Weekly Digest – January 25 2022

Weekly Digest – January 25 2022

The rapidly spreading Omicron variant is causing worker shortages across the entire economy as employees are out sick or quarantining. At Delta Airlines, 8,000 employees contracted COVID-19 recently, contributing to more than 2,200 cancelled flights. Grocery stores and many other businesses are cutting back on their product lines. A shortage of truck drivers means shipments are delayed, so store shelves are empty. Children are taking public buses to school because there are not enough school bus drivers. Fortunately, some signs suggest that this latest wave may be easing around the world and across the county.

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Monthly Child Tax Credit Payments

In December, the IRS began sending out Letter 6419, which contains information on the amount of payments sent out and the number of children that the IRS based their calculations on. However, according to a discussion on Reddit, those letters may not be correct. Before filing your tax return, check the amount in the letter with the payments you received. If there’s a difference, visit the IRS Child Tax Credit Update Portal, which will contain the correct information. For more information on the expanded child tax credits see the IRS FAQs.

TAX MATTERS

Starting in summer 2022, taxpayers will need to create an account with the third-party identification company ID.me to access certain information on the IRS website. To verify your identity, you’ll need to provide a government document with a photo such as a driver’s license or passport and take a selfie with your phone or computer. If you already set up an IRS account, it will work until summer, but after that, you will need an account through ID.me to access the Child Tax Credit Update Portal or get your tax transcripts. Identification verification will not be required to file a tax return or to make tax payments. Here’s how to set up your IRS ID.me account.

Are you caring for an aging parent or other relative? This article on CNBC outlines some of the tax breaks you may qualify for. If your relative earned less than $4,300 for the year, you may be able to claim them as a dependent. You may also be able to take a deduction for their medical expenses, and you may also receive a tax credit for any dependent care you paid for.

If you invest in bitcoin or other cryptocurrencies, you may be able to take advantage of a special accounting method to reduce your taxable gains. Unlike regular currencies, the IRS considers cryptocurrency to be property, which means that any time you transact in it, you have a taxable event. The IRS allows a little-known method known as HIFO, or highest in, first out for accounting for your crypto transactions. This method allows you to choose the unit with the highest cost as the basis for your transaction and can significantly cut your tax bill. However, using this method requires careful record keeping.

PERSONAL FINANCE

Supply chain disruptions and increasing labor costs are showing up as higher food prices at the grocery store. Prices for meats, poultry, fish, and eggs increased by 12.5% over the last year. But a few strategies can help you ease the pinch on your budget. First, plan out your meals for the week before you shop so you only buy what you need. Be willing to substitute if a particular ingredient is too expensive or is not available. Stock up your pantry with canned goods and shelf-stable foods such as rice and dried beans. These items are not as sensitive to inflation as fresh produce. Cook at home as much as possible.

GREAT REASSESSMENT

While many workers in the Great Resignation are moving to jobs that pay more, a new study by the MIT Sloan Management Review says that toxic workplace culture is the biggest reason people are quitting their jobs. This study found that toxic workplace culture is 10 times more important than pay in predicting workplace turnover. While people may grumble about other workplace issues such as bureaucracy or being siloed, those problems don’t generally cause people to quit their jobs.

REMOTE AND HYBRID WORK OPTIONS

Onboarding new employees in a remote world has been cited as the second biggest challenge for companies, just behind employee burnout. This article on B2C outlines several strategies to make remote onboarding easier. For example, don’t wait until the employee’s first day to make sure tech and software are in place. Encourage new hires to ask as many questions about their roles and informal protocols at work as they need to feel comfortable.

A sign of the changing workplace is the increase in LinkedIn job titles that reference remote or hybrid work. As organizations increase their remote workforce, they are finding a need to create roles to support their teams. For some companies, this role may involve developing a strategy for the future of work, while in other companies, this role may help employees navigate tax issues when they work and live in different states. Such roles have been common in the tech field for years, but with the pandemic, more companies are adding these roles.

ECONOMY

Even when COVID-19 transitions from pandemic to endemic, the virus will likely still take a toll on health, work, and finances. As epidemiologists warn, endemic does not mean low rates of infection, but rather that a stable state has been achieved, which may still mean high levels of infections, and consequently, high numbers of workers out sick. Workplace disruptions may lead to long-term and widespread reductions in global output. Overworked employees are less satisfied with their current wages, but even boosting pay has not been enough to overcome staff shortages.

An unexpected increase in jobless claims for the week ended January 15 may be a sign that the Omicron surge is impacting the labor front. This jump in jobless claims may be a short-term trend as most employees struggle to retain their workers. Even though unemployment has fallen to 3.9%, 2.9 million fewer people are now working than in February 2020, just before the pandemic.

Sick workers across the entire food supply system are making it harder for grocery stores to keep their shelves stocked. Food processers are cutting production levels. A shortage of drivers and distribution center workers means fewer truckloads are reaching stores, and stores may not be receiving everything they ordered. Supplies of sports drinks, frozen cookies and refrigerated dough are in the 60-70% range of normal.

One of the few blessings of the pandemic has been an increase to bargaining power for workers. Wages are rising and if an employee quits a job, it’s likely that a new job at higher pay can be found. This new bargaining power for workers is not expected to abate any time soon. The biggest percent increases are going to workers in the lowest-earning levels, the youngest workers, and to those with the least education. However, rising inflation means that those wage gains may not be keeping up with price increases. Economists at the Conference Board expect that blue-collar and manual services jobs will likely continue strong growth into 2023.

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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