For Gig Workers and Business Owners, Taxes Are Even Trickier Now

The revamped credit “is a better program — there’s more money, and it’s available to more employers,” said Shelly Abril, the head of tax compliance at Gusto, a payroll services provider. “But with that comes all this extra complexity.”

Devon Lind plans to seek retroactive 2020 credits for his workers at Blender, a collection of businesses in Spokane, Wash. Blender’s two core businesses — Photoboxx, which sells photo printing and display technology, and Smash, a mobile “rage room” where people can destroy plates — both depend on events, and sales plunged last year. The company had nine employees before the pandemic. It laid off five.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

Because Blender took a Paycheck Protection Program loan, it was initially ineligible for the retention credit, but Mr. Lind now plans to seek it for two quarters last year. The credit “is really going to help us continue to retain employees as we’re gaining back business,” he said.

But extracting the most money allowed from the credit is complicated because of the way it interacts with P.P.P. proceeds — and the Internal Revenue Service hasn’t yet provided detailed guidance.

“There’s just tons of nuance in the credit,” said Andre Shevchuck, a partner at the accounting firm BPM. “We have instructed a lot of clients to first check in with their payroll provider to see how the rubber meets the road, and it may also make sense for businesses to talk to a C.P.A or a lawyer.”

Self-employed workers are normally not eligible for unemployment compensation, but the CARES Act extended benefits to them. Ms. Holcomb filed for unemployment when her contract job temporarily eliminated her hours.

Some who collected the money are in for a tax-time shock, though: The payments are taxed as income. States are supposed to offer recipients the option of having federal taxes withheld, but in their scramble to deal with a deluge of claims, some states didn’t do it — and many people, faced with urgent bills and a reduced income, declined the option. Researchers at the Century Foundation estimate that fewer than 40 percent of unemployment payments last year had taxes withheld.

View Source

It May Be Time to Start Worrying About the Estate Tax

Elimination of the step-up rules could capture billions in taxes from the rich but hurt some people who do not have enormous wealth. Consider a hypothetical couple who bought their home 40 years ago for, say, $75,000, paid the mortgage, maintained the yard, made some upgrades and now find themselves with a house worth $300,000 or more. For many families, a house like that forms the basis of a modest estate to pass to heirs. Now, if heirs ever sell that house, they will be responsible only for gains above $300,000; if the step-up in basis were eliminated, they would owe taxes on any amount above the original $75,000.

The loss of a step-up in basis at death would change the calculus for real estate and any other highly appreciated asset. (Think of Apple stock bought in the 1980s, or Bitcoin from 10 years ago.)

“Most of America has their wealth concentrated in their home,” said Chris Bixby, senior wealth adviser at Mariner Wealth Advisors. “That would be subject to the step-up. I’m talking to people about gifting the house earlier to get it into their heir’s name, so the appreciation happens in their name, not yours.”

That may be a step too far for many people, who will want to retain ownership of their home.

There is also a broader equity issue.

Elimination of the step-up in basis could make it harder to bridge the racial wealth gap, said Calvin Williams Jr., chief executive and founder of Freeman Capital, a wealth management firm. He noted that the Brookings Institution has found that Black families, on average, have about one-tenth the wealth of white families — $17,150 versus $171,000. In addition, Brookings estimates that only 10 percent of Black families inherit any money, about $100,000 on average, compared with about 30 percent of white families, who receive about $200,000.

Elimination of the step-up rule would make it more difficult for Black families to pass on whatever wealth they have been able to accumulate, he said. “The fact that the inheritance gap has continued to grow, even as Black income is continuing to grow, shows just how much work needs to be done to close that gap,” he said.

It might be more equitable to create a cap on the step-up in basis that would exempt people below a certain amount of wealth, he said: A $500,000 exemption would provide relief to many middle-class families. This would be similar in spirit to another proposal under consideration by the Biden administration, an increase in capital gains taxes for people earning more than $1 million a year.

