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What Employers Should Know About the COVID Vaccine

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BY KATIE HALL, REYNOLDS + ROWELLA

The COVID-19 vaccine is providing many employers with the hope that things may soon return to normal—or as normal as can be considering a year-plus long pandemic. The vaccine certainly provides a glimmer of light at the end of the tunnel, but there are few things employers should consider while planning how to best protect their employees.

Let’s start with the most common questions:

Can we require all employees to get vaccinated?

The simple answer: Yes, but with exemptions. On December 16th, 2020, The Equal Employment Opportunity Commission (EEOC) released guidance specific to COVID-19 vaccination programs. While they have not expressly stated that employers can require vaccinations, it can be inferred that it may be permissible with certain exemptions. Specifically, employers must be prepared to exempt those with disabilities, pregnancy-related medical conditions, and/or religious objections.

The EEOC’s guidance states that the Americans with Disabilities Act (ADA) allows employers to require that individuals “shall not pose a direct threat to the health or safety of individuals in the workplace. However[…] if a vaccination requirement screens out or tends to screen out an individual with a disability, the employer must show that an unvaccinated employee would pose a direct threat due to a ‘significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.’” If an employee refuses to obtain the vaccine due to disability, the employer should evaluate whether they pose a direct threat by evaluating

  • the duration of the risk;
  • the nature and severity of the potential harm;
  • the likelihood that the potential harm will occur;
  • and the imminence of the potential harm.

If it is concluded that an unvaccinated employee would pose a direct threat to the worksite, the employer must then consider whether a reasonable accommodation can be made, such as allowing the employee to work from home or providing another mutually agreed-upon work arrangement.

Title VII of the Civil Rights Act of 1964 (Title VII) also provides certain exemptions. Once an employer is made aware of an employee’s sincerely held religious beliefs, practice, or observance that prevents them from getting the vaccine, the employer must provide a reasonable accommodation unless it results in undue hardship (as determined under Title VII) to the employer.

Can we fire an employee that refuses to get vaccinated?

If an employee cannot get vaccinated due to a disability or sincerely held religious beliefs and no reasonable accommodation is possible, then an employer can “exclude” the employee from the workplace. This does not mean that the employee can be terminated, but that the employer will need to determine if any other rights apply under federal, state, or local authority before making that decision.

Employers may be faced with a difficult situation if employees refuse the vaccine outside of protected reasons, especially if a large number of employees refuse. Employers may have to choose between firing a potentially large number of employees or taking these refusals on a case by case basis, which may leave the employer open to discrimination claims.

So we can require the vaccine- but should we?

It depends. In certain environments, such as in healthcare, a vaccination requirement may make sense so long as employers comply with ADA and Title VII. But what about for those who are not considered frontline workers? For these employers, the answer becomes a bit grey. Employers should consider the climate surrounding the vaccine, as well as the fact that many Americans are hesitant to get it. A mandatory vaccination program may take a hit on employee morale in certain instances. Additionally, employers should also be aware of potential worker’s comp claims should the requirement result in an employee developing complications from the vaccine.  

What about providing incentives to employees to get the vaccine?

Currently, there is a lack of legal guidance from the EEOC surrounding incentives to get the vaccine. However, many large corporations are forging ahead with incentives despite this. Some of these incentives include one-time cash payments and paid time off to receive the vaccine. If an employer chooses to provide incentives, they should also consider how that may impact those that cannot get the vaccine due to disability or religious reasons. In order to avoid claims of discrimination, employers may want to provide other avenues to receive the incentive, such as taking a training on COVID safety precautions or periodic COVID testing.

As we await further guidance on this topic, providing education surrounding the vaccine in conjunction with a voluntary vaccine program may be employer’s safest bet.

As a Connecticut employer, what can I do now?

