Weekly Digest – December 15 2021
In our early days of understanding the possible impacts of the new Omicron variant, it can be difficult to parse fact from opinion. In The Atlantic, Derek Thompson looks at the studies and anecdotal evidence so far available to develop an early if imperfect evaluation of the risks.
- Omicron is more transmissible and will spread faster than Delta.
- Omicron will cause more breakthrough infections.
- On the positive side, Omicron will produce less severe illness, but could still result in a high number of hospitalizations.
- Getting vaccinated plus a booster seems to ward off severe illness.
- As long as countries in the southern hemisphere have low vaccination rates, COVID-19 will be with us a long time.
As Thompson concludes his article, “We’re all in this together.”
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
With the last of the advance Child Tax Credit payments under ARPA scheduled to go out this week, Democrats are in a bind to pass legislation to continue those payments, which they see as crucial to reducing childhood poverty. While a few Republicans have signaled that they support a continuation of the program, they also want changes to restrict payments based on income and to tie payments to work.
As a reminder, the IRS will be sending out letters in January with the total amount of advance child tax credit payments received. The information on this letter will be needed to file your 2021 tax return, where you’ll reconcile the total amount of payments received in 2021 with the amount you can claim on your tax return. For more information on the expanded child tax credits see the IRS FAQs.
As 2021 draws to a close, there’s still time to make some changes to your retirement accounts. If you haven’t maxed out your 401(k) contribution, consider making extra salary deferrals by year end to reach the maximum $19,500 or $26,000 for those over 50. With tax rates at historic low rates, this might be a good time to convert your traditional IRA to a Roth IRA. Don’t forget to take any required minimum distributions from your accounts – after a one- year break from RMDs in 2020, those are once again in effect.
Did you start a business working out of your home during 2021? If so, you may be eligible to claim a home office tax deduction. This tax deduction is available to anyone who is self-employed and uses part of their home regularly and exclusively for work. Unfortunately, through 2025, the home office deduction is not available to employees who work from home. The IRS allows two methods for calculating this deduction. Using the simplified method, you can deduct $5 per square foot, up to a $1,500 cap. With the other method, you deduct the actual expenses for your home office, which includes maintenance and repairs for the home office itself and a pro-rata portion of the expenses for maintaining the entire home. Be sure to consult with your tax advisor regarding this valuable deduction.
Have you invested in cryptocurrency? Due in part to increased cryptocurrency usage, crypto heists are getting bigger. Thieves mainly target either centralized exchanges, which store user’s assets in digital wallets, or decentralized finance (DeFi) services, which are peer-to-peer financial services running on public blockchains. Thieves tend to exploit weaknesses in code to steal assets, then launder those stolen assets through wallets. Before using a particular crypto wallet or exchange, users should evaluate the reputation and professionalism of the company and the people involved. Adding two-factor authentication and requiring approval for withdrawals can also help to keep your assets safe.
THE GREAT REASSESSMENT
The exit interview is a common ritual when leaving a job. But before you agree to one, think carefully about what you want to achieve with a conversation about your reasons for leaving. Pro-active employers generally welcome honest feedback that helps them improve their workplaces. Exit interviews can also provide the cathartic experience of expressing long-held frustrations and grievances. However, it’s wise to carefully consider how any negative comments might reflect badly on you in the future.
The “Great Resignation” is not just about people quitting their jobs, as Derek Thompson explains in a piece in The Atlantic that counters three common myths. First, the Great Resignation isn’t just about people quitting their jobs. In the sectors with the greatest numbers of quits – leisure and hospitality – many people are leaving low-paying positions for jobs with better pay and benefits. Second, the Great Resignation isn’t about white-collar burnout. While many white-collar workers have been expressing increased levels of burnout, that burnout does not seem to result in large numbers leaving their jobs. Third, this is not solely a 2021 phenomenon. The largest group of people who permanently left the workforce tend to be older workers who quit in 2020, possibly for health reasons, and possibly as an early retirement.
REMOTE AND HYBRID WORK OPTIONS
The Omicron variant, a Thanksgiving-related surge in infections, and uncertainty about the Biden administration’s vaccine mandate is upending plans to return to the office and require vaccination. Many companies are extending or continuing with remote and hybrid work options, while companies are split between continuing with vaccine mandates or encouraging employees to be vaccinated. Companies that have committed to reopening offices and operating as they did before the pandemic are having the most challenging time, as many employees have either moved away or threaten to quit if they must return to the office.
Problems with company identity and employee morale frequently manifest as turnover. To get through difficult times, Vladik Rikhter, CEO and co-founder of Zenput, says the foundation to his company’s success in 2021 was building a resilient leadership team, maintaining transparency, and investing in team identity. A resilient leadership team works not just for the best compensation, but for the mission and vision of the company. Demonstrating transparency during good times as well as bad times helps in overcoming obstacles. Leaders who are clear on a company’s mission, vision, and values, and connect those to the team helps to build strong teams who can get through tough times together.
According to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for October, the number of people quitting their jobs is decreasing. The JOLTS survey runs a month behind the nonfarm payrolls report, and showed that the number of openings exceeded those looking for jobs by 3.6 million in October.
Multiple rounds of government stimulus payments increased the overall savings rate by 26% this past spring, but that pandemic era savings is rapidly dwindling. While those in the lowest income groups saw the largest percentage increase in savings rates, that still amounted to total cash balances of only about $1,000. With stimulus payments and the additional federal unemployment payments at an end, many families have already depleted their savings. While the additional cash buffer gave many workers additional leverage to seek out new jobs with higher wages, over the long run, those wage increases may be passed on as price increases or may threaten the long-term viability of some businesses.
Why has counting and predicting the number of jobs been so difficult in the COVID-19 era? Two big reasons: First, predicting the behavior of companies and consumers amid unprecedented government stimulus, labor-market shifts, and virus fears has been difficult for economists. Second, government payroll data comes largely from surveys, and employers have not been providing as much data. While an error of 200,000 in the number of jobs created seems significant, that amounts to only a rounding error compared to the 149 million jobs in the entire U.S. labor market. Labor estimates also depend on regular ebbs and flows with the seasons, but the pandemic has disrupted those regular patterns.
- 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
- Fast Company has a listing of the best productivity apps for 2020
- 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!