Keeping Your Company Grounded During a Crisis

Keeping Your Company Grounded During a Crisis

This article discusses and emphasizes the need for all businesses to be able to adapt and pivot in the right direction, especially during a crisis like the Coronavirus pandemic. Some tips that are outlined are the ability to strategize quickly, supporting company morale, staying grounded, and preparing for a future crisis through risk management. No matter your industry, these tips can be very beneficial if implemented in the proper format. Be sure to check out this thing for more information as well as the full list of tips!

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Reynolds, Bone & Griesbeck Thanks Latest Intern Class

Reynolds, Bone & Griesbeck Thanks Latest Intern Class

We have had an amazing class of interns throughout the spring semester and want to take an opportunity to appreciate their hard work. These talented individuals were a vital part of our tax and audit departments for the past few months. The strain would have been felt in each area if it weren’t for their dedicated efforts. 

“It’s been an absolute pleasure to see these interns grow into their roles in our firm,” said Skeet Haag, managing partner of RBG. “We are thankful to each of these young adults for their hard work. I look forward to seeing these students progress in the accounting profession.” 

Matt Sullivan spent his internship supporting the audit team. Sullivan has been named to the Dean's Honor Roll at the University of Mississippi where he is pursuing his degree. 

Anjila Khatiwada served on the audit team during her time with RBG. Khatiwada is the recipient of the Academic Excellence Award, Provost Scholarship, and is a brand ambassador for the Patterson School of Accountancy at Ole Miss. She is pursuing a degree at the University of Mississippi. 

Taylor Wallace joined the team in January and worked in the tax department. Wallace is pursuing a degree at Mississippi State University and plans to attend graduate school. 

Reynolds, Bone & Griesbeck truly appreciate these wonderful new professionals and the work they did for us the last few months. We wish them well in whatever they do and we know they’ll do great work wherever they set their minds to it. 

If you’d like to learn more about our internship opportunities, click here [https://rbgcpa.com/careers]. 

American Rescue Plan Act

After passing through the Senate on Saturday, March 6, and the House on Wednesday, March 10, the American Rescue Plan Act (ARPA) was signed into law by President Biden on Thursday, March 11, and includes $1.9 trillion in relief. Read on for details on the provisions included in the ARPA.

Individual Stimulus Checks
Estimated portion of the stimulus package: $422 billion
The ARPA includes another round of economic impact payments for people who meet certain income eligibility requirements. Single taxpayers who earn less than $75,000 will receive $1,400 and married taxpayers filing jointly who earn less than $150,000 will receive $2,800. The payments phase out at an adjusted gross income of $80,000 for single filers and $160,000 for joint filers. The bill also includes a $1,400 payment per dependent. Payment amounts will be determined using 2020 tax returns if already processed by the IRS or 2019 returns.

Federal Unemployment Assistance
Estimated portion of the stimulus package: $242 billion
The bill renews federal unemployment benefits at a lower level—$300 per month—through September 6, 2021. Additionally, it makes the first $10,200 of unemployment insurance benefits for households with incomes at or below $150,000 non-taxable.

Aid to Businesses
Estimated portion of the stimulus package: $47.25 billion
The ARPA includes funding for various industries hard hit by the pandemic, as well as a financial boost for the Paycheck Protection Program. The funds are broken down as follows:

  • $15 billion for airlines and eligible contractors (must refrain from furloughing workers or cutting pay through September 2021)
  • $25 billion for restaurants and bars (includes grants of up to $10 million per entity to be used for covering payroll, rent, utilities, and other operating expenses)
  • $7.25 billion for the PPP

Child Tax Credit
The ARPA makes a number of changes to the existing child tax credit, including:

  • Making the credit fully refundable for 2021
  • Including 17-year-olds in the definition of qualifying children
  • Increasing the amount of the credit for children over seven to $3,000
  • Increasing the amount of the credit for children 0-6 to $3,600
  • Directing the IRS to estimate each taxpayers‚Äô child tax credit and pay it in advance monthly from July through December 2021

The increased credit amounts faze out at certain income levels ($75,000 for singles, $150,000 for married couples filing jointly, and $112,500 for heads of household).