CT employers play a large part in getting CT residents vaccinated. The CT.gov website provides employers with information they need to help their workers gain access to the vaccine. According to the website, “Employers who have Phase 1b-eligible workforce should complete [the online VAMS enrollment form] in order to enroll in VAMS and enable their employees to schedule a vaccine appointment. Employers who do not have employees eligible in Phase 1b do not need to take any action at this time.”

Once an eligible employer has registered with VAMS, the employer can upload a roster of employees. Employees listed on the roster will receive an email from VAMS inviting them to schedule an appointment to receive the vaccine.

As with all things COVID-related, the rules are regularly in flux. Employers should check EEOC’s latest guidance prior to finalizing any vaccination programs or incentive plans for their workforce.

We would be happy to discuss with you the complex and evolving issues employers are navigating with the COVID-19 vaccinations. Contact the R+R HR consulting team for development of your company’s vaccine.

Katie Hall, PHR, Director, HR

katieh@reynoldsrowella.com With over a decade of diversified knowledge in HR, Katie has extensive hands-on experience leading HR initiatives including policy design, compensation, performance management, recruiting, compliance reporting, HR workflow development, training and development, and benefits administration. She assists R+R clients with recruiting and retaining quality staff and working closely with businesses in regards to their benefits, training and compensation programs

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

Five tips to lower your tax liability

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The 2021 tax filing season is here! When preparing your 2020 taxes returns, consider these last-minute ideas to lower last year’s federal income tax liability.

1. Contribute to a Traditional IRA

If you’ve not yet made a deductible traditional IRA contribution for the 2020 tax year, you can still do so until April 15. Then you can claim the resulting write-off on your 2020 return, assuming last year’s income wasn’t too high to qualify. You also can potentially make a deductible contribution of up to $6,000 or up to $7,000 if you were age 50 or older as of December 31, 2020. If you’re married, your spouse can do the same.

There are two ground rules for deductible IRAs. First, you must have enough 2020 earned income (from jobs, self-employment or taxable alimony received) to equal or exceed your IRA contributions for the 2020 tax year. If you’re married, either you or your spouse (or both) can be the source of the necessary earned income. Second, deductible IRA contributions are phased out (reduced or eliminated) if last year’s income was too high. Here are the phaseout ranges for 2020:

  • If you’re unmarried and were covered by a tax-favored retirement plan in 2020 (whether an employer-sponsored plan or a self-employed plan), your eligibility to make a deductible contribution for last year is phased out between adjusted gross income (AGI) of $65,000 and $75,000. For married filing separately, the phaseout range is $0 to $10,000.
  • If you’re unmarried and weren’t covered by a plan in 2020, your eligibility to make a deductible contribution isn’t affected by your AGI. You can make a fully deductible contribution up to the applicable limit, assuming you have enough earned income.
  • If you’re married and both you and your spouse were covered by retirement plans in 2020, the eligibility of both you and your spouse to make deductible contributions for last year is phased out between joint AGI of $104,000 and $124,000.
  • If you’re married and weren’t an active participant in an employer-sponsored retirement plan for 2020, but your spouse was, your deductible IRA contribution phases out with AGI of between $194,000 and $206,000. (The participating spouse’s eligibility is phased out between joint AGI of $104,000 and $124,000.)

If you’re married and neither you nor your spouse were covered by a plan, your eligibility to make a deductible contribution isn’t affected by your AGI. You and your spouse can both make fully deductible contributions up to the applicable limit, assuming you have enough earned income.

2. Make a Deductible Health Savings Account (HSA) Contribution

If you had a qualifying high-deductible health plan (HDHP) last year, you could still make a deductible HSA contribution for your 2020 tax year if you’ve not already done so. The contribution deadline is April 15.

For 2020, the maximum deductible HSA contribution is $3,550 for self-only coverage or $7,100 for family coverage (anything other than self-only coverage). More specifically, if you’re eligible to make an HSA contribution for last year because you had a qualifying HDHP, you have until April 15 to establish an account and make your rightful deductible contribution.

