How Many Non-Auditors are Getting Pulled Off the Bench to Do Inventory Counts This Year?

Hello and Happy post-Christmas Monday, everyone.

Quick show of hands (let’s just pretend I can see them through the screen OK?), how many of you NOT in audit have been pulled off the bench to do inventory counts this week? We’re hearing some grumblings of tax people being thrown into the gauntlet and thought it might be good to throw the question out there to find out if this is just the usual “hey you’re not doing anything anyway and Kevin has the flu so he can’t go to St. Louis to count widgets” year-end situation or something a bit more acute.

As we all know, there is a critical labor shortage not just in accounting but everywhere, but since we don’t care about “everywhere” it’s solely the pressure accounting firms are under to recruit and — more importantly — retain talent that we’re interested in at the moment. Can’t imagine firm-sponsored Applebee’s dinners are going to go over well with tax people who thought they’d get some much-needed rest and actual food this holiday season, and we already know that entire teams are jumping ship one after another, leaving fewer victims associates to do the counting this year. Add to that, you have the Rona wildcard still in play; the CDC recommends isolation if you have symptoms, even if you’re fully vaccinated. That last one has the potential to be disastrous for already short-staffed teams.

Last year some firms deployed remote inventory counts using real-time video — think someone from the audited entity roaming the warehouse with a GoPro strapped to their head — but that was before vaccines were widely available to anyone who wants one. We’re curious if remote inventory counts are here to stay, especially after KPMG recognized they are faster and cheaper (we all know how much firms love to save a buck).

Anyway. We’d love to hear how things are going this year, so go ahead and let ‘er rip in the comments, shoot us an email at [email protected], or text us at 202-505-8885. As usual, you are also welcome to use the tipline to vent (therapists are expensive, we get it) if, say, you’re counting vats of bull semen, stacks of dildos, or otherwise engaged in any kind of terrible inventory count.

Stay safe out there all of you, no matter where there is.

Photo by Samson Katt from Pexels

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Many businesses failing to focus on cash flow, survey finds

–  Only 14% of UK Finance departments report a primary focus on cash flow during the COVID-19 pandemic.

16 AUGUST 2021: New research has shown that just 14% of UK Finance decision-makers focused on cash flow during the most recent Covid-19 lockdown.

The majority of businesses focussed on cost-cutting exercises and the use of Government support. For example, 41% confirmed they had furloughed accounts payable staff over the past 12 months.

As of June 2021, approximately 11.6 million jobs had been placed on furlough in the United Kingdom as part of the government’s job retention scheme at a cost of around £100 billion.

Ian Smith, GM and Finance Director for document management provider Invu, the company that commissioned the research, argues that cash is the key metric in a crisis.

“Cost-cutting is a key component in cash management but failing to pay attention to current and future cash flow both entering and coming out of a crisis can be terminal for a business.”

“At the start of a crisis, working capital assets and liabilities unwind as the volume of business reduces. For most businesses, this releases cash tied up in working capital and together with cost-cutting may help a business survive to the bottom of the cycle. Emerging from the crisis will see both increasing expenditure and increasing working capital requirements, a nasty pincer movement on cash resources.”

“Surviving this cycle is dependent on having full visibility of working capital commitments which places a high reliance on timely and accurate management accounts and visibility of future financial commitments.”

The survey showed 16% of UK businesses can take up to 20 days to publish their management accounts – a further 7% taking over 30 days.

Smith argues that this is far too long in a normal business environment, let alone a crisis, as the relevance of the information diminishes after each passing day, providing little value for decision making.

“A business needs real-time visibility of variances compared to plan to be agile in a crisis. Each day spent waiting for management accounts, to see variances in performance against the current plan, represents a lag in decision making for corrective actions. This is a significant business vulnerability to nasty financial surprises,” Smith says.

The survey showed that a minority of businesses, 32%, use budgetary controls at the point of making a purchase commitment, and 68% of those businesses believed their purchasing process was effective.

“The majority of businesses appear to make financial commitments without fully understanding their financial business impact at the point of purchase. Combining this with slow management reporting means the impact on cash is often not known until it’s too late to do anything about it,” Smith continues. “Narrowing the gap between making a commitment and understanding its impact on cash flow needs to be a priority. Businesses failing to address this are at risk.”

