Weekly Digest – January 7, 2022
The rapid spread of the Omicron variant is impacting businesses large and small by keeping more workers home or quarantined. Record levels of new infections in the US are forcing airlines to cancel flights, stores to close, and available workers to work longer hours or in different areas than normal. While new CDC guidance decreases the number of quarantine days from ten to five, the infectious nature of the new variant may cause continuing worker shortages across all sectors of the economy and may result in lower growth for 2022.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
Shortly before Christmas, the IRS announced it would begin sending out letters for the advance Child Tax Credit payments starting in December and continuing into January. These letters will include the total amount of payments taxpayers received in 2021 and the number of children used to calculate payments. This information will be needed for preparing 2021 tax returns to ensure that families receive the correct amount of the Child Tax Credit. The IRS also announced that in late January, it would begin sending out letters for the third Economic Impact Payment that was issued in 2021. The information in Letter 6475 will be needed for reconciliation on 2021 tax returns. For more information on the expanded child tax credits see the IRS FAQs.
If you received more than you were entitled to, you may have to pay back a portion of the advance Child Tax Credit payments you received in 2021 when you file your tax return. This can happen if your financial situation changed in 2021 or if your family status changed so that you are claiming fewer eligible children on your 2021 tax return. If your modified AGI is less than $40,000 for single filers, $50,000 for head of household filers, or $60,000 for joint filers, you won’t have to repay any of the excess you received.
If you didn’t receive the full amount of advance Child Tax Credit payments or stimulus payments you were entitled to, you can get the balance still owed to you when you file your 2021 tax return. A total of three stimulus payments have so far been sent out – two in 2020 and one for up to $1,4000 per person in 2021. The advance Child Tax Credit payments sent out in 2021 account for half of the total amount that families are eligible for, so many families will receive additional payments when they file their 2021 tax returns.
The coming tax filing season may come with headaches and delays. While the IRS is steadily working through the backlog of 2020 returns and other paperwork, the agency still had 6.3 million unprocessed individual returns and 2.3 million amended returns as of December 18. Reconciling stimulus payments and child tax credit payments received with the correct amounts as determined on 2021 tax returns may cause delays if there are discrepancies that must be resolved. In addition, pending changes from stalled legislation may introduce retroactive changes to 2021 taxes midway through filing season.
For personal finance, sometimes what you don’t do is more important than what you do. This article in the Wall Street Journal has four tips for what not to do during 2022 to come out ahead. For example, don’t pay off a low interest mortgage with extra cash. Instead, invest those extra funds where they will earn a higher return. Don’t fall prey to pressure from retailers to overspend and buy extra because supplies may be running short. Retailers may be taking advantage of panic buying in the wake of supply chain issue, but it is still prudent to shop around for the best deal, or to wait for a sale.
The pause on federal student loan repayments, which were due to restart on February 1, has now been extended to May 1, 2022. Since March 2020, no payments have been required, and interest has not been accruing. While the date for payments to restart has been delayed several times, the Biden administration indicates that this will be the final delay. At least 21 days before payments are to restart, borrowers will receive a billing statement or notice. Borrowers whose circumstances have changed may be eligible for repayment plans based on income by contacting the Department of Education.
Isolation of elderly people due to the pandemic has resulted in an uptick of fraud and other abuse by their caregivers and family members. The FBI has tracked a 55% increase in elder fraud between 2019 and 2020, while a study by Yale University found an 83.6% increase with one in five older people living in homes or apartments reporting some form of abuse. A shortage in caregivers has resulted in nursing homes inadvertently hiring people with criminal backgrounds, while pandemic-related isolation has made it more difficult for families to monitor the care and health status of elderly family members.
According to a recent report from the Secret Service, at least $100 billion in pandemic relief funds have been stolen, mainly in the form of unemployment fraud. So far, the Secret Service has seized more than $1.2 billion and returned more than $2.3 billion in fraudulently obtained funds, while the Labor Department estimates that as much as $87 billion in unemployment funds may have been paid improperly.
REMOTE AND HYBRID WORK OPTIONS
After almost three years of remote work, many people are exhausted from too many virtual meetings. This article in Inc. includes six tips for making those video meetings better. For example, include only those people who will care most about the outcome of any decisions to be made at a meeting. Including too many people slows down the decision-making process. Reach an agreement about the important problems that a meeting is intended to solve before the meeting happens. Start meetings by asking people how they feel and to voice their opinions on what’s working and what isn’t.
A winter surge driven by the Omicron variant is causing economists to cut their forecasts for the US economy for 2022. The chief economist at Moody’s Analytics cut his first quarter US GDP growth forecast from 5.2% to 2.2%. Economists anticipate that some economic activity will be pushed from the first quarter into the second quarter of 2022. However, on the bright side, healthcare providers are getting better at treating infections and businesses are becoming more resilient.
Applications for unemployment benefits, a proxy for layoffs, are at a half-century low while job openings continue to exceed the number of workers seeking employment. Employers continue to raise starting pay and to offer additional hiring bonuses and benefits. Some employers are looking outside their regular pool of prospects to hire students as part-time workers.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on 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!