Important: The write-off for HSA contributions is an above-the-line deduction. That means you can take the write-off even if you don’t itemize.

3. Deduct State and Local Sales Taxes (Instead of State and Local Income Taxes)  

If you live in a jurisdiction with low or no personal income tax or if you owe little or nothing to state and local income tax collectors, you have options. You can potentially claim itemized deductions on last year’s return for either:

  • State and local general sales taxes, or
  • State and local income taxes.

The sales tax option is only relevant if your allowable itemized deductions for last year would exceed your allowable standard deduction for last year. The standard deduction for 2020 was:

  • $24,800 for most married couples who file jointly,
  • $12,400 for most singles and those who use married filing separate status, and
  • $18,650 for most heads of households.

Higher standard deductions apply for those who were age 65 or older on December 31, 2020.   

If you can benefit from choosing the sales tax option, you can use an IRS-provided table (based on your income, family size, state of residence, and local sales tax jurisdiction) to figure your allowable sales tax deduction. But if you kept receipts from 2020 purchases and that gives you a bigger write-off, you can add up the actual sales tax amounts and deduct the total.

Even if you use the IRS table, you can add on actual sales tax amounts from major purchases, such as:

  • Motor vehicles (including motorcycles, off-road vehicles, and RVs),
  • Boats,
  • Aircraft, and
  • Home improvements.

In other words, you can deduct actual sales taxes for these major purchases on top of the predetermined amount from the IRS table.

4. Add Up Health Insurance Premiums and Medical Expenses

If you itemize deductions on your 2020 tax return, you can potentially claim a deduction for qualifying medical expenses you paid last year. This includes premiums for private health insurance coverage and premiums for Medicare health insurance.

Specifically, you can claim an itemized medical expense deduction if your total qualifying expenses exceed 7.5% of your adjusted gross income (AGI) for the year. Under current tax law, the standard deduction amounts have been significantly increased for 2018 through 2025. So, fewer individuals will be itemizing on their 2020 returns. But having significant medical expenses may allow you to itemize and collect some tax savings. 

Important: If you’re self-employed or an S corporation shareholder-employee, you can probably claim an above-the-line deduction for your health insurance premiums, including Medicare premiums. That means you don’t need to itemize to get the tax-saving benefit.

5. Take Advantage of COVID-19 Tax Relief for Certain Small Business Owners

Several COVID-19 federal tax relief measures are potentially available to eligible S corporation shareholders and owners of unincorporated businesses, including:

  • Sole proprietorships,
  • Single-member limited liability companies (LLCs) treated as sole proprietorships for tax purposes,
  • Partnerships, and
  • Multi-member LLCs treated as partnerships for tax purposes.

These relief provisions can significantly improve your personal tax situation. For example, you can carry back a 2020 business net operating loss (NOL) for up to five years and recover some or all the personal federal income tax paid for the carryback year(s).

April 15th is coming soon

The federal income tax filing deadline for individuals is just around the corner. If you haven’t yet filed (or extended) your 2020 return, contact a R+R tax advisor to help soften your tax hit with these and other planning moves. 

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

Are You Taking Advantage of Valuable Tax Credits?

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Tax credits are a powerful way to lower your federal income tax bill. It’s important to differentiate between tax credits and tax deductions. A credit usually provides greater tax savings than a deduction, because a credit reduces your tax bill dollar for dollar. A deduction reduces only the amount of income that’s subject to tax.

Here are five major credits for you to consider on the 2020 tax return that you must file in 2021.

1. Higher Education Credits

The tax law gives parents a choice between two possible tax credits for higher education expenses:

American Opportunity Tax Credit (AOTC). With the AOTC, the maximum annual credit is $2,500 per student for each of the first four years of study. The AOTC is phased out based on your modified adjusted gross income (MAGI). For 2020, the AOTC is phased out at between $80,000 and $90,000 of MAGI for unmarried individuals (and between $160,000 and $180,000 for married couples filing jointly.)

