Free Housing for Front Line Workers

hotel

We’ve had this question multiple times in the last 2 weeks. Here is the scenario:

“My pay package includes a housing stipend because I am finding housing on my own. However, hotels are offering free stays for front-line workers, that is not provided by my company or the hospitals. At the hotel I do pay for parking. What will happen to the housing stipend if I accept the free stay at the hotel, considering I have to duplicate expenses?”

The answer is that you will need to duplicate expenses for lodging since the lodging is being provided by a third party. The solution is to pay SOMETHING to the hotel, maybe a tip to the housekeeping staff or for other amenities that they offer that you will use in the room.  Parking does not count as lodging expenses, unless you are a hippie! : ) Under the rules there needs to be SOME expense to trigger the exclusion of the per diems.

Get Ready for the Recovery Episode 2

surgery 2

In an earlier post, I pointed out that our home state was preparing to restart the elective surgeries that have been on hold during COVID. This piece of news is from Canada and although the Canadian health system has different logistics, the same pent up demand is present

Many of our healthcare clients are out of work or furloughed waiting for the procedures to begin. Its rough holding on but the recovery is coming so hang in there!

How Hospitals will Handle the Surgery Backlog

Stimulus Payments Rolling Out – What to Do

money

The stimulus payments are rolling out and they will be based on either the 2019 return or the 2018 return and if you don’t receive it you will file in 2021 to claim it

The IRS created a web page for those that 1) don’t regularly file or 2) need to update their bank account information, address or both.

Here is the link: Update Your Info with IRS

I’m Taking a Crisis Contract – How Does That Affect my Taxes?

travel crisis coronavirus

Several travelers are accepting short term assignments in areas affected by the COVID pandemic. These assignments pay significantly more than regular traveler contracts and are often for a shorter duration than 13 weeks.

What about the taxes?

This is covered in other posts on our blog, but there are three things to note:

1) What is withheld from your paycheck for taxes is not the actual tax – it is an estimate of the taxes owed on the income you earned during the pay cycle.

2) The tax withholding will be higher in percentage terms since the calculation of the withholding ASSUMES you will earn the same amount each paycheck for the remainder of the year

3) The reality is that you will not earn this much with each check all year.

This leaves you two choices: You can either change your withholding short term or just let the withholding run the normal rate. If the later, any tax payments that are more than needed will be refunded when you file your return the following year.

Here is an illustration:

Jane normally earns 50K a year but has an opportunity to earn 7500 a week for 4 weeks on a crisis contract. She will earn 30K during the 4-week assignment, but 80K for the entire year (50+30). The tax withholding on the crisis contract will ASSUME she makes 7500 a week or 390K a year. 390K vs 80K is a big difference but it shows you why the withholding is so high.

What should your withholding be if you want to adjust it? Everyone’s situation is different so this will not work for everyone. Whatever you decide, DO NOT FILE EXEMPT. The one approach you can use is as follows using Jane as an example:

  • Calculate the amount you would earn if you worked the crisis shift all year (390K)
  • Subtract the amount you expect to earn during the crisis contract (30K)
  • Subtract from #2 the amount you expect to make at your REGULAR jobs (50K)
  • Subtract 20K
  • 390-30-50-20= 290K
  • Put this amount on Line 4B on the W4 Withholding Form

The 20K is a buffer should your expectations change and if you linger longer, you will want to adjust your W4 again.

This takes care of the Federal withholding. Every state is different, but if they use the old formulas that ask for EXEMPTIONS, claim Single and 5 or Married and 5.

And finally, after you are done with the crisis contract, CHANGE the withholding back to where it was before you started. AND, be safe!

A Short Overview of the Stimulus Payments

dollar bills

Stimulus Checks will be issued soon, and our office has received several calls concerning the when, how and why. Here is what you need to know:

  • The stimulus payment is a 2020 credit that will be reconciled on the tax return filed in 2021 for the 2020 tax year – IT’S NOT TO BE PAID BACK! 🙂 IT’S FREE MONEY!
  • It is a maximum of $1200 for singles, $2400 for married taxpayers and then $500 for each child
  • The payment phases out for Singles earning more than 75K, Married earning more than 150K and those filing Head of Household earning more than $112,500
  • The payments are being sent in advance based on the return filed for 2019
  • If the 2019 return has not been filed, it will be based on the 2018 return
  • If neither the 2018 nor the 2019 return has been filed, you will want to file soon
  • If you do not get all the stimulus, you may receive it when you file the 2020 tax year return in 2021
  • Currently, the IRS is requiring all individuals to file a return to receive the stimulus, yet the law that was passed does not require that. The IRS has announced a special return for those that do not regularly file. Details are forthcoming
  • If you have provided a direct deposit account on your 2018 or 2019 return, the payment will go to that account.
  • The IRS will provide a database and web site that will allow you to change the account identification number if necessary.
  • The IRS has provided a web page with FAQs: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

There is considerable confusion over these rules and an unnecessary rush to file 2019 returns when the 2018 return is sufficient. If you have not filed in 2019 and show more than the allowed income on the 2018 return, that would be a reason to file sooner provided the 2019 return income is eligible for the payment. If both returns show disqualifying income, you still have another chance when you file for 2020.

For a YouVideo explanation see: https://youtu.be/9lr-7oGdhGk

Helpful Articles on the Stimulus

blur cash close up dollars

Photo by Burst on Pexels.com

Below are links to two helpful articles regarding the stimulus

This one is a calculator to determine how much you will get. You will need your most recently filed return (2018 or 2019) to determine the income

Stimulus Calculator

The second is a concise overview of the program. Note that the payment is an ADVANCE of a 2020 tax credit so there will be a form to file next year to reconcile amounts already received if you did not get the full amount. Guidance is coming soon so stay tuned:

All About the Stimulus