There are many economic issues going on related to COVID-19.
A federal judge ruled this week that the Centers for Disease Control and Prevention did not have the authority to stop housing evictions. There are always some evictions even without a pandemic. Some people have hard financial times. Others do not want to pay and move from one eviction to another regularly. Some people may have stopped paying rent when the virus struck even though they could have paid. They may now have a rough time catching up.
Many landlords are small operators of maybe a duplex or two. However, even bigger landlords have continuing expenses of taxes, utilities and maintenance. How can they pay their own expenses if they cannot collect rent?
The government made a very unusual decision during this tax season. Normally the rules are determined before the game begins. This year, halfway through the tax prep season the IRS changed rules and made up to $10,200 of unemployment benefits tax-free for certain individuals. Many people had already filed their returns. Tax preparers were told not to file an amended return in most cases. The IRS was going to issue the refund within their system. This process is set to begin in June. There were some temporary increases in child credits in the last stimulus bill. Those benefits will be paid out monthly, probably starting in June.
Many employers are having a hard time finding employees. In our own area you can see many businesses with “help wanted” signs. Some are advertising higher wages or other incentives. Some states are now starting to end the enhanced benefits that are encouraging some people not to apply for work. Many people have opted to stay at home instead of going back to work after realizing they can earn more by remaining unemployed.
This is especially true when the extra money is tax free.
The debate will be intensifying about whether schools, employers and other groups will require vaccinations. Just this week Carnegie Mellon University announced they will require their students to receive the vaccine. Norwegian Cruise Lines is fighting with the governor of Florida over vaccine requirements. The cruise line wants the vaccine required. They believe this will encourage more passengers to come aboard. The governor believes this is an individual choice. This battle is likely to be fought out many times in coming months.
As we have discussed in the past, rising tax rates are a near certainty. The Trump tax cut is set to expire Jan. 1, 2026. At that time, tax rates automatically revert back to the old rates which were higher for most people. It is not very likely that they will be extended. With the way the deficit is exploding, tax rates will need to increase for more than just the wealthy. There just are not enough of these people to cover all of the spending. The president is asking for a bigger budget for the IRS so that the can do many more audits. Taxes are going to become a bigger part of your budget.
Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.
Originally Appeared On: https://observer-reporter.com/business/covid-and-the-economy/article_ff6af576-b33d-11eb-b146-d31ee7cc15e2.html