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We Did it Guys, We Found the World’s Most Insufferable Accountant

Once again, r/linkedinlunatics comes through with the gold:

Either this guy is really, really serious about his job OR — and more likely — just really bad at figuring out how to get 16 hours of work done in 10.

If Reddit existed 20 years ago, the comment section on that post would likely be filled with similarly-minded weirdos who consider abandoning any hope of a personal life some kind of twisted badge of honor. Thankfully we live in current day where this kind of behavior is called out for what it is: lunacy.

This is not the flex you think it is, my guy. Go touch grass. Quick, before climate change turns it all to dust and sadness.

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Making Tax Digital is less about tax and regulation than you may think

Evan Jones is Lead Technology Product Manager at Wolters Kluwer Tax & Accounting UK

When we think of Making Tax Digital (MTD) for Income Tax, the obvious association is tax and regulation, but the reality is that MTD in any form is less about either of the above and more about how practices need to evolve as organisations, and how they might encourage their clients to begin to operate in a digital way.

When it comes to practices making as smooth a transition as possible for their clients, there may be a certain amount of expectation setting and education that make MTD for Income Tax a streamlined process rather than the burdensome task many practices fear. There is a real opportunity to transform customer interactions across the entire journey into a seamless, client-focused end-to-end digital experience.

Evolving as Digital Organisations

A shift in mindset to encompass digital working is needed among both practices and their clients as we edge towards the deadline for implementing MTD for Income Tax in April 2023. In their preparations, many practices have begun to explore technology solutions, and it’s often left to the tax department to assess these and lead the way.

However, the reality is that most of the job of MTD for Income Tax will not involve the tax department, and rather, will fall on the department already doing the bookkeeping or VAT. The fundamental principle in MTD for Income Tax is that the record keeping needs to be digital and recorded as close to real time as possible, but understandably, ‘Making Bookkeeping Digital’ probably doesn’t have quite the same impact!

In recognising the true nature of the requirements, what practices will no doubt soon realise is that MTD for Income Tax is less about regulation and tax, and more about preparing clients to work digitally as soon as possible. In fact, it’s also less about specific technology, and more about being comfortable with digital workflows and new ways of working, particularly when preparing clients to make the transition from annual bookkeeping, to quarterly bookkeeping.

Setting Expectations

Most practices have wanted their clients to use digital bookkeeping products for some time now and MTD for Income Tax and its quarterly reporting requirement may just be the catalyst they need.

The upside is that these practices will then be able to have sight of the client data they need, and to keep tabs on it throughout the year without the rigmarole of sending backups via email and ensuring clients don’t work on it at the same time.

However, the complexity is that these increased checkpoints have the potential to change relationships with clients around areas of responsibility and expectation. Just because an advisor has 24×7 access to a digital bookkeeping solution and a client’s data, doesn’t mean that there is a constant human audit service ready to flag when figures aren’t correct.

It’s important to prepare clients for this change in the relationship and set expectations by working with them more digitally now. This may help to address the fear than many practices have, which is that they will be experiencing a large extra burden that they are unable to charge for.

Making it Personal

As practices make the digital mindset shift, there’s often a fear that these new digital processes, including automation applied to what may have traditionally been manual, will affect advisor’s ability to provide a personal service to their clients.

However, if implemented correctly and appropriately, technology should inspire innovation and help practices to build stronger relationships. Sharing information digitally and having more transparency can often introduce more touchpoints, and the move to digital absolutely does not need to replace personal relationships.

Digital should actually enable practices and their clients to have more meaningful relationships, as the rather mundane necessity of constantly requesting information to be sent back and forth can be removed. Just having that data on tap will allow advisors to work more closely with their clients, and move beyond the administrative, operational tasks to dig down into what value add services they may be able to offer.

These are just a few of the mindset changes we’ll begin to see practices make with their clients as we begin the two-year countdown to MTD for Income Tax. While it may seem a daunting process, remember that it’s not the first regulatory hurdle that practices have had to overcome in the past, five, ten or even twenty years. Like all regulation, it’s a chance to adapt and to work smarter, and with the right approach to digital, practices may just find MTD for Income Tax is a new opportunity to have better, more meaningful and more profitable relationships with clients.

Wolters Kluwer Tax & Accounting were the sponsor of the Accountex Spotlight Day on 12 August, which focussed on Making Tax Digital and featured 3 free webinars with members of the HMRC MTD team. All are available to watch on demand now.

