Author: 16783607

Tax Tips – Penalty Relief

If you make a mistake on your income taxes, you may receive a penalty from the IRS. In some circumstances, the IRS can provide relief from certain penalties, such as:
• Failing to file a tax return
• Failing to pay on time
• Failing to deposit certain taxes as required
Types of penalty relief offered by the IRS:
Reasonable Cause
If you can show that you tried to meet your obligations, but didn’t succeed in doing so, you may be forgiven. Some circumstances would be a house fire, a natural disaster, or a death in the family.
Administrative Waiver and First-Time Penalty Abatement
Relief may be possible if you:
• Didn’t previously have to file a return or had no penalties for the three years prior to the IRS assessed penalty.
• Filed all currently required returns or filed an extension of time to file.
• Paid or arranged to pay any tax due.
Statutory Exception
It’s possible you’ve received incorrect written advice from the IRS, which may result in an exception.
*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[9]

[9] www.irs.gov/newsroom/heres-what-taxpayers-should-know-about-penalty-relief

Big Gains for the Major Indices – WEEKLY UPDATE – JUNE 10, 2019

The Week on Wall Street
Stocks rallied during a week in which Wall Street was buffeted by headlines. The S&P 500 rose 4.41%. The Nasdaq Composite and Dow Jones Industrial Average respectively added 3.88% and 4.71%. The MSCI EAFE index of overseas stocks improved 2.02% across five days.[1][2]
Following a mixed Monday, the market jumped Tuesday after dovish remarks from Federal Reserve Chairman Jerome Powell. Breaking out of a 6-week losing streak, the Dow had its best week since November.[3]

Jerome Powell’s Comments
Speaking at the Federal Reserve Bank of Chicago, the Fed chair stated that central bank officials “will act as appropriate to sustain the expansion” of the economy in the face of “recent developments involving trade negotiations and other matters.”[4]

The next 2-day Fed policy meeting ends on June 19, with a press conference to follow.[5]

Hiring Cools
Employers added just 75,000 net new jobs to their payrolls in May, according to the Department of Labor. Economists polled by Reuters thought that the gain would be 185,000. The main unemployment rate held at 3.6% last month; the U-6 rate, which includes the underemployed and those who have stopped looking for work, fell 0.2% to 7.1%.[6]

To some analysts, the weak May hiring number hinted at private-sector concern over tariffs. To others, it simply signified the possibility that the economy may be at or near full employment.[7]

Final Thought
While breaking news does often merit investor attention, refrain from letting the headlines of the moment prompt you into emotional decisions. Brace yourself for further headlines that may drive market volatility because new developments are arriving quickly in the financial markets.
[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.cnbc.com/2019/06/07/us-futures-edge-higher-as-wall-street-rally-set-to-continue-jobs-data-in-focus.html

[4] www.cnbc.com/2019/06/04/powell-says-the-fed-will-act-as-appropriate-to-sustain-the-expansion.html

[5] www.federalreserve.gov/newsevents/calendar.htm

[6] www.reuters.com/article/us-usa-economy-instant/us-may-payrolls-rose-less-than-expected-idUSKCN1T81GG

[7] www.reuters.com/article/us-usa-economy-instant/us-may-payrolls-rose-less-than-expected-idUSKCN1T81GG

Tax Tips – Hobby or Business?

You may make jewelry, sell baked goods, or do some carpentry. When you start selling these goods, the IRS may need for you to report this income. So, how do you know when it remains a hobby or becomes a business? When your hobby becomes profitable, it may be a business. The IRS offers some factors for you to consider, including:
• Do you carry on the activity in a businesslike manner and maintain books and records?

• Does the time and effort you put into the activity indicate you intend to make it profitable?

• Do you depend on income from the activity for your livelihood?

• Are your losses due to circumstances beyond your control (or are normal in the startup phase)?

• Have you changed your methods of operation in an attempt to improve profitability?

• Do you or your advisors have the knowledge needed to carry on the activity as a successful business?

• Were you successful in making a profit in similar activities in the past?

*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[9]

[9] www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

May Ends with a Retreat – WEEKLY UPDATE – JUNE 3, 2019

The Week on Wall Street
Stocks struggled during a 4-day market week as the U.S.-China trade standoff continued to weigh on the minds of market participants. From the Friday, May 24 close to the Friday, May 31 close, the S&P 500 retreated 2.62%; the Nasdaq Composite, 2.41%; the Dow Jones Industrial Average, 3.01%. The MSCI EAFE index of overseas stocks dipped just 1.47% in a week.[1][2]
Trade is dominating the conversation in the financial markets, with developments steadily unfolding. Wednesday, China’s state media suggested that the country could soon cut off exports of rare earths to the U.S. Late Thursday, the Trump administration announced 5% tariffs on all imports from Mexico, effective June 10; these taxes could rise in the coming months.[3][4]

Meanwhile, on Main Street…
The Conference Board’s consumer confidence index soared to 134.1 in May, its highest reading since November; the consumer view of present economic conditions was the best since the end of 2000. Additionally, the University of Michigan’s consumer sentiment index ended May at 100.00, near the 15-year peak of 102.4 seen earlier in the month.[5][6]

Spring also brought a solid advance in consumer spending. April’s gain was 0.3%, according to the Bureau of Economic Analysis.[7]

Final Thought
While Wall Street remains cautious and concerned about trade, consumers appear to be upbeat, sensing widespread economic prosperity. This underscores the fact that the state of the economy does not necessarily correspond to the state of the stock market (and vice versa).