In order to distribute the monthly estimated child tax credit payments, the IRS will create an online portal where taxpayers can both opt out of advance payments and provide information that modifies the amount of their payments.

Additional Tax Credits
The ARPA includes a number of additional tax credits:

  • COBRA continuation coverage – On top of the extended unemployment benefits, the ARPA includes a 100% subsidy of COBRA health insurance premiums. This means that laid-off workers can maintain health insurance through their former employer‚Äôs plan at no cost. The subsidy covers the period from April 1, 2021, through September 30, 2021.
  • Earned income tax credit – For 2021, the ARPA expands the EITC by making it available to taxpayers without children.
  • Child and dependent care credit – The bill makes this credit refundable for 2021 and increases the exclusion for employer-provided dependent care assistance for 2021 to $10,500.
  • Employee retention credit – The bill extends this credit, which was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, through the end of 2021.
  • Family and sick leave credits – The ARPA extends these credits, which were established by the Families First Coronavirus Response Act (FFCRA), through September 30, 2021. Additionally, it increases the limit on the credit for paid family leave, increases the number of leave days a self-employed individual can take, makes leave taken due to a COVID-19 vaccination qualify, creates a reset date for counting paid sick leave (March 31, 2021), and allows 501(c)(1) governmental organizations to participate.
  • Premium tax credit – The ARPA expands the premium tax credit for both 2021 and 2022 and adjusts the definition of an applicable taxpayer to include those who received, or have been approved to receive, unemployment compensation anytime in 2021.

Aid to States and Cities
Estimated portion of the stimulus package: $350 billion
The bill allots $350 billion to assist state, local, tribal, and territory governments in responding to the coronavirus pandemic, broken down as follows:

  • $195.3 billion to states
  • $130.2 billion to cities and counties
  • $20 billion to tribal governments
  • $4.5 billion to U.S. territories

Housing Assistance
Estimated portion of the stimulus package: $45 billion
The ARPA provides aid in the form of emergency rental assistance ($30 billion), funding for preventing COVID-19 outbreaks among the homeless ($5 billion), and mortgage assistance ($10 billion).

Aid to Schools
Estimated portion of the stimulus package: $170 billion
K-12 schools will receive $130 billion. The money is to be used to reduce class sizes, modify classrooms to enhance social distancing, install ventilation systems, purchase personal protective equipment, hire nurses and counselors, and provide summer school.

Of the $170 billion, the remaining $40 is earmarked for colleges and universities. The institutions are instructed to use the money to defray pandemic-related expenses and to provide emergency aid to students to cover expenses (e.g., food, housing, and computer equipment).

Funding for Testing and Vaccinations
Estimated portion of the stimulus package: $60 billion
Of the $70 billion allocated in this area, $14 billion is designated for expansion of COVID-19 testing (including enhanced contact tracing, laboratory expansions, and the creation of mobile testing units), and $46 billion is set aside for vaccination distribution and administration.

Sources:

https://www.politifact.com/article/2021/mar/05/whats-revamped-pandemic-and-stimulus-bill-now-sena/

https://www.journalofaccountancy.com/news/2021/mar/senate-passes-coronavirus-stimulus-bill-recovery-rebates.html

https://www.journalofaccountancy.com/news/2021/feb/tax-provisions-american-rescue-plan-act.html

https://www.cnn.com/2021/03/04/politics/stimulus-senate-democrats-proposal/index.html

https://www.cnet.com/personal-finance/new-stimulus-bill-to-become-law-in-days-what-to-know-now-what-happens-next/

IRS Announces Individual Tax Deadline Extension

IRS Announces Individual Tax Deadline Extension

For the second year in a row, the federal income tax filing due date for individuals has been postponed. The postponements come as a part of the fallout of the coronavirus pandemic and the legislation that has resulted from it, which has added complexity to tax filings and systemic strain to the U.S. tax bureau.