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A Pair of Senators are Trying to Get the Kiddos Hooked on Accounting in Grade School

Do you guys remember those after school specials of the 80s that made it seem like drug dealers hiding around every corner offering free drugs was going to be something one would have to be concerned about as we got older? I imagine I’m not the only one who was tremendously disappointed to find out there are no such drug dealers. Having to pay for our drugs aside, there was a lesson in there somewhere: the grown-ups were warning us to be cautious because kids are dumb and impressionable and people who want to take advantage of that will be lurking around every billboard and TV commercial.

Well, in the spirit of gettin’ em started when they’re young, a pair of senators have introduced a new bill that hopes to get kids hooked on accounting in grade school. Let’s check it out:

Today, U.S. Senators Jacky Rosen (D-NV) and Susan Collins (R-ME) introduced their STEM Education in Accounting Act, bipartisan legislation that would designate accounting as a STEM (science, technology, engineering, and math) subject, strengthening education and career pathways for the accounting profession and promoting diversity within the field.

The bill would amend the Every Student Succeeds Act to add accounting education programs as an allowable use of K-12 grant funding and promote high-quality accounting instruction for members of groups underrepresented in accounting careers. This bipartisan legislation comes at a time when the accounting profession, like many sectors of the economy, is struggling with a shortage of talent to fill available jobs. While the pandemic has exacerbated the problem in many sectors, the accounting profession has long faced such a shortage.

The Every Student Succeeds Act replaced the notorious No Child Left Behind law of the Bush era and was signed into law by President Obama in 2015. Here is a thorough read on what it means for K-12 public education in the United States should that be something you’re interested in learning more about on a quiet Monday before Christmas.

Including accounting in STEM education is a no-brainer according to Senator Collins because math. You know, the M in STEM. Also known as that thing most of you never do at work but whatever, let’s roll with it anyway.

“Mathematics is a critical skill that can help students unlock countless doors to high-paying, in-demand fields. One of those doors leads to the accounting profession whose work plays a key role in providing capital markets with confidence and assurance in financial reporting,” said Senator Collins. “Our bipartisan bill would designate accounting as a STEM subject. I encourage all of my colleagues to join me in promoting accounting education, improving students’ finance skills, and strengthening the pipeline of future accountants, who play such a vital role in our financial system.”

High-paying you say? That’s about as believable as the lie about shady drug dealers passing out joints on the playground. But I digress…

You’ll note the accounting pipeline shout-out at the end there. Which leads us to this comment from the AICPA gleefully rubbing their hands together at the idea of exposing kids to accounting:

“For years, the AICPA has championed the inclusion of accounting in STEM programs and we are grateful to Senators Collins and Rosen for their leadership in recognizing the connection between accounting and technology,” said AICPA President & CEO Barry Melancon, CPA, CGMA. “The technological skills CPAs learn help them make informed decisions, solve complex problems and enhance the delivery of services throughout the audit, finance and tax arenas. As the profession continues to evolve its services in areas like cybersecurity, information integrity and systems controls and its use of emerging technologies and techniques, such as blockchain and data analytics, the integration of this knowledge with quantitative reasoning skills enhances accountants’ value to their clients, to the profession and to the finance and tax industries. This bipartisan legislation is a recognition of the value the accounting profession provides and will help to diversify and expand the profession.”

Comments like these are exactly why the ‘Smithers Fetch Me the CGMAs’ meme exists.

As fun as it is to point and laugh at the AICPA’s desperation to stuff the pipeline with warm bodies, there’s nothing wrong with introducing kids to accounting when they’re young. Surely there are worse things to expose them to. Like… you know what, let’s not go there.

A similar bill was introduced in the House earlier this year. We’ll keep you posted on any developments. Personally I’m looking forward to the potential for T account coloring pages!

Further reading:
AICPA Supports STEM Education in Accounting Act [CPA Practice Advisor]

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Strategic Resourcing: Solving Staffing Issues and Driving Transformation through Outsourcing  

It is a tough job. Not just finding the right talent but also retaining them. And it’s not just you. Accounting firms across the country are facing capacity challenges like never before. Globally, accounting and finance roles ranked seventh out of 10 positions that are the hardest to fill. This staffing issue is especially aggravating during the tax season when you have a million things to do and not enough time for meaningful work such as client meetings and advisory. The mundane, repetitive work, extra hours, and the nightmares of missed deadlines can put you and your team under intense pressure.

