also not known is whether the pandemic-induced isolation will have any long-term impacts, particularly on the social development of young people.
What will happen with schools in fall? While most schools plan to open back up to in-person learning in fall, it won’t be back to normal for everyone. Mask mandates and social distancing rules will likely still be in place. Some districts will open their cafeterias, while some will require that children eat in classrooms. Many schools are planning to continue remote learning, at least as a fallback option, or because some parents aren’t ready for their children to return to buildings that they feel are unsafe. What will happen in each school depends on local pandemic conditions, local and state decisions, and the concerns of teachers and parents.
Is it better for the leader of a company to be loved or to be feared? Perhaps a bit of both, but with a greater emphasis on direct and effective feedback and communication, as the CEO of Numerated discovered during the pandemic. As soon as Dan O’Malley began providing blunt feedback and simultaneously offering resources to help team members, his startup thrived. Transparent communication delivered with the goal of making the business operate more effectively helped his team members truly step into their roles.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on t payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions 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
- 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!