Lifetime Learning Credit (LLC). Conversely, the LLC features a maximum annual credit of $2,000 per tax return, regardless of the number of students in the family. This credit is also phased out based on MAGI levels even lower than the ranges for the AOTC for 2020. For 2020, the LLC is phased out at between $59,001 and $69,000 of MAGI for unmarried individuals (and between $118,001 and $138,000 for married couples filing jointly). But unlike the AOTC, the LLC isn’t limited to four years of study.

If you’re eligible for a higher education credit, you must choose one; you can’t claim both. The AOTC is generally more favorable than the LLC on 2020 returns, but what’s right for you will depend on your personal situation.

2. Child Credit

The Tax Cuts and Jobs Act (TCJA) enhanced the child credit for 2018 through 2025. Under the TCJA, this credit was doubled from $1,000 to $2,000, and the thresholds for phasing out the credit were increased significantly. Furthermore, $1,400 of the child credit is currently refundable, up from a maximum of $1,000.

To qualify for this credit, the child must be:

  • Under age 17 at the end of the applicable tax year,
  • Your own child, a stepchild or a qualified foster child,
  • An individual who didn’t provide more than half of his or her own financial support during the tax year,
  • Your tax dependent as defined by prior law,
  • A U.S. citizen, a U.S. national or a U.S. resident alien, and
  • An individual who lived with you for more than half of the applicable tax year.

In addition, for each qualifying dependent other than a qualifying child (such as a dependent child age 17 or older or a dependent elderly parent), a $500 “family” credit is available.

3. Dependent Care Credit

Separate from the child credit, you can claim a credit for the cost of caring for children under the age of 13 and other qualifying dependents (such as an elderly relative who needs nursing care) while you (and your spouse, if you’re married) work. The dependent care credit is 20% for taxpayers with an adjusted gross income (AGI) above $43,000.

The credit is available for the first $3,000 of qualified expenses for one child or $6,000 for two or more children. Thus, you may claim a credit of $600 for the cost of caring for one child or $1,200 for two or more children. But qualified expenses can’t exceed your earned income (if you’re single) or the earned income of the lower-earning spouse.

You may claim the credit for expenses paid to numerous types of providers, including:

  • Day care centers,
  • Summer day camp — but not overnight camp,
  • Nursing care centers, and
  • Certain in-home or outside caregivers.
4. Adoption Credit

The tax law provides a nonrefundable credit for qualified adoption expenses. For 2020, the maximum credit is $14,300 of the qualified expenses incurred to adopt an eligible child. An “eligible child” is defined as someone who’s under age 18 or physically or mentally incapable of caring for himself or herself.

The credit covers reasonable and legal costs directly related to the adoption, including:

  • Adoption agency fees,
  • Court costs,
  • Attorneys’ fees,
  • Travel costs, including meals and lodging, and
  • Extra expenses needed to adopt a foreign child.
5. Retirement Saver’s Credit

The retirement saver’s credit encourages some taxpayers to set aside money for the future. This nonrefundable credit applies to the first $2,000 voluntarily contributed to a qualified plan, such as a 401(k), a traditional IRA or a Roth IRA.

The credit may equal 10%, 20% or 50% of the qualified contribution, depending on the saver’s AGI. The income levels aren’t very high, and they’re adjusted annually for inflation. For example, an unmarried taxpayer can’t claim a credit if he or she has an AGI of more than $32,500 in 2020 ($65,000 for married couples filing jointly and $48,750 for head of household).

If you qualify, the maximum credit is $1,000 (50% of $2,000). Other special rules may apply. For instance, a taxpayer who was under age 18 last year or is a full-time student can’t claim the credit.

Ready, Set, File

This list isn’t all inclusive. If you want more information about tax credits and other tax breaks available for the 2020 tax year, contact a R+R tax professional today.