[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] apnews.com/af8ed9e6b95f4d14b32e6e0135949159

[4] www.foxbusiness.com/markets/us-stocks-wall-street-may-31-2019

[5] www.bloomberg.com/news/articles/2019-05-28/u-s-consumer-confidence-tops-forecasts-rises-to-six-month-high

[6] www.investing.com/economic-calendar

[7] www.investing.com/economic-calendar

TAX TIPS – Lock Down with a Stronger Password

One of the best ways to secure your personal financial data, like your Social Security number and banking and credit card information, is to create a strong password. Simple and predictable passwords can be cracked by cybercriminals, and your identity can be stolen. Check out these tips to lock down your privacy:
• Create a passphrase that you can picture in your head, making it hard for cybercriminals to guess, but easy for you to remember.

• Use a different password or passphrase for each account. If necessary, consider using a password manager for multiple accounts.

• Change all factory-set passwords. Factory-set passwords are a go-to for cybercriminals. Be sure to create strong passwords for wireless devices like printers and routers.

• Use multifactor authentication. When possible, use sites with multifactor authentication. This adds another layer of protection by requiring more than just your username and password to access your account. You’ll most likely be sent a unique security code to your cell phone, which you’ll need to enter when prompted, in order to access the site.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[7]

[7] www.irs.gov/newsroom/strong-passwords-help-protect-accounts-against-cybercriminals

Trade Tensions Linger – WEEKLY UPDATE – MAY 28, 2019

The Week on Wall Street
Stocks drifted lower last week as investors considered the possibility that the world’s two largest economies might take some time to resolve key trade issues.

The S&P 500 retreated 1.17%; the Nasdaq Composite, 2.29%; the Dow Jones Industrial Average, 0.69%. The concern over trade was felt elsewhere: the overseas developed markets benchmark, the MSCI EAFE, also lost 1.41% in five sessions.[1][2]
Market Waits for Further Trade Talk Cues
A compromise on tariffs between the U.S. and China did not seem forthcoming last week. Negotiations appeared stalled. Regardless, President Trump and Chinese President Xi are slated to meet at June’s G20 summit in Japan.

The Department of Commerce has effectively banned U.S. companies from doing business with Chinese tech giant Huawei, a major global player in 5G technology. Some analysts think China may respond with retaliatory measures.[3]

Leading Retailers Report Earnings
Big-box stores and other major retail chains announced first-quarter results last week. While some traditional department store chains disappointed (Kohl’s, JC Penney, Nordstrom), Macy’s recorded its sixth straight quarter of comparable sales growth. Target reported a 10.8% jump in earnings in the first quarter, Walmart announced Q1 gains in earnings and revenue, and Urban Outfitters saw record sales in Q1.[4][5]

Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance.

Final Thought
As new chapters in the U.S.-China trade drama continue to unfold, remember that your investment approach is built around your long-term objectives and risk tolerance. There will always be day-to-day price changes; there will always be breaking news alerts. The disciplined, long-term investor stays the course through the ups and downs.

[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.cnbc.com/2019/05/21/tech-stocks-are-feeling-the-pain-but-may-emerge-better-off-after-trade-war.html

[4] seekingalpha.com/article/4265991-q1-2019-u-s-retail-scorecard-may-21-update

[5] www.just-style.com/news/us-q1-in-brief-ross-stores-l-brands-target-corp_id135965.aspx

Tax Tips – Like, Hashtag, and Follow Tax Tips on Social Media

Social media is a great way to get tax tips and helpful news from the IRS. The agency uses a variety of social media platforms to share tips and information with taxpayers:
• YouTube: Get video tax tips in English, Spanish, and American Sign Language.

• Instagram: Follow the official IRS Instagram account @IRSNews for the latest tax scam information to help keep your personal data secure.

• Facebook: The IRS posts useful news and information for taxpayers and tax return preparers.

• Twitter: Follow @IRSnews for tax-related announcements and tips. @IRStaxpros tweets news and guidance for tax professionals. Tweets from @IRSenEspanol have the latest tax information in Spanish. @IRSTaxSecurity tweets tax scam alerts.