So how can you create added value for your clients and speed up your firm’s growth adding to you?

There is no magic lever that you can pull to create more capacity at your accounting firm suddenly. The only way for resolving staffing issues and ensuring the firm’s growth is through careful capacity planning and strategic resourcing.

Key Capacity Challenges

Finding skilled accounting professionalsIntense competitionFinding the time to hire the right professionalCost of recruitment – training, salary, loss of fee-earning timeRisks of hiring – Workload, what if they leave, etc.

Outsourcing Accounting and How to Make it Work

Outsourcing your accounting and taxation services can be an ideal solution for supplementing your team and scaling up the business. Instead of just “getting the job done,” you and your team can focus on strategic high-margin work. Apart from increased capacity, efficiency, and profitability, you’re able to employ highly skilled professionals and achieve a better work-life balance.

Of course, you need to consider certain factors, including your motivations for outsourcing, whether it’s a good match for your firm, and finding a global team that can deliver in terms of quality and quantity.

Identifying these objectives can help you select the perfect accounting provider and provide a perspective on how outsourcing fits into your overall business plan. Here’s how you can make outsourcing work for you.

Understand your motivations to outsource

Why are you planning to outsource? Whether you want to reduce operational costs, fix the staffing issues, get more clients on board, or achieve peace of mind, you need to understand your pain points and how outsourcing can help you fix them.

Defining your objective will also provide your team with the right direction. Outsourcing does not mean replacing local staff with remote teams. It means that you’re simply delegating work, so your local staff add more value to clients with additional higher-value services and focus on business growth.

Determine the tasks you want to outsource

Based on your objectives, figure out which activities to outsource and your firm’s benefits from doing so. It’s best to outsource repetitive and laborious tasks such as self-assessment tax returns and payroll that usually take a toll on your team during the busy season.

Pick the right partner

Is the outsourced accounting company that you would be working with a good fit? Not only should the outsourcing provider be able to provide proper technical support, but they should also have good communication skills, a faster turnaround time, and an easy onboarding process. They should have a complete understanding of the business needs and then deliver an outsourcing strategy to suit your firm. This will ensure that you get the support you need when you want it.

Define the scope and the goals

It is essential to communicate your expectations and the steps included in the tasks for the accounting firm. When the requirements and expectations are laid initially, the outsourcing service provider can perform better and provide timely delivery.

Even with the current challenging situation, every day, we’re hearing stories of accounting teams who are using outsourcing as an opportunity to learn and scale.

QX Accounting Services is a reliable and professional outsourcing company that caters to more than 500 clients in the UK, USA, and Canada. It has been ranked as the Top 100 Outsourcing Firms in the World by IAOP. With over 1000 experienced accountants and 5+ years of experience, QXAS is a trusted partner that can help your firm scale and reach the heights you always envisioned.

If you are an accounting practice owner looking for strategic solutions to the capacity challenges, call +44 208 146 0808 or click here.

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How can firms remain competitive alongside cloud-native practices?

Like many other industries, the pandemic forced practices to think on their feet and adapt. Many adopted digital, automated cloud-based tools tailored specifically to the needs of accountants to consolidate their operations. The ease of use and scalability of these tools also gave rise to hundreds of new firms. In just the month of March 2020, a record 636 new accountancy practices were founded.

These ‘cloud-native’ firms can streamline lengthy processes and tasks, becoming the de facto standard of any practice starting out due to their affordable pricing, ease of use and efficiency. All of which enables accountants to focus on offering clients higher-value advisory services. Many established firms have moved their operations either fully to the cloud or are in the process of migrating from desktop. In fact, over 70% of our customers are in the cloud, despite the pandemic and continued economic uncertainty. With this tsunami of migration, competition in the accountancy profession is as fierce as ever.

Join the cloud-native party

To keep up with competition and stay ahead in the market, change doesn’t have to be big, audacious, or even expensive. Making incremental adjustments can lead to a world of difference.

The starting point should always be providing clients with better informed advice and insight. This could be as simple as tweaking current processes to provide clients with services they didn’t even know they needed.