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

EXPANDED TAX CREDIT OPPORTUNITIES FOR EMPLOYERS

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Signed into law on December 27th, the Consolidated Appropriations Act (the Act) extends and expands the Employee Retention Credit (ERC) that was enacted under the CARES Act to provide economic relief for businesses hit hard by the coronavirus pandemic 

Below is a summary of a few of the favorable retroactive changes to 2020:

The expanded and enrichened ERC is going to prove an extremely valuable credit for many businesses, especially so in 2021—particularly businesses that received PPP loans will be surprised that not only can they now participate, but they can even do so retroactively for 2020.

Please note that this information is current as of the date of publication. We will continue to provide additional in-depth updates around this matter.

If you have questions about any of the changes discussed above or need assistance please contact a R+R tax advisor.
About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

WFH Policy Assessment

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Earlier this year, employers were polled by Mercer, a global benefits consulting service, to give their preliminary thinking about flexible work arrangements in a post-pandemic environment. Their answers suggest that, in some cases, companies with employees working remotely have become more receptive to these arrangements.

Here are some quick survey highlights:
  • 68% of companies are now updating or creating new work-from-home policies. As reasons to expand flexible working arrangements, they cite employee engagement and productivity; enhanced employee value proposition; a more diverse workforce; and greater access to a larger talent pool.
  • 65% of employers anticipate that, post-Covid-19, between one-quarter and three-quarters of their employees will work remotely on a regular basis.
  • 67% of employers have seen the productivity of employees working remotely during the pandemic remain level and 27% have seen it increase.
Employee Sentiments

What about employees? Their sentiments were captured in a recent survey by market research firm, Morning Consult. Questions were directed only to employees whose jobs make it possible for them to work remotely. Roughly four out of five agreed with the statement, “I enjoy working from home.”

When asked about how many days a week they’d like to work from home once the Covid-19 pandemic is “under control,” one-third expressed a desire to work from home every day. Nearly one-quarter prefer three to four days per week. One in five would like one to two days working remotely.

What appeals most to those who prefer working from home at least several days a week is that there’s no time-wasting commute. Working from home also gives them more time to focus on their health. Other pluses mentioned include a higher general comfort level with the home office environment, greater family connections, and a perception that their work quality has improved while working remotely.

Not All Roses

Still, employees also point to some downsides. For example, they list the risk of work and personal lives merging, feeling disconnected from coworkers, and feeling isolated. It’s important to remember that surveys capture averages and provide a helpful starting point for thinking about issues. But your own workforce may not have the same attitudes as those captured in these recent surveys. One way to find out is to conduct your own poll. If you do, don’t give employees the impression that every wish they express for their work settings will be granted or that any policy changes will last forever.

Criteria for Policy Assessment

Before committing to a work-form-home policy establish clear criteria that will enable you to assess its efficacy. Criteria might include:

  • Employee productivity. It doesn’t necessarily need to increase, but you don’t want it to drop, either.
  • Employee satisfaction. If all or some employees eventually decide working from home isn’t as attractive as they thought it would be, you might want to amend your policy.
  • Supervision issues. In some cases,the job of front-line supervisors overseeing remote employees could become unduly challenging.
  • Esprit de corps. Team spirit and unit cohesion may not hold up with employees working remotely.
  • Liability concerns. You may be unable to manage risk, including cybersecurity concerns, with workers using less-secure home networks and connections. In-home work-related injuries could also become a problem.
  • Recruiting results. On the other hand, you may be able to attract hard-to-find skilled workers more easily if they can work from anywhere.
  • Cost. The shared cost of employee home office necessities such as ergonomic furniture and computer hardware could be higher than expected. But reduced office leasing and utilities expenses are likely to cut your costs significantly.

The good news is that you probably have gained enough experience during the pandemic to anticipate potential issues with a permanent work-from-home policy. Just keep in mind that there can be differences between pandemic-driven ad hoc solutions and formal policies.