• LinkedIn: The IRS shares agency updates and job opportunities.
You can also access IRS information and your tax status with the IRS app, IRS2Go. Use the app to check your refund status, pay taxes, and find free tax help.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[8]

[8] www.irs.gov/newsroom/taxpayers-can-now-instantly-get-tax-info-on-instagram

Trade News Moves the Market – WEEKLY UPDATE – MAY 20, 2019

The Week on Wall Street

Stocks fell sharply at the start of last week over trade tensions, then recovered with help from strong earnings and indications that U.S.-China trade talks would continue. Even so, the major indices had a down week. The S&P 500 lost 0.76%, while the Nasdaq Composite fell 1.27%, and the Dow Jones Industrial Average declined 0.69%.

In contrast, the MSCI EAFE benchmark for international stocks rose 0.19%.[1][2]
The Latest Trade Developments
A broad selloff occurred Monday after China announced it would respond to increased U.S. tariffs by boosting its own import taxes on $60 billion of U.S. products. Friday morning, the Street breathed a sigh of relief as the Trump administration decided to delay 25% tariffs planned for imported cars and car parts; they had been slated to take effect on May 18. Just hours later, President Trump announced an end to U.S. tariffs on metals coming from Canada and Mexico.

At midweek, Secretary of the Treasury Steven Mnuchin told reporters that he expected the U.S. to resume trade negotiations with China in “the near future.”[3][4][5]

Earnings Season Winds Down
The first-quarter earnings scorecard is nearly complete, as more than 90% of S&P 500 companies have reported actual Q1 results.

Stock market analytics firm FactSet notes that 76% of these firms have beaten consensus earnings-per-share estimates. Overall earnings for S&P 500 components have surpassed expectations by 5.4%. Both these percentages are above 5-year averages.[6]

Final Thought
The market is quite sensitive to trade developments at the moment, and it is unclear whether this will be a short-term trend or a long-term influence on prices. While the U.S. prepares its next moves, China also is preparing its response to any new U.S. tariffs, which could include manipulating its currency.

[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.reuters.com/article/us-usa-trade-china/tough-talk-from-china-leaves-trade-talks-with-u-s-in-limbo-idUSKCN1SN207

[4] www.marketwatch.com/story/mnuchin-says-he-expects-to-go-to-beijing-to-continue-trade-talks-in-the-near-future-2019-05-15

[5] www.npr.org/2019/05/17/724357441/u-s-to-lift-tariffs-on-canadas-and-mexico-s-steel-and-aluminum

[6] insight.factset.com/market-punished-sp-500-companies-reporting-negative-eps-surprises-in-q1

Tax Tips – Tax Facts About Renting Out Residential Property

For individuals who rent out their residential property for income, there are different tax rules that apply based on whether they used the property as a residence at any time over the course of the year.

Residential rental property may include a single house, condominium, apartment, mobile home, vacation home, or similar property. These properties are often referred to as dwellings. Taxpayers renting the property can use more than one dwelling as a residence during the year. Using a dwelling for personal purposes for more than the greater of 14 days or 10 percent of the total days rented to others at a fair rental value is considered a residence. Personal use includes:

• Any person who owns an interest in the property or a family member of such person

• Anyone who has an arrangement that lets the owner use some other dwelling

• Anyone using the property at less than fair rental value
Personal use does not include days for repair and maintenance if the work is being done on a largely full-time basis.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[7]

[7] www.irs.gov/newsroom/know-the-tax-facts-about-renting-out-residential-property

Higher Tariffs Take Effect – WEEKLY UPDATE – MAY 13, 2019

The Week on Wall Street
As we noted recently, Wall Street has a wandering eye. Last week, it focused on the new tariff threats in the ongoing U.S.-China trade dispute. Stocks fell across five trading sessions: the Dow Jones Industrial Average lost 2.12%, the S&P 500, 2.18%; the Nasdaq Composite, 3.03%. International stocks also fell: the MSCI EAFE index declined 3.06%.
Earnings and big-name initial public offerings mattered little last week. Traders were more concerned about how consumers and corporations might be affected by higher import taxes in future quarters.[1][2]
Tariffs Increase
At 12:01 a.m. Friday, duties on $200 billion worth of Chinese products coming to the U.S. rose from 10% to 25%. Just days earlier, President Trump had tweeted that the U.S. might also tax another $325 billion of Chinese imports, mainly consumer goods.

While the proposed new taxes might take months to implement, institutional investors reacted negatively to this information, perceiving that trade talks were stalled.[3][4]

Final Thought
A few weeks ago, market watchers noted the huge number of initial public offerings anticipated for 2019. One well-known tech firm completed its IPO on Friday, and the wave of tech IPOs is still building. According to research firm CB Insights, the average stock market valuation of the venture-capital-backed tech companies going public this year is $9.6 billion.[5]

1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.cnn.com/2019/05/10/business/china-us-tariffs-trade/index.html

[4] www.cnbc.com/2019/05/07/if-trump-slaps-china-with-all-the-tariffs-threatened-it-could-be-the-us-consumer-that-pays.html

[5] www.nytimes.com/interactive/2019/05/09/business/dealbook/tech-ipos-uber.html