Weekly Digest – March 10 2021

When will the pandemic be over? That’s the question that Alexis Madrigal of The Atlantic asked prominent public health experts. While “the end of the pandemic” means “when transmission of COVID-19 ceases” to most non-scientists, that threshold likely won’t be met anytime soon, if ever. One threshold is less than 5,000 new cases and less than 100 COVID deaths per day. By that standard, we have a long way to go, as the U.S. has been averaging 60,000 cases and 2,000 deaths per day. Vaccination rates of 80% for those over 65, and 70% to 80% for everyone else. The experts also warn that easing off on restrictions too soon may extend the date that we can truly say the pandemic is over.

According to new guidance from the CDC, fully vaccinated people can gather indoors without masks. However, the CDC also recommends that fully vaccinated people continue to wear masks, practice social distancing, and avoid large crowds.

STIMULUS UPDATES

The New Stimulus Plan

After a marathon weekend of debate, the Senate passed its version of a new stimulus plan, and it heads to the House for another round of discussion and a final vote. Here’s what’s in the new plan:

  • A third stimulus payment of up to $1,400 for each eligible person. Single taxpayers with income under $75,000 will receive a full payment, and joint filers with combined incomes under $150,000 will each receive a payment of $1,400. New income ceilings mean that many people who previously received payments in the first two rounds will not receive one this time around. Single filers with incomes of $80,000 or more will not receive anything; for joint filers, that no-payment ceiling is $160,000. Children and adult dependents, including college students, will also receive a payment of $1,400 each. Payments of $1,400 for dependents are also included. This payment calculator from Kiplinger will help estimate how much you could receive.
  • Expanded federal unemployment benefits of up to $300 per week through September 6.
  • For 2020, the first $10,200 of unemployment benefits will not be taxable for those making under $150,000.
  • Expanded child tax credit of up to $3,600 per child under age 6 and $3,000 for each child aged 17 or under. The plan includes the option to make the payments periodic rather than paid out as a tax refund, similar to the treatment for other countries.
  • Funds to help schools reopen safely.
  • Funding to help state, local, and tribal governments.

The House is scheduled to vote on the new plan on Tuesday. The next round of stimulus payments will likely start going out within days of Biden’s signature.

Economic Impact Payments (aka Stimulus Checks)

According to the IRS, all first and second round payments have been sent out. If you didn’t receive one or both of those payments, check with the IRS Get My Payment tool.

If you’re eligible for the second round of payments but did not receive one, you can receive the additional stimulus payment as a Rebate Recovery Credit on your 2020 tax return.

Paycheck Protection Program (PPP)

When Congress enacted this program, the intent was that proceeds from forgiven PPP loans would be tax-free, and that any expenses paid with PPP proceeds would also be deductible. This is contrary to the usual treatment of forgiven loans, which treats loan forgiveness as taxable income. Some states, but not all, are in conformity with the federal government’s treatment of PPP proceeds. The Tax Foundation has a map and chart that shows how PPP loan proceeds will be taxed across the U.S.

The SBA recently released new guidance for self-employed Schedule C filers that allows for PPP loans based on gross revenue instead of net income, as explained in the Journal of Accountancy. This guidance will allow self-employed persons to receive larger loans than under the previous rules. This expansion is available only for new first- and second-draw loans on a go-forward basis.

Tax Issues

Under the CARES Act, required minimum distributions (RMDs) from retirement plans were suspended for 2020. As a reminder, RMDs are required for 2021, unless the Biden administration decides otherwise. Legislation passed in 2019 increased the age to start RMDs from 70 ½ to 72 for anyone turning 70 ½ in 2020 or later. People who turned 70 ½ in 2019 were supposed to take their first RMD by April 1, 2020, but with the CARES Act suspension of RMDs, that deadline is now April 1, 2021.

Employee Retention Credit

The Employee Retention Credit was passed as part of the CARES Act of 2020, and grants employers who suffered either a shutdown in their business or a decline in gross receipts due to the COVID-19 pandemic a refundable tax credit of 50% of wages paid, up to a maximum credit of $5,000. The IRS recently released guidance on claiming the ERC and how this credit interacts with the PPP. Originally, employers had to pick either the ERC or the PPP, but changes made by Congress in December allow both. Employers can receive funds under both programs but cannot use the same wages for both programs. The rules are complex, so please consult our office for assistance.

REMOTE WORK

Leading a remote company requires more empathy so that employees know that they are valued. This article in Fast Company outlines five things that emotionally intelligent leaders do to retain their remote workers. Briefly, these leaders establish strong relationships and don’t assume that all is well. Regular video calls aren’t as good as in-person conversations, but they do help with connection. They check in regularly with open-ended questions and listening without micromanaging. Supportive networks of fellow employees or outside resources help connect team members with similar problems. Virtual celebrations of important milestones and team accomplishments also help keep team members connected and engaged.

LIVING WITH THE PANDEMIC

As the coronavirus vaccine rolls out slowly across the country, companies are trying to figure out when – and if – employees should return to work. Besides vaccination levels, companies need to coordinate with school opening schedules and employee preferences. Some companies are setting firm dates as early as April or as late as September for all employees to return to the office, while others are limiting the number of people allowed back in the office. Some require all employees who want to return to be vaccinated, while others are encouraging vaccination rather than requiring it. Some are planning for hybrid remote and on-site work, while others want all employees to eventually return.

GENERAL RESOURCES

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!

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