\When employees don’t have to work from home, you enjoy more flexibility in structuring a remote-working policy. Matters to iron out include which employees are eligible, how many days they can work from home, what tech and other support you’ll provide, and scheduling procedures.

Word to the Wise

If your employees have been forced to work from home during the pandemic, you’ve enjoyed a unique opportunity to test a whole new approach to working. Permanent work-from-home potentially could save your business a lot of money and result in a happier, more productive workforce.

What’s Next

In preparing for rapid opportunities for growth, take the time to find the tools, resources, and HR experts to help create a solid plan for preparing your business to thrive on the other side of COVID-19. Our HR consulting team is here to help you. Contact Katie Hall to get started.

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

$900B COVID-19 Relief Bill Signed into Law

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On December 21, 2020 the House and the Senate passed a $900 billion pandemic relief package. The bill combines coronavirus-fighting funds with financial relief for individuals and businesses and was signed into law by President Donald Trump over the weekend.

Key bill provisions include:
  • Allocation of an additional $325 billion in aid for small businesses including a new round of Payroll Protection Program (PPP) funding for businesses enduring pandemic-induced economic hardships.
  • Economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.
  • A $300 per week supplement for workers receiving unemployment benefits from Dec. 26 until March 14, 2021. This bill also extends the Pandemic Unemployment Assistance (PUA) program and the Pandemic Emergency Unemployment Compensation (PEUC) program.
  • An extension of the national eviction moratorium through January 31, 2021, as well as $25 billion in emergency rental aid.
  • Extension of the employee retention tax credit, several expiring tax provisions and temporarily allows a 100% business expense deduction for meals provided by a restaurant (rather than the current 50%) incurred after December 31, 2020 and expires at the end of 2022.
PPP 2 Eligibility and Loan terms

The new package provides additional funding for those businesses that did not receive PPP money in the first round. In addition, it allows businesses a second chance at PPP money if they have fewer than 300 employees and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

Please make note that the bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.

PPP loans are capped at 2.5 times the average monthly payroll costs in the year prior to the loan or the calendar year, with a maximum loan amount of $2 million. Hotel and food services businesses (NAICS code 72) are eligible for up to 3.5 times their average monthly payroll costs, again cannot exceed the $2 million maximum.

The covered period for new loans runs through March 31, 2021

To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks.

Costs eligible for loan forgiveness include payroll, rent, covered mortgage interest, and utilities. The following additional categories have been added as potentially forgivable:

  • Covered Operations Expenditures
  • Covered Property Damage
  • Covered Supplier Costs
  • Covered Worker Protection Equipment
Tax deductibility for PPP expenses

The new legislation also provides that business expenses paid for with the PPP loan proceeds will be considered tax deductible. This provision officially reverses multiple IRS revenue rulings made earlier in the year denying the tax deductibility of these expenses.

As with most topics related to COVID-19, changes are being made rapidly. Please note that this information is current as of the date of publication. We will continue to provide additional in-depth updates around this matter.

To learn more about PPP loan eligibility, application/forgiveness or tax credits , please CONTACT US or connect with your R+R advisor to discuss your organization’s questions, concerns, and priorities.


About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

Katie Hall, Gets Published in CT CPA’s Magazine

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With more than a decade of diversified knowledge in HR, Katie has extensive hands-on experience leading HR initiatives including policy design, compensation, performance management, recruiting, compliance reporting, HR workflow development, training and development, and benefits administration. She assists R+R clients with recruiting and retaining quality staff and works closely with businesses in regards to their benefits, training, and compensation programs. 

Read what Katie has to say about “What Employers Need to Know about Connecticut’s Paid Family and Medical Leave Act”

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

2020 US Taxes: Implications for Visitors to the US in the year of Covid-19

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By: Christopher Galakoutis, Reynolds & Rowella

In a typical year, millions of people from around the world visit the US.  Many come as students and tourists, while others travel to the US to attend meetings, conferences and for other short-term business trips. 