View Source

The Tax Headaches of Working Remotely

New Jersey, however, has said it will give its newly telecommuting residents a credit for those New York taxes for 2020, even though it is entitled to the revenue because the taxpayers are now working within its borders, Mr. Walczak said. So residents won’t, for now, have to worry about double taxation. But New Jersey estimates that it is forgoing more than $1 billion in revenue as a result — suggesting that the practice is unlikely to be sustainable in the long term, Mr. Walczak said.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

The practice of states reaching outside their borders to tax telecommuters was an issue even before the coronavirus showed up, and it is getting more attention because of a spat between New Hampshire and Massachusetts. Massachusetts said last year that it would tax the income of out-of-state residents who had worked in the state but were telecommuting during the pandemic. This miffed neighboring New Hampshire, which has thousands of residents who commute to work in Boston and other cities in Massachusetts. In October, it filed a lawsuit asking the U.S. Supreme Court to hear its complaint. (More than a dozen other states — including New Jersey — have filed briefs urging the court to consider the case.)

The workers in New Hampshire aren’t being double taxed because New Hampshire is one of nine states that have no state income tax. But New Hampshire officials object to residents being taxed by another state for work done inside its borders. (Massachusetts said in a filing in response to the suit that the policy maintains the prepandemic “status quo.”)

As remote work could remain popular even after the pandemic, federal action may be needed to make state income tax rules for telecommuting more uniform, tax experts say. A group called the Mobile Workforce Coalition says it is building bipartisan support for reform.

“Telecommuting,” Mr. Sobel said, “is going to become the norm.”

So if you worked in a state other than your usual one in 2020, how should you approach tax season?

First, make a list of any states where you worked remotely, even if it was for a brief period of time, accountants suggest. If you didn’t keep close track, try to approximate the number of days worked in each state. State laws vary, but typically income is taxed once you reach a threshold, like the amount of money earned, the number of days you worked in the state or a combination of the two. About half the states start the clock at just one day, while others use 30 or 60 days.

These sorts of rules generally apply not just to employees but also to freelancers, said Dina Pyron, global leader of the mobile tax preparation app EY TaxChat. “It doesn’t matter if you are an employee or a contractor.”

View Source

Jeffrey Epstein’s Manhattan Mansion Sold for $51 Million

Jeffrey Epstein’s Manhattan mansion has been sold to an unidentified buyer for about $51 million, which will go to a fund providing restitution for the disgraced financier’s sexual abuse victims.

A lawyer for Mr. Epstein’s estate said the seven-story mansion on East 71st Street was sold earlier this week — although for considerably less than the initial $88 million asking price.

The sale was completed after a judge in the U.S. Virgin Islands rejected an attempt by the territory’s attorney general to freeze the sale of any further asset by his estate, which is now worth about $240 million. Once valued at nearly $600 million, the estate has been paying out expenses including taxes and contributions to the restitution fund, which has distributed about $55 million to dozens of Mr. Epstein’s accusers.

The attorney general, Denise George, requested the asset freeze after the estate said a cash crunch was preventing it from providing new money to the restitution fund. The judge overseeing the administration of Mr. Epstein’s estate ruled that Ms. George did not have legal standing to request the asset freeze.

A deed for the sale has yet to be recorded, but Daniel Weiner, one of the estate’s lawyers, said in an email that funds from the sale were being transferred to the compensation program so that it could “resume issuing new claims determinations.”

Several other major transactions loom, including the sales of Mr. Epstein’s homes in Palm Beach, Fla.; Paris; and New Mexico, and the two private islands he owned in the Virgin Islands. The sale of the islands, however, will not happen anytime soon: Ms. George’s office has placed a lien on them as part of the civil racketeering lawsuit she filed last year against Mr. Epstein’s estate.

Mr. Epstein killed himself while in federal custody in August 2019, a month after his arrest on sex trafficking charges. To date, about 150 women — most of whom claim they were sexually abused by Mr. Epstein as teenagers — have registered with the restitution fund to submit claims.

View Source

Coupang, South Korea’s Answer to Amazon, Debuts in I.P.O.

SEOUL, South Korea — The small white delivery trucks zip down streets all over South Korea. The uniformed workers send photos of safely delivered packages to impatient customers. Workers can move so fast, their employer promises, that it calls the service “rocket delivery.”

The trucks and the operation belong to Coupang, a start-up founded by a Harvard Business School dropout that has shaken up shopping in South Korea, an industry long dominated by huge, button-down conglomerates. In a country where people are obsessed with “ppalli ppalli,” or getting things done quickly, Coupang has become a household name by offering “next-day” and even “same-day” and “dawn” delivery of groceries and millions of other items at no extra charge.

