MAY 2021 E-NEWSLETTER

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Some Refunds Delayed as IRS Holds 29 Million Returns for Manual Processing ​The IRS Taxpayer Advocate's (NTA) Office reported that the agency is holding on to about 29 million returns for manual processing, which will have the effect of delaying refunds across the country. READ MORE

May Articles

VALUING YOUR BUSINESS Knowing how much your business is worth can do more than figure out how much money you can get when you sell it. Creating an accurate valuation is part of an ongoing business strategy. READ MORE

UNDERSTANDING YOUR BUSINESS INSURANCE BINDER Whether you’re insuring your business against liability or protecting your employees with a workers’ compensation policy, your insurance agent will provide a binder that can serve as your temporary proof of insurance before an insurance policy is issued. READ MORE

BIG CHANGES TO CHILD TAX CREDIT The American Rescue Plan Act, signed into law in March 2021, made significant changes to the child tax credit for 2021 only -- unless Congress extends these changes. READ MORE

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DEFINING COMPANY CULTURE Company culture is defined as the values, goals, practices and attitudes that represent the personality of an organization. Worker satisfaction is highest when employees' personal views are in sync with a clearly defined company culture. READ MORE

MAY 2021 CLIENT PROFILE The Roberts family hired a live-in au pair to help care for their children while the parents work. One of their co-workers mentioned something about a “Nanny Tax,” and the Roberts aren’t sure if it applies to their situation. READ MORE

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May 2021 Q & A Q: I recently moved. How do I notify the IRS of my new address? A: You will need to officially notify them of your new address. Changing your address with the post office won’t cut it. You can accomplish this in a few different ways. First, you can complete Form 8822, the change of address form, or write a letter. If your address changes before filing your tax return, you can simply use your new address on your return and the IRS will make the update for you.  Q: Does providing my customers with an early payment discount make sense for my new business? A: Start with asking yourself do you need to have customers pay faster because you need the cash? If you’re in a pinch to make payroll or pay rent, then it might make sense. But remember that offering a discount cuts into your profit margin. So ensure your business can afford it. And just because you provide an early payment discount to speed up cash flow doesn’t mean your customers will take it. Be sure to have a backup plan to meet any short-term cash flow needs.

SHORT BITS

DEDUCTION ERRORS According to the Treasury Inspector General for Tax Administration, the IRS allowed business owners to claim $57 million in potentially erroneous qualified business income deductions on 2019 tax returns. The way this pass-through deduction is written is very complicated, and it’s part of the reason for the deduction errors. SLASHED CONTRIBUTIONS The COVID-19 pandemic caused many businesses to change how they contribute to employees’ 401(k) accounts. It’s estimated that 46,000 401(k) plans were affected because companies paused discretionary funding to employees’ accounts, cutting back on matching contributions or ditching all matching contributions. ECONOMIC EDUCATION A new study in the Journal of Children and Poverty revealed that youths with a savings account in their name, regardless of the balance, were approximately six times more likely to attend college than those with no account. Additionally, growing up in a family that manages assets well - such as savings and equity in a home - shows that assets, not income is associated with college success. MOM FACTS According to a study by the Pew Research Center, the median age that a woman becomes a mother is 26, up from 24 in 1994. And highly educated women are increasingly becoming moms. Eighty percent of women with a Ph.D. or other professional degree have given birth. And a rising share of births to foreign-born mothers is increasing diversity as nearly one-third of all births in California, New York and New Jersey were to mothers who were born outside the US.