For the most part short stays in the US do not trigger US tax residency or a US income tax return filing requirement.  There are cases however where individuals – known as ‘foreign nationals’ to use tax terminology – do plan for and spend longer periods of time in the US, triggering US tax filing requirements either as tax residents (Form 1040) or nonresidents (Form 1040NR). 

The year 2020 and the Covid-19 pandemic has been far from typical.  Visitors may have been forced to remain in the US due to travel restrictions and/or other pandemic related lock downs.  Consequently, those caught up in these unplanned, extended US stays may unknowingly have triggered US tax filing thresholds.  As a result, they would be required to file a tax return and report certain financial information to the IRS.

Per US tax rules, a foreign national who is physically present in the US during the calendar year for 183 days or more is generally treated as a tax resident.  In addition, a foreign national who is not physically present for 183 days or more in the calendar year, but who had been present in the US in the prior two years, may nonetheless be treated as tax resident for the current year; known as the substantial presence test (SPT), this rule provides for a weighted, lookback period day count with tax residency triggered based on that formula. 

There are certain narrow exceptions regarding days that may be excluded from the SPT (Canada/Mexico commuters, in-transit stays of less than 24 hours, exempt individuals, medical condition that arose while in the US), i.e., days which would not be counted in determining if US tax residency has been triggered.  One in particular – the medical condition exception – has been expanded to cover cases surrounding the pandemic. 

The ‘Covid-19 Medical Condition Travel Exception’ found in IRS Revenue Procedure 2020-20 released earlier this year, provides rules related to this exception for foreign nationals, including that a single period of up to 60 calendar days of US presence, starting on or after February 1, 2020 and on or before April 1, 2020 (with the specific start date to be chosen by each individual) may be excluded for purposes of applying the SPT.  This is welcome relief from the IRS and would see the exception apply to any individual who intended to leave the US during that period but was unable to due to Covid-19 travel disruptions. 

Individuals who may have triggered US tax residency for calendar year 2020 due to Covid-19 travel disruptions may wish to explore whether they qualify for the Covid-19 medical condition exception.  Specific guidance has been established by the IRS on claiming this exception.  Please contact Reynolds & Rowella for more information.

This article has provided a general discussion of US tax rules related to US presence.  Readers should  discuss any US Visa matters and/or US immigration law questions with legal counsel.

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

6 Proactive Estate Planning Strategies

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Most peoplearen’t currently exposed to the federal estate tax – thanks to the generous unified federal estate and gift tax exemptions. However, there are still good reasons to review your estate plan and possibly update it to reflect the current federal estate and gift tax regime as well as life events. Plus, there’s always uncertainty about the future direction of the federal estate and gift tax rules.

As year-end approaches, here are some estate planning moves to consider.

1. Review the Basics

The Tax Cuts and Jobs Act (TCJA) made favorable changes to the federal estate and gift tax regime. For 2020, the unified federal estate and gift tax exemption is $11.58 million, or effectively $23.16 million for married couples.

For 2021, the exemption is scheduled to increase to $11.7 million, or effectively $23.4 million for married couples. In 2026, the exemption is set to fall to about $6 million, or $12 million for married couples, after inflation adjustments — unless Congress changes the law sooner.

2. Designate Your Beneficiaries

It’s important to periodically review your beneficiary designations, especially if you’ve experienced a major life event (such as marriage, divorce, or the birth or adoption of a child). This may seem like common sense, but failure to update beneficiary designations is a common oversight.

Remember: A will or living trust document does not override beneficiary designations for life insurance policies, retirement accounts and so forth. Your estate planning pro can provide a checklist of assets that need beneficiary designations.

3. Update Real Property Ownership

If you’re married and own property with you and your spouse named as joint tenants with right of survivorship (JTWROS), the surviving spouse will automatically take over sole ownership of the property when the other spouse dies.