On Wednesday, March 17, the Internal Revenue Service (IRS), in conjunction with the U.S. Treasury Department, announced an extension of the federal income tax filing due date for individuals. Individual returns for the 2020 tax year are now due on May 17, 2021, rather than the standard date of April 15, 2021.

The IRS stated their intention to issue formal guidance on the extension soon. As of now, here are the details we know, per the IRS news release:

  • In addition to a filing extension, any federal income tax payments owed for 2020 are also automatically extended to the new due date, with no penalties or interest.
  • The filing and tax payment postponements are applicable for self-employed individual filers.
  • Taxpayers who do not pay any amounts owed by May 17 will begin to accrue penalties and interest at that point.
  • There is no need to file for an extension or contact the IRS‚Äîthis extension is automatic.
  • Individuals who need more time than the May 17 due date provided should file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return to apply for an extension through October 15, 2021. This would result in an extension for filing; any payment due would still need to be paid by May 17 to avoid penalties and interest.
  • The postponement does not apply to the April 15 deadline for estimated tax payments.

Individual taxpayers should be sure to note that this extension only applies to federal income tax filings. While it is possible that states will follow suit with a due date extension, individual taxpayers need to refer to their state tax bureau for guidance on state income tax filings.

As your tax advisors, please be aware that we are actively monitoring the situation for updates that impact you, both federally and locally. We will continue to work hard to meet current tax deadlines and operate under the assumption that all other standard deadlines remain in effect unless an announcement is made by tax authorities. We will be sure to reach out again in the event of any further developments. 

Reynolds, Bone & Griesbeck PLC Announces New Audit Senior

Reynolds, Bone & Griesbeck PLC Announces New Audit Senior

The Memphis accounting and consulting firm Reynolds, Bone & Griesbeck PLC (RBG) is pleased to announce the promotion of Chris Nation to audit senior.   

A professional in the accounting field since 2015, Nation joined the RBG team in 2020 and began working in the firm’s Audit Department. His primary focus is on serving clients in the manufacturing & distribution and dealership sectors. In 2015, Nation graduated magna cum laude from Azusa Pacific University with a Bachelor of Accountancy. He is in pursuit of his CPA designation and has passed all four parts of the CPA exam. Formerly a resident of California, Nation currently lives in Hernando, Mississippi. 

“It is my pleasure to congratulate Chris on this exciting promotion,” said Skeet Haag, CPA, managing partner of RBG. “In the course of his time with us, he has proven himself to be hard working and eager to learn. I look forward to watching his promising career unfold.”

Reynolds, Bone & Griesbeck PLC is a premier CPA and advisory firm known for providing high-quality tax, accounting, auditing, and advisory services to a wide variety of clients. By investing in the next generation of professionals, RBG will continue its 104 year history of challenging and inspiring our people and clients to achieve their goals while creating lasting legacies. 

Four Essential Questions You Should Ask Your Tax Professional This Season Related to COVID-19

Four Essential Questions You Should Ask Your Tax Professional This Season Related to COVID-19

Good tax professionals ask the right questions to ensure they understand your situation and can help you to the best extent the law allows. Given the host of pandemic-related tax changes for 2020, it’s good to keep these four questions below in mind. If your tax preparer doesn’t ask these questions in your tax organizer or during a meeting, raise them yourself.

1. Did you receive your stimulus payment?

Not everyone received all the stimulus they were entitled to. As a result, the amount of your stimulus payments needs to be reconciled on your 2020 tax return to calculate if you qualify for the Recovery Rebate Credit.

The way the Recovery Rebate Credit works is that if you qualified for stimulus payments but didn’t receive them, then you'll receive a credit on your 2020 tax return. On the other hand, if you received too much, there is no impact on your refund or balance due. You can’t lose here, so make sure you discuss your stimulus payments.