The company, which is sometimes called the Amazon of South Korea, is set to get a big endorsement on Thursday from Wall Street. Its shares are expected to begin trading in an initial public offering that will raise $4.2 billion and value the company at about $60 billion, the second-largest American tally for an Asian company after Alibaba Group of China in 2014. On Wednesday its shares were priced at $35, according to a person close to the company.

Coupang may need the money. South Korea’s big conglomerates, called chaebol, and others are building their own delivery networks as Coupang plans its expansion. It faces other issues, too, such as growing concerns about working conditions after the death of several Coupang warehouse and delivery workers that some relatives and labor activists blamed on overwork and poor labor practices.

likes to say, “Our mission is to create a world where customers wonder ‘How did I ever live without Coupang?’”

an e-commerce giant.

As competition heats up, superfast ​delivery is quickly becoming the new norm, weakening the novelty of Coupang’s “rocket delivery” service.

a statement.

And it continues to pitch itself as an essential service for busy South Koreans.

In a letter to potential investors, Mr. Kim put forward an example of a quintessential Coupang shopper: a working mother who, late at night, realizes she has forgotten to go shopping, and then places an order online through Coupang.

“When she opens her eyes, it’s like Christmas morning,” wrote Mr. Kim. “The order is waiting at her front door.”

View Source

Biden Plans Messaging Blitz to Sell Economic Aid Plan

Still, Biden administration officials are mindful that political opposition could easily fester and grow if they do not clearly explain the contents — and direct benefits — of a bill that will be the second-largest economic aid package in American history, trailing only the initial bill that lawmakers approved under Mr. Trump last year as the worsening pandemic pushed the nation into recession.

Frequently Asked Questions About the New Stimulus Package

The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

Republicans continued to attack the bill on the House floor on Wednesday, casting it as overly expensive, ineffectively targeted and bloated with longstanding liberal priorities unrelated to the pandemic.

“Because Democrats chose to prioritize their political ambitions instead of the working class,” Representative Jason Smith of Missouri, the top Republican on the Budget Committee, said in a news release, “they just passed the wrong plan, at the wrong time, for all the wrong reasons.”

Senator Sherrod Brown of Ohio, one of the few Democrats in the chamber to represent a state Mr. Biden lost to Mr. Trump in 2020, called the Republican attacks “lies” and said they showed why Democrats needed to remind voters of the benefits to people and businesses included in the bill.

“You’ve got to sell it, because they’re going to lie about everything,” Mr. Brown said. “The sale is an easy sell, but you need to continue to remind” voters about the contents of the package, he said.

With that in mind, Mr. Biden is scheduled to follow his speech on Thursday with travel to states led by both Democratic and Republican governors in the coming weeks to begin the sales pitch. Among the options being considered, if they can be done safely during the pandemic, are town-hall-style events that allow the president to directly take questions from people.

The main message, according to Jen Psaki, the White House press secretary, will be an echo of one of Mr. Biden’s chief campaign promises: “Help is on the way.”

View Source

Inflation Fear Lurks, Even as Officials Say Not to Worry

While the Biden administration’s ambitious effort to salve the pandemic’s deep economic wounds made its way through Congress, proponents insisted that funneling $1.9 trillion to American households and businesses wouldn’t unshackle a long-vanquished monster: inflation.

Officials at the Federal Reserve, responsible for balancing the job needs of Americans with price pressures that could erode their buying power, have said there is little cause for worry.

Yet as the legislation moved toward the finish line, inflation prospects increasingly influenced political commentary and Wall Street trading.

The worries reflect expectations of a rapid economic expansion as businesses reopen and the pandemic recedes. Millions are still unemployed, and layoffs remain high. But for workers with secure jobs, higher spending seems almost certain in the months ahead as vaccinations prompt Americans to get out and about, deploying savings built up over the last year.

said in an interview with Bloomberg Television last week.

In addition to the $1.9 trillion about to pour forth, Mr. Dimon said, $1 trillion in savings that piled up during the pandemic remain unspent.

The inflation fixation has been one driver behind a sharp sell-off in government bonds since the start of the year, pairing with a stronger growth outlook to push yields on 10-year notes up to about 1.5 percent, from below 1 percent. Bonds, like stocks, tend to lose value when inflation expectations grow, eroding asset values.

“I would not buy 10-year Treasurys,” Mr. Dimon said.

The volatile bond trading prompted several unnerving days on Wall Street last week. High-flying tech stocks — previously seen as a haven for those chasing market-beating yields — were particularly upended, though broad share indexes remain near record highs.

