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Tax Tips: Protecting Your Data

These days, you can do almost anything online, including filing taxes. That can sometimes mean being more vulnerable to security compromises, such as a breach of data or identity theft. Here are tips for keeping your data safe.

  • Always use security software with firewall and anti-virus protections. Make sure your security software is always on and set to automatically update. You may want to go so far as to encrypt sensitive files such as tax records you store on your computer.
  • Learn to recognize and avoid phishing emails, threatening calls, and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
  • Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Shop at reputable online retailers. Treat your personal information like you do your cash; don’t leave it lying around.

* 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[10]
[10] IRS.gov, May 12, 2020

Markets React to Positive Outlook- WEEKLY UPDATE – MAY 26, 2020

The Week on Wall Street
Upbeat comments by the Federal Reserve Chairman and more signs of an economic turnaround combined to help fuel a powerful rally in the stock market last week.

The Dow Jones Industrial Average rose 3.29%, while the Standard & Poor’s 500 advanced 3.20%. The Nasdaq Composite index climbed 3.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.87%.[1][2][3]

Stocks Cheer Fed Support
The markets surged higher to open the week, buoyed by a Sunday night “60 Minutes” interview with Fed Chair Jerome Powell, who said that the Federal Reserve would do everything necessary to support economic recovery. Rising oil prices and more states lifting restrictions added to the overall improving investor outlook.

After a day digesting those gains, stocks moved another leg higher on strong earnings from big retailers and growing optimism over the global economic recovery. Stocks drifted in the final two days of trading as investors worried about heightening tensions between the U.S. and China.

Different Views on the Economic Recovery
Treasury Secretary Steven Mnuchin and Fed Chair Powell testified last week before the Senate Banking Committee, providing Senators with two different views of the nation’s economic outlook.[4]

Secretary Mnuchin suggested a wait-and-see approach before moving ahead with additional fiscal measures. He wants to pause new spending in order to first assess the impact of the already-approved stimulus program. He believes that the economy will experience a “V-shaped” recovery.[5]

Fed Chair Powell, on the other hand, expressed worries that waiting too long for additional fiscal measures may hamper the fragile economic recovery. It was the third time in a week that the Fed Chair suggested more federal spending is needed to help the economic recovery.[6]

Final Thoughts
One of the challenges of assessing the U.S. economy using certain government reports, like the consumer price index or the employment report, is that they are considered “lag indicators.” Lag indicators provide good insight into where we’ve been, but are less helpful in looking at the current state of economic activity.

Looking at some “real-time” data can help investors better assess the here-and-now. For example, gasoline deliveries are trending higher, consumer confidence appears to have stabilized, and airlines are seeing more bookings. Even the supply of toilet paper seems less of a concern these days, with Google searches falling to near normal levels.[7][8]

[1] The Wall Street Journal, May 22, 2020
[2] The Wall Street Journal, May 22, 2020
[3] The Wall Street Journal, May 22, 2020
[4] The Wall Street Journal, May 20, 2020
[5] The Wall Street Journal, May 20, 2020
[6] The Wall Street Journal, May 20, 2020
[7] MarketWatch, May 20, 2020
[8] MarketWatch, May 20, 2020

Tax Tips: How to Amend Your Return

If you discover that you’ve made an error on your tax return, you may need to file an amended return. Though you don’t need to file if you’ve made a simple math error or left out forms (the IRS corrects for those automatically), you should file an amended return for any missed credits, deductions, filing status, or income.

  • Use Form 1040X to file an amended return.
  • You’ll need to use separate forms for each year that you need to amend.
  • If you use any other forms or need to submit new documentation, attach them to the 1040X form.
  • Pay any additional taxes you owe as soon as possible to avoid accruing additional interest and penalties.

* 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] IRS.gov, June 4, 2019

Powell Somber on Recovery – WEEKLY UPDATE – MAY 18, 2020

The Week on Wall Street
Stocks drifted lower last week, weighed down by Federal Reserve Chairman Jerome Powell’s unsettling comments on the economy and signs of renewed tensions with China.

The Dow Jones Industrial Average fell 2.65%, while the Standard & Poor’s 500 retreated 2.26%. The Nasdaq Composite Index slipped 1.17% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, slid 3.66%.[1][2][3]

Stocks Pull Back
Stocks moved lower throughout most of last week on worries that the emerging economic reopening might accelerate the spread of COVID-19. Comments by Fed Chair Powell added to the downside pressure when he expressed concern about the path ahead for the U.S. economy.

The stock market managed to find some firmer footing, posting a strong gain on Thursday. Stocks rallied again on Friday, overcoming headlines that suggested a souring relationship with China and a report that showed U.S. retail sales dropped 16.4% in April.[4]

Powell Speaks
Fed Chair Powell spoke last Wednesday and painted a somber economic outlook, remarking that “the path ahead is highly uncertain and subject to significant downside risks.” He urged the White House and Congress to pass additional financial relief to help the economic recovery, adding that there was no plan on the Fed’s part to cut the federal funds rate to below zero.[5]

Powell also referenced internal Fed research that found those least able to weather the current economic environment were most impacted, with nearly 40% of households making less than $40,000 per year having lost a job in March.[6]

[1] The Wall Street Journal, May 15, 2020
[2] The Wall Street Journal, May 15, 2020
[3] The Wall Street Journal, May 15, 2020
[4] CNBC.com, May 15, 2020
[5] The Wall Street Journal, May 13, 2020
[6] The Wall Street Journal, May 13, 2020

Tax Tips: Have You Heard About the Taxpayer Advocate Service?