Small changes can also have a big impact on culture and recruitment. If practices want to stand out as a desirable place to work in today’s job market, they need to consider evolving internal operations and working styles to attract the best talent. Not only will attracting and retaining top candidates positively impact clients through the services they provide, it will also help practices plan for the future in the knowledge they have the best people best placed within their organisation.

To successfully deliver the best services and advice to clients, all the while enhancing culture in the process, accountants need digital-first solutions that access real-time and accurate data across every aspect of their firm.

Life on the cloud

Powered by the cloud, real-time data enables accountants to metaphorically ‘look over the shoulder’ of clients and gain a thorough understanding of what’s happening in their business. This increases the touchpoints between both parties, widening the scope for additional collaboration.

The cloud provides actionable data that helps accountants give forward-looking advice rather than just completing year-end tax filings – the general bread and butter. It also provides aggregated insights from across a firm’s client base, amalgamating the data and performance of businesses in the same sector. These services are now essential as accountants deal with the busy festive period, Making Tax Digital (MTD) and rebuilding from the pandemic.

The benefits of cloud-based tools aren’t even strictly restricted to servicing clients – practices can also benefit internally. Post-pandemic, employees now expect different working experiences and styles. The cloud enables employees to work from anywhere, provided they have a laptop and an internet connection. Not only is this appealing for Millennials and Gen Z who seek greater flexibility in the way they work, it helps other employees with commitments, such as single parents who can choose the hours they work to fit in with their life using cloud-based tools and systems.

For Becky Homer at Farnborough-based practice Jones & Co., access to flexible accountancy software opened up the possibility of effectively managing being a parent with a heavy workload. Becky said, “I’ve even been to Thorpe Park for the day, and the kids have gone off on the rollercoasters and I’ve sat in a coffee shop and been able to work as if I’m in the office…”.

In a world of digitisation, the accountancy profession is sometimes guilty of being slow to innovate – I know a number of firms that still use outdated technology. This reluctance to modernise is harmful and damaging the value proposition of accountants. Ultimately life on the cloud simplifies long drawn out and inefficient processes, so it’s no wonder firms that have already adopted these tools are thriving.

Take one step to the right

Accountancy professionals are a critical part of every business, helping them stay on track and grow in good times and bad. However, to remain competitive and stave off competition from cloud-native new-comers, they need to successfully deliver the best services and advice to clients. To do this, accountants need digital-first solutions.

Using real-time, accurate data across every aspect of their firm to create workflow efficiencies, accountants can ensure they have the tools needed to thrive and transform their firms and clients’ businesses today, and tomorrow.

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Business Advice: Some Helpful OSHA Guidelines for Returning to the Workplace


If you need some business advice regarding this matter, we’ve got answers for you!

The Occupational Safety and Health Administration issues workplace-related safety rules. Although it’s easy to assume that such rulings only apply to construction zones or heavy industry, every business facility is subject to their regulations and inspections. The COVID-19 pandemic turned everything upside down and inside out. But now, with vaccinations becoming increasingly prevalent, going back onsite is also going back to normal. If you need some business advice regarding this matter, we’ve got answers for you!

Making the Proper Preparations 

First things first recognize that there is going to be an adjustment period. Transitions are always bumpy, no matter what the paradigm shift entails. The traditional notions surrounding the five-day workweek and the daily commute grind are more than likely going to change. Beyond falling by the wayside, remote work looks like the wave of the future. In the meantime, here is a compelling list of business advice in regards to new training procedures. 

 

Emphasize employee benefits and paid sick leave;Practice social distancing within reason use of PPE, contact tracing, and improved sanitization;And be more vigilant against OSHA rule violations

 

Complying with Updated “Best Practices” 

Along those same lines, strive to comply with the new definition of best practices for workplace operations post-pandemic. First and foremost, make employee health-related matters at the top of the office pyramid. Designate “essential workers” who must remain onsite, even if they work as a temporary skeleton crew. Begin scheduling virtual meetings over platforms such as Zoom, FaceTime, and Skype. Put a written plan in place that changes as circumstances change. We’re all still in a state of flux, and your business needs to be agile in ways that it probably has never needed to be until now.  

Prioritizing New Human Resources Strategies 

HR departments have long been the backbone for recruiting prospective employees. Then, individual team managers oversee the onboarding process, especially if further training is required depending on the different industries factor in how employee development needs to change. Likewise, revise your payroll routines accordingly. Investigate outsourcing – it might be a good solution!

trust the professionals at the Harding group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

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How Does Cryptocurrency Affect Tax Payments?