“I would suspect there’s a pretty good chance you’re going to see rates going up,” Mr. Dimon said. “And people are starting to worry about that.”

Mr. Powell said this month, making it clear that he expected the coming increase to be transitory.

The Fed earned an inflation-fighting reputation in the 1970s and 1980s, when it eventually contained runaway prices with double-digit interest rates that caused a recession. But price gains have been slow for decades, and Mr. Powell and his colleagues have been working to ensure that consumers and businesses don’t start to expect ever-lower inflation.

Healthy economies tend to have gentle price increases, which give businesses room to raise wages and leave the central bank with more room to cut interest rates during times of trouble. If inflation drops too low, it risks price declines that are especially painful for debtors, whose debts stay the same even as prices and wages fall.

Fed officials revised their framework for setting monetary policy last summer, saying that instead of shooting exactly for 2 percent inflation, they would aim for 2 percent on average — welcoming inflation that runs faster some of the time.

Inflation is expected to increase in the coming months as prices are measured against weak readings from last year. Analysts surveyed by Bloomberg expect the Consumer Price Index to hit an annual rate of 2.9 percent from April through June, easing to 2.5 percent in the three months after that before easing gradually to year-over-year gains of 2.2 percent in 2022, based on the median projection.

the index rose 0.1 percent.

Gasoline prices alone were up 6.4 percent in February. But over all, the data matched projections, suggesting that inflation remains under control, despite a recent rise in prices for commodities like oil and copper. Stock markets rose on the news, with the Dow Jones industrial average reaching a new high.

“Outside of another buoyant advance in energy prices in February, consumer price inflation remains very tame,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.

The inflation concerns among some investors are a turnaround from the aftermath of the 2007-9 recession, which was followed by a decade of frustratingly slow growth in the United States and Europe. For much of that time, deflation, or falling prices, was a leading cause of anxiety among investors and economic experts.

Frequently Asked Questions About the New Stimulus Package

The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

Now there is a belief that economic growth will ramp up at least temporarily, thanks to relief from Capitol Hill and increased vaccinations across the country.

The about-face was noted Wednesday by the economist Bernard Baumohl in a letter to clients. “If you suddenly feel the ground shaking beneath you, it’s not because an earthquake struck,” he wrote. “What you’re experiencing is a wild stampede of Wall Street bulls trampling over their previous softer economic forecasts and now charging ahead with near frothy upward revisions to G.D.P. growth and inflation projections for 2021.”

he said this month. “When they arrive, we will consider raising interest rates. We’re not intending to raise interest rates until we see those conditions fulfilled.”

Fed officials have been less concrete about what might prod them into slowing their vast bond purchases, which they have been using to make many types of borrowing cheaper and bolster demand. Officials have said they would like to see “substantial” progress before tapering off their buying, and have repeatedly said they will signal any change far in advance.

The Fed will meet in Washington next week and release a fresh set of policymakers’ economic projections next Wednesday. Although the Fed looks at the Consumer Price Index, it bases its policy on a different gauge of price trends, which tends to run slightly lower.

“It is possible that participants will project higher 2021 inflation, especially if the Fed staff forecast incorporates policy effects on inflation or a reopening demand surge in select categories,” Goldman Sachs economists wrote last week. “Signaling awareness of these transient boosts to inflation in advance might make it easier for Fed officials to credibly downplay them later.”

The Goldman analysts expect the Fed’s projections to suggest that it might make one rate increase in 2023. Previously, Fed officials had not penciled in any rate increases through the end of that year.

Over the long term, inflation can be a concern because it hurts the value of many financial assets, especially stocks and bonds. It makes everything from milk and bread to gasoline more expensive for consumers, leaving them unable to keep up if salaries stall. And once inflation becomes entrenched, it can be hard to subdue.

But most mainstream economists doubt that a sustained bout of troublesome inflation is on its way.

“The inflation narrative has switched to concerns about rising prices,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “For the Fed, price response to the economy reopening is seen as transitory and is unlikely to cause too much angst, given inflation pressures are not expected to be sustained.”

And Mr. Dimon, the JPMorgan Chase chief, signaled that inflation fears needed to be put in perspective. “I would put that on the things to worry about,” he said, but “I wouldn’t worry too much about it” — certainly not compared with taming the pandemic itself.