On the other hand, if you own property with a nonspouse as JTWROS, the surviving joint tenant will automatically take over sole ownership when the other joint tenant dies. That’s great if it’s your intention and you’ve already set up JTWROS ownership. But if that’s what you intend, and you’ve not yet established JTWROS ownership, consult your legal advisor as soon as possible to get this done.

Important: Perhaps the biggest advantage of JTWROS ownership is that it avoids probate. Instead, the property automatically goes to the surviving joint tenant.

4. Establish (or Update) Your Will

If you die intestate (without a will), the laws of your state will determine the fate of your minor children and assets. Unless you like being at the mercy of your state, you need a written will to make your wishes known. The main purposes of the will are to name:

  • A guardian to care for your minor children (if any) until they reach adulthood, and
  • An executor, who will pay the estate’s taxes and any other bills and then deliver what’s left to your intended heirs and charitable beneficiaries.

5. Create (or Update) a Living Trust

or those with significant assets, a living trust can be an effective tool to help avoid probate. Here’s how it works: You establish the living trust and transfer legal ownership of assets for which you wish to avoid probate, such as your main home and your vacation property.

You should also have a so-called “pour-over will” drafted. That document stipulates that assets, which aren’t officially owned by the trust, still belong under its umbrella. Examples might include vehicles, valuable Persian rugs, coin collections and jewelry.

Important: If you set up a living trust, you must transfer legal ownership of the most important assets for which you wish to avoid probate (typically homes and other real property) to the trust in order to successfully avoid probate. Many people set up living trusts and then fail to follow through by transferring ownership. If so, the probate-avoidance advantage is lost unless your estate’s executor can argue that the problem is cured by your pour-over will.

6 . Set Up an Irrevocable Life Insurance Trust

Life insurance death benefits are generally free from federal income tax. However, the death benefit from any policy on your own life is included in your estate for federal estate tax purposes if you have so-called “incidents of ownership” in the policy. It makes no difference if all the insurance money goes straight to your designated beneficiaries.

It doesn’t take much to have incidents of ownership. For example, you have incidents of ownership if you have the power to:

  • Change beneficiaries,
  • Borrow against the policy,
  • Cancel the policy, or
  • Select benefit payment options.

This unfavorable life insurance ownership rule can cause unsuspecting individuals to be exposed to the federal estate tax.

Other Tax-Smart Planning Moves

Wealthy individuals with estates above the unified federal estate
and gift tax exemption should consider other options to lower their exposure to federal estate and gift taxes, including:

  • Annual gifts. The current annual federal gift tax exclusion is $15,000. Annual gifts help reduce the taxable value of your estate without reducing your unified federal estate and gift tax exemption.
  • College tuition or medical expense payments. You can pay unlimited amounts of college tuition and medical expenses (but not room-and-board expenses) without reducing your unified federal estate and gift tax exemption.
  • Gifts of appreciating assets. In 2020, you can give away up to $11.58 million worth of appreciating assets, such as stocks and real estate, without triggering federal gift tax (assuming you have never tapped into your unified federal estate and gift tax exemption in prior years).

Moving Target

Things change. Major life events could require changes in your estate plan. Plus, the federal and estate and gift tax rules, along with state death tax rules, have proven to be unpredictable. For these reasons, we encourage you to review your estate plan. If you wait, your current estate plan with all its flaws, or your completely missing estate plan, will be locked in when you die.

Contact Eric Miller, R+R’s tax and estate advisor, to help create a financial security plan to meet your goals, and provide tools and resources to build an estate plan that makes an impact well into the future.

About Reynolds + Rowella

Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.

where to find us and how to call us

90 Grove Street / Ridgefield, CT 06877 / Office: 203.438.0161 / Fax: 203.431.3570
51 Locust Avenue / New Canaan, CT 06840 / Office: 203.972.5191