If you have ever actually owned or used bitcoin, you might be interested in knowing just how cryptocurrency may affect tax payments — or your tax picture.

If you have ever actually owned or used Bitcoin, you might be interested in knowing just how cryptocurrency may affect tax payments — or your tax picture. Regardless of how you acquired your bitcoin, understanding its outlook on your tax situation can help inform you on the proper methods and trading moves you make with the cryptocurrency. Here are the key facts to know about how Bitcoin and cryptocurrency will ultimately affect your tax payments and overall tax situation.

Cryptocurrencies Including Bitcoin Are Considered Property

The IRS has issued that any cryptocurrencies — like bitcoin- must be considered and classified as property for tax purposes. More often than not, Bitcoin will be declared property and hinge on how it was acquired. The reality is that cryptocurrency is typically acquired from a “mining” process. Then the value will become taxable immediately. However, if you’ve disposed of or ended up using your bitcoin during the year, you will definitely owe taxes on the actual realized value. Ultimately, that might end up meaning you will have a capital gain that ends up being taxable come tax season. 

Keep A Record Of Your Bitcoin

Having a record of your Bitcoin transactions becomes increasingly important for your tax situation. You will always want to have records of the fair market value of Bitcoin and other cryptocurrencies you own. The reality is, after understanding how bitcoin can impact your tax situation, you might have more information on the best practices to use as you utilize bitcoin to benefit you most effectively and efficiently. Ultimately, the IRS will definitely be paying special attention to people who own bitcoin and other cryptocurrencies as they begin to gain popularity as of late.

Bottom Line

At the end of the day, owning Bitcoin and other cryptocurrencies can be an excellent investment. In fact, there are many tax benefits people associate with bitcoin and cryptocurrency. However, knowing how they may impact your tax situation, in the long run, can prove worthwhile to ensure the IRS doesn’t end up conducting an audit on your assets and avoid making some common tax mistakes as well. 

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. Follow us on Facebook Twitter YouTube, and LinkedIn for more tax tips.

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Tax Changes – How Will Tax Season 2022 Look?


While, unlike 2020 and 2021, it seems that the deadline for the 2022 tax season won’t be pushed back, several other tax changes could impact you and your business.

The 2022 tax season is the third one since the COVID-19 pandemic began, and as has been the trend, there are a lot of changes. It’s unlikely that the 2022 tax season will look like it did in past years, so business owners must be aware of tax changes that may impact how they file. These new complications are a sign of the times, and it’s becoming clear that we’re gearing up for a “new normal.” While, unlike 2020 and 2021, it seems that the deadline for the 2022 tax season won’t be pushed back, several other tax changes could impact you and your business.

EIPs

Economic Impact Payments are those stimulus checks that went out during the third round sent out in March. The maximum amount that one could receive ($1,400) plus any payments for qualified dependents won’t be taxed by the federal government. That said, it is possible you received less than you were entitled to, which can be taken advantage of as a credit on your 2021 return.

CTC

The Child Tax Credit has been enhanced with a new maximum of $3,000 or $3,600 for children under six years old. The credit is also fully refundable and allows for advance payments, with some advance CTC payments going out back in July. These credits will need to be factored into their tax returns, potentially causing filing headaches. As a result of these tax changes, tax refunds for those who received CTC payments may be lower than expected.

Unemployment

Due to new laws and tax changes, there are still unique breaks for some workers who lost work in 2020. Essentially, the first $10,2000 of unemployment benefits is exempt from being taxed—provided your AGI was below $150,000. Many people are unaware of this, so it’s important to be thorough! 

Dependents

ARPA has changed the maximum dependent care credit. For families with an AGI of $125,000 or less, it’s now $4,000 for one child and $8,000 for two or more children. That credit is also now fully refundable, so be sure to get the most out of your tax filing.

COBRA

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows employees who leave their companies to continue to get health insurance for some time, typically 18 months. There is a cost, though, plus a standard 2% administrative fee. However, because of ARPA, there is a 100% subsidy for COBRA premiums between April 2021 to September 2021. As a result, the payments are tax-free.

Trust the Professionals at the Harding Group

Unlike other accounting firms,The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact usonline or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us onFacebookTwitterYouTube, andLinkedIn

 

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