2. Did you work remotely? If so, when and where?

As a result of the pandemic, a lot of people worked from home for all or part of the year. If you lived in the same state you worked in, then there’s no cause for concern or further investigation. In situations where workers lived and therefore worked remotely in a different state than they normally would have commuted to when going into the office, then there could be an issue.

If you worked from another state for any part of the year, make sure you ask your tax preparer about this so you can understand the filing requirements in each state and any nexus issues. Just remember that if you are a W-2 employee, it doesn’t matter if you worked from your home, there is no home office deduction unless you’re self-employed.

3. Did you take any distributions from your retirement accounts in 2020 due to COVID-related circumstances?

Typically, early distributions from tax-advantaged retirement accounts such as 401(k) and IRAs are subject to a 10 percent penalty. There are provisions in the law that allowed penalty-free distributions in 2020 under certain circumstances related to COVID-19. Also, the income from distributions is spread over three years, which can further reduce the overall tax rate (unless you elected to tax it all in the year of distribution).

If you took distributions from a retirement account and were impacted by COVID-19, make sure your tax professional is aware of these exceptions; and ask the right questions to see if you qualify for any of the preferential treatment.

4. Are you self-employed and missed work because you were sick with the coronavirus or needed to care for someone who was ill with it?

Under the Families First Coronavirus Response Act (FFCRA), those who are self-employed can be eligible for sick and family leave credits if they or a family member had coronavirus and couldn’t work between April 1 and Dec. 31, 2020, as a result. If eligible, your tax preparer will file Form 7202 with your Form 1040 to make the claim.

Conclusion

Doing the best as a tax preparer means knowing your client’s situation and circumstances. There’s a good chance your tax professional is already on top of the COVID-19 changes, but it’s good to keep the questions above in mind just in case.

Some Businesses Rely on a Line of Credit to Escape Damages Caused by Pandemic

Some Businesses Rely on a Line of Credit to Escape Damages Caused by Pandemic

As businesses attempt to work their way through to a post-pandemic world, there are various means to bridge the financial gap. As recommended by the U.S. Small Business Administration (SBA), some companies can use a line of credit to reach international customers or opportunities outside the United States to make up for the damage COVID-19 caused with fewer domestic sales. How can businesses use a line of credit to increase their chance of survival and pivot to profitability as we move through 2021?

According to Debt.org, a business line of credit functions like any other line of credit that uses revolving debt. Businesses use a portion of their line of credit to meet financial obligations and repay based on the lender’s terms. Common lines of credit borrowing limits can range from $1,000 to $250,000 and are generally not secured against the business' assets, accounts receivables, etc.

As a U.S. Bank study found, via the National Federation of Independent Businesses (NFIB), 82 percent of companies that go out of business do so because of inadequate cash flow management. The NFIB and U.S. Bank study explain that an inability to purchase inventory, satisfy employee payroll, on-board workers, or obtain some sort of financing increases the likelihood of a business failing.

However, businesses that are approved for and use a line of credit for meeting payroll, purchasing raw materials and items necessary to keep their business running (including rent or lease payments), greatly increases the business’s chance of survival. So, as revenues and profits shrink, employers can tap their line of credit to increase the chances of surviving.

Business Survivability Considerations

Continuous access to funds allows owners to have greater control over a business's finances and helps them make better growth-driven decisions. For example, Noam Wasserman, a Harvard Business School professor, explains that oftentimes outside investors force founders out of their company – only half of the founders were still the CEO three years after the business's inception. If a line of credit gives the business enough financial flexibility, then the founders can stay in control.

Another way to leverage a line of credit is highlighted in the SBA export assistance programs due to COVID-19-related losses. Small business owners that export products directly, or indirectly to a third party that does the exporting, may be eligible.

Prior to a company completing a sale to an international client, or for prospecting for new international export markets, businesses can apply for a line of credit or a term note, up to $500,000, under the SBA's Export Express loan program.

