Business Update – March 2 2022
One of the side effects of the pandemic has been the expansion of online grocery shopping and speedy delivery. But in large cities, many online grocery purchases are fulfilled by businesses that have taken over retail storefronts to become “ghost stores” or “dark stores.” These are small scale fulfillment centers that serve only ecommerce customers, with most orders being delivered by bike. These dark stores have the potential to reshape urban neighborhoods, by replacing stores open to the public, which attract walkers and which serve as informal community meeting places with fulfillment centers that are closed to the public and which increase traffic by bike delivery workers and restocking vans.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Recovery Rebate Credit
The IRS has released a fact sheet with updates to its FAQs to help people claim their Recovery Rebate Credit on their tax returns. Anyone who did not receive their third Economic Impact Payment (aka stimulus check) or did not receive the full amount they are eligible for can claim the full remaining amount when they file their 2021 tax return. Included in the updates is information about Letter 6475, which the IRS will be sending out through March 2022 with information about the amount that a person received.
Monthly Child Tax Credit Payments
Before filing your tax return, check your IRS Online Account to be sure you report the correct amount of any advance Child Tax Credit payments received during 2021. This will help ensure that refunds are paid promptly within 21 days. As a reminder, couples who filed Married Filing Joint will each receive a letter reporting half of the payments received. When filing 2021 tax returns, married couples will need to combine both amounts when they file their joint return. For more information on the expanded child tax credits see the IRS FAQs.
If you paid for childcare during 2021, you may be eligible for a tax credit of up to $8,000. The child and dependent care tax credit was expanded in several ways. First, the cap on eligible expenses was increased from $3,000 per child to $8,000 for one child and $16,000 for two children or more. The percentage of expenses available as a credit increased from 35% to 50%, so a family with two or more children who spent at least $16,000 could get a refundable credit of $8,000. Additionally, the phase out limits have increased from $15,000 to $125,000, so more families will be eligible for the full amount than in previous years.
Even though we are starting the third month of 2022, there are still ways to cut your 2021 tax bill. If you haven’t maxed out your 2021 IRA contribution, you can still add funds up until April 15. If one member of a couple is working, a non-working spouse can contribute to a spousal IRA based on the earnings of the working spouse. If your employer offers it, you can also still add funds to a health savings account. With an HSA, you get a deduction for the contribution, and the earnings can be withdrawn in later years tax-free as long as the funds are used for medical expenses.
After facing Congressional backlash over its use of facial recognition, the IRS will be offering taxpayers another option to verify their online identities. The IRS plans to transition away from using the third-party service, ID.me, over the next few years, and to begin using Login.gov, which many Americans already use to access federal websites. Taxpayers can still choose to use facial recognition to verify their identities but can also choose to have a live on-line interview with an ID.me representative for identity verification.
American consumers reported losing more than $5.8 billion to fraud during 2021, an increase of 70% over the previous year, where fraud losses were $3.4 billion. The total amount lost is likely higher because not all fraudulent losses are reported, and the total does not include losses for identity theft. Losses included con artists who peddled fake health remedies or who stole identities to claim unemployment benefits. While younger Americans were targeted more frequently, those in their 70s and older lost more money.
THE GREAT REASSESSMENT
Just a few years ago, people were not so motivated to leave their jobs for a promise of better pay or better work-life balance. But today, those two factors have become the biggest priorities for employees who might consider seeking a new job, according to a recent Gallup poll. The current labor market favors job seekers over employers, so employees are willing to ask for more pay and more flexibility than in the past. Paying attention to what the highest performing employees like most about a workplace and tailoring offers to reflect those preferences can help employers attract the best talent.
For many companies, March 1 has been the date to return to the office. But some economists are predicting that pressure from inflation combined with a sudden loss of autonomy may result in a new wave of resignations. People who are required to return to the office may seek other work with greater flexibility and more pay. Retaining employees thus may require employers to expand remote work options or to offer other creative perks, in addition to raises in pay.
REMOTE AND HYBRID WORK OPTIONS
Although Americans are returning to restaurants, movies, and travel as pandemic restrictions ease, many are still not returning to the office. Employers who had hoped for loyalty from employees who were kept on the payroll even at the height of the pandemic are instead seeing empty seats. Research indicates that the reluctance to return to the office is less about COVID-19 and more about convenience. More than half (61%) of people who telecommute most of the time are doing so by choice.
The Federal Reserve’s preferred measure of inflation rose 5.2% in January over the previous year, a rate not seen since 1983. The personal-consumption-expenditures (PCE) index measures costs paid by consumers and those who spend on behalf of consumers for a hypothetical basket of goods across rural and urban areas. It excludes volatile food and energy costs, but also includes the costs of employer-sponsored health care plans. The continuing trend of rising inflation adds pressure for the Fed to raise interest rates this spring.
Despite inflation pressures, the US economy continues to grow, according to the Purchasing Managers Index, which rose to a two-month high. However, according to a survey by the Conference Board, consumer confidence has fallen over the last two months. Inflationary pressures are discouraging people from making big purchases, such as homes, cars, major appliances, and vacations. However, a strong labor market and higher home valuations have made most Americans wealthier than they were before the pandemic.
- 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)
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- 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!