View Source

Looming Deadline and Last-Minute Changes Hinder Small-Business Relief

The latest revision of the Paycheck Protection Program appeared to be a victory for the most vulnerable small businesses, offering more generous relief to companies like solo ventures that were eligible for only tiny loans — or none at all.

If only they could take advantage of the changes.

President Biden announced an abrupt overhaul two weeks ago to funnel more money to very small companies, some of which qualified for loans as small as $1 under the old guidelines. But the Small Business Administration updated its systems only on Friday, and with just three weeks before the program is set to expire, some lenders say there just isn’t enough time to adapt to the changes.

The result has been gridlock and uncertainty that have left tens of thousands of self-employed people frantic to find lenders willing to issue the more generous loans before the program ends on March 31.

JPMorgan Chase, the program’s largest lender this year in terms of dollars disbursed, doesn’t plan to act on the new loan formula before it stops accepting applications on March 19. Bank of America, the second-biggest lender, opted against updating its loan application and said it would contact self-employed applicants to manually sort out their applications — but wouldn’t accept new ones after 5 p.m. today.

forums like Reddit to hash out their options and to swap tips on which lenders are using the new formula and which ones are not. “Desperate for Guidance!” one typical post reads. “Reaching out to see if anyone can help me figure out this absolutely monstrous failure.”

The disarray is compounded by the other major change Mr. Biden announced last month: a 14-day window, which ends today, during which the Small Business Administration would accept applications only from companies with fewer than 20 employees. The intent was to get aid to needy businesses, especially those run by women and minorities. The vast majority of those businesses are sole proprietorships that would benefit from the new formula, and many rushed to take advantage of the priority period.

But the nearly two-week delay for the more generous rules put lenders in a tough spot: They could pause applications from sole proprietors, creating a backlog they would later have to unravel, or they could approve applications under the previous formula, which would result in much smaller loans for their customers.

Biz2Credit, which has made more loans this year than any other lender, temporarily stopped accepting applications while it worked to adjust to the new rules. It plans to resume this week, said Rohit Arora, its chief executive.

Other large lenders — including Cross River Bank and Customers Bank, which round out the program’s top five lenders — said they had begun processing loans on Monday using the new formula.

Hundreds of thousands of borrowers who have already received their loans have no way to reapply under the more generous rules, infuriating business owners like Bryan Cordova, who finalized a loan for his printing business in Round Rock, Texas, just days before Mr. Biden announced the changes.

 stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

Even before the changes were announced last month, lenders were trying to unravel extensive errors and data verification problems that had stalled tens of thousands of applications. It would take an act of Congress to push back the deadline, and lenders and trade groups are calling, with increasing urgency, for an extension.

The American Institute of Certified Public Accountants called the March 31 deadline “unrealistic,” and 10 banking groups sent a letter to lawmakers last week urging Congress to give them more time.

The Biden administration has not sought an extension, but key congressional leaders have said they are willing to pass legislation that would push back the deadline. The House Small Business Committee is scheduled to hold a hearing on Wednesday about the status of the Paycheck Protection Program.

“It’s clear that small businesses are still feeling the effects of the Covid crisis and need P.P.P.’s support,” said Representative Nydia M. Velázquez, a New York Democrat who leads the House committee. She said Congress must “ensure this critical lifeline isn’t abruptly pulled away from small businesses.”

Senator Benjamin L. Cardin, Democrat of Maryland and the leader of his chamber’s small business committee, “would be open to a bipartisan agreement” to extend the deadline, according to a spokesman, Fabion Seaton.

have been waiting for months for the federal government to open a generous $15 billion grant fund for their industry that was authorized in December. But the money will not start flowing until April at the earliest, according to Mr. Coleman, the Small Business Administration spokesman.

Businesses have been barred from taking one of those grants if they also took a Paycheck Protection Program loan this year, but the $1.9 trillion relief bill that passed the Senate on Saturday would remove that restriction and count the loan toward any grant the business receives later. The bill is now before the House and is likely to be finalized by Mr. Biden this week.

That change would allow venues like the AT&T Performing Arts Center in Dallas to get help faster. “We were thrilled to see that come through,” said Debbie Storey, the center’s chief executive.

Ms. Storey’s organization made the “painful” choice last week to forgo the grant and seek a Paycheck Protection Program loan instead, she said. Her lender had urged the center to apply this week or risk missing the deadline.

“We couldn’t afford to miss that window,” she said.

View Source