Through the SBA's Export Working Capital loan program, approved applicants can obtain as much as $5 million in financing or a revolving line of credit related to the firm's export-related business. This assistance also can help businesses better fulfill export orders as well as provide financial assistance for additional ex-U.S. sales. The financing can assist in keeping international orders through more favorable payment options for their foreign customers.

While there is never a guarantee that a business will survive, today’s companies that take advantage of different lending options, such as a line of credit, have a better chance to set themselves up for the post COVID-19 recovery.

Sources

https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

https://www.debt.org/credit/lines/

https://www.nfib.com/content/resources/start-a-business/why-do-small-businesses-fail/

https://hbr.org/2008/02/the-founders-dilemma

The Impact of COVID on Life Insurance

The Impact of COVID on Life Insurance

If someone you know died from COVID-19 and had an existing life insurance policy, there should be no problem receiving the death benefit. The terms of a life insurance contract cannot be changed after purchase, so anyone with a policy before the pandemic will continue to be covered as long as premiums are paid.

However, the life insurance industry is in a quandary right now when it comes to new applicants applying for policies.

Some insurers have placed an age limit on applicants to whom they will sell policies. Travelers who have recently visited countries with a significant outbreak and people currently infected with the virus are generally asked to wait until after they have quarantined or recovered to apply for life insurance. While the coronavirus has had a high fatality rate among people age 65 and older, the death rate has fluctuated among demographics over the past year as the virus spread from metropolitan areas to more rural parts of the country.

With this in mind, now is probably one of the most challenging times to apply for a life insurance policy. In the past, applicants have had to answer standard questions regarding their medical history. Today, most also will have to disclose if they have been treated for COVID-19. Bear in mind that even people who did not become severely ill could suffer medical conditions in the future resulting from the infection. However, it is best to answer that question honestly, because any future claims could be denied if it is found the applicant lied about his or her COVID experience on the application.

As the data continues to be assessed, insurers will likely adjust their terms and rates in response to the recent pandemic. It is possible, in fact quite probable, that data pointing to enduring effects of COVID-19 will be included in life insurance underwriting standards in the future. This could increase premiums for COVID-19 survivors – or result in denial of coverage altogether.

In the past, there were life insurers that sold low-cost, low-payout policies without a medical exam or extensive health questions. But these days, given how quickly the coronavirus can take a life, applicants age 60 and older would be hard-pressed to qualify for one of those “guaranteed issue” policies.

Pre-existing health conditions such as diabetes and asthma – which are highly susceptible to the ravages of the coronavirus – may undergo more scrutiny in the future. While pre-existing conditions are no longer a qualifying issue for health insurance, they are very much a part of the life insurance underwriting process and do increase individual premiums.

There is one silver lining for life insurance applicants: Some insurers have eliminated the normally required physical exam due to social distancing restrictions. Others have opted to postpone the in-person exam but offer immediate temporary coverage with a limited death benefit. A couple of life insurers in Connecticut and Massachusetts even offer a free, three-year term life policy to frontline workers in appreciation for their work during the pandemic. Eligible applicants include in-hospital personnel and first responders who have the greatest risk of exposure to the coronavirus.

Anyone who has lost their income due to the pandemic and is in danger of not being able to pay life insurance premiums should call their carrier to see if there are options to continue coverage. Some companies have agreed to defer premiums for up to 90 days rather than cancel coverage for people likely to find employment soon. It’s a good idea to call and find out rather than miss payments and hope your insurance company chooses not to notice.

Changes in the PPP Program Working Better This Time Around

Changes in the PPP Program Working Better This Time Around

This article discusses how the Small Business Administration has made significant changes when comparing the first round of the Paycheck Protection Program (PPP) and the most recent program. Specifically, the SBA stated that “The changes aim to speed up the flow of funds to PPP applicants while maintaining the integrity of the program.” These changes lead to money reaching the smallest of businesses, reaching rural communities, and increased partnerships. Be sure to check out this link for more information and details on how the PPP2 is impacting the non-profit and small business industries.

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