The Taxpayer Advocate Service is an independent group within the IRS that works to protect taxpayers under the Taxpayer Bill of Rights. They also help taxpayers resolve issues and act as the taxpayer’s voice within the IRS. Here’s what you should know:

  • Advocates can help you resolve lingering issues with the IRS that you cannot resolve alone.
  • They work with individuals, businesses, and tax-exempt organizations at no charge.
  • You may be eligible for help if your IRS problem is causing financial stress or if you believe an IRS procedure is flawed.
  • You can find a Taxpayer Advocate through your local directory and at www.taxpayeradvocate.irs.gov.

* 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[11]
[11] taxpayeradvocate.irs.gov, May 8, 2020

Jobs Down, Stocks Up – WEEKLY UPDATE – MAY 11, 2020

The Week on Wall Street
Despite a historic downturn in employment, stocks managed to climb higher last week as investors were emboldened by the pace of economic re-openings, both here and abroad.

The Dow Jones Industrial Average gained 2.56%, while the Standard & Poor’s 500 advanced 3.50%. The Nasdaq Composite Index jumped 6.00% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 1.09%.[1][2][3]

Tech Stocks Power NASDAQ
Last week’s trading was driven by a crosscurrent of emotions – worries about weak corporate earnings pace of business re-openings as well as optimism over the pickup in economic activity and progress on developing a vaccine.

Stocks posted back-to-back daily gains to end the week despite troubling employment data. Perhaps the headline of the week was that the technology-heavy NASDAQ Composite Index moved into positive territory year-to-date.[4][5]

A “Silver Lining” in the Jobs Report?
Last week brought into stark focus the number of jobs lost since the start of the economic shutdown. Since mid-March, unemployment insurance claims have reached 33.5 million. The pace of newly unemployed has slowed down, however, with recent weeks at about half the rate at the peak in late March.[6][7]

April’s employment report, released on Friday, saw a spike to 14.7% in the unemployment rate. As severe as these numbers may be, 88% of April’s newly unemployed characterized their job loss as temporary rather than permanent, as opposed to 47% of the newly unemployed in March who said their job loss was temporary.[8][9]

[1] The Wall Street Journal, May 8, 2020
[2] The Wall Street Journal, May 8, 2020
[3] The Wall Street Journal, May 8, 2020
[4] The Wall Street Journal, May 8, 2020
[5] The Wall Street Journal, May 8, 2020
[6] CNBC, May 6, 2020
[7] CNBC, May 6, 2020
[8] The Wall Street Journal, May 8, 2020
[9] The Wall Street Journal, May 8, 2020

Tax Tips: Preparation is Key

With this year’s tax deadline moved to July 15th, you might be tempted to push your taxes to the back of your mind. Now is a good time, however, to set up a system that will keep your tax records safe and easy to find. Here’s how to make organizing your taxes even easier:

  • Speak to a professional about tax minimization strategies you can employ.
  • Already worried about next year’s tax burden? Adjust your withholding to avoid a big bill at tax time.
  • Take action when your life changes. Getting married or divorced, having a child, incorporating a business – these are all life changes that may affect your taxes. Speak to a professional about updating your tax information.
  • Keep all your tax documents organized in one place. Add files, documents, and receipts as they arrive.
  • Find a tax specialist. If you’re not currently working with a tax professional, now is a good time to interview one.

* 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] IRS.gov, December 16, 2019

Economic Normalization Near? – WEEKLY UPDATE – MAY 4, 2020

The Week on Wall Street
Stock prices ended the week slightly lower, despite news of positive results from a test trial of a COVID-19 drug treatment and several states easing their economic lockdowns.

The Dow Jones Industrial Average slipped 0.22%, while the Standard & Poor’s 500 lost 0.21%. The Nasdaq Composite Index dropped 0.34%. The MSCI EAFE Index, which tracks developed stock markets overseas, rose 4.34%.[1][2][3]

Light at the End of the Tunnel?
Investors were emboldened last week by two significant developments: a quickening in the pace of state re-openings and positive results from a clinical trial of pandemic treatment. These developments turned investor focus toward economic normalization and away from the economic destruction that has occurred.

Market optimism was also supported by earnings reports early in the week, which showed that some companies were navigating reasonably well through the crisis. But stocks retreated on Friday as traders reacted to mixed earnings from two tech titans. The two firms offered a reminder that even the strongest companies have not escaped the economic impact of the pandemic.

Worries over possible new China trade tariffs also weighed on stocks as the trading week came to a close.

Corporate Earnings
It was a busy week for corporate earnings reports. So far, the earnings season has been mixed; it has provided some clarity, though, about the impact of COVID-19 on businesses.

With 193 of S&P 500 companies reporting, 65% have checked in with results ahead of consensus Wall Street estimates. Among the better-performing sectors to date were Technology and Consumer Staples. Financials were among the laggards.[4][5][6]

Final Thought
Despite the continued shutdown of businesses nationwide, stocks staged a powerful rebound in April, leading some to wonder if Wall Street is disconnected from Main Street. But market watchers are quick to point out that Main Street may not be as disconnected as it appears. April’s rally was led by a group of very large companies, with over 75% of stocks in the S&P 500 trading below their 200-day moving average.[7]

[1] The Wall Street Journal, May 1, 2020
[2] The Wall Street Journal, May 1, 2020
[3] The Wall Street Journal, May 1, 2020
[4] NASDAQ, April 30, 2020
[5] NASDAQ, April 30, 2020
[6] NASDAQ, April 30, 2020
[7] Index Indicators, May 1, 2020

Tax Tips: Selling Your Home?

If you’re putting your home on the market, you may be able to manage taxes on some of your capital gains. Read on to see what the IRS regulations say.

If you show a capital gain on the sale of your home, you may be able to exclude all or a portion of the gain from your taxes if you have owned and used it as your primary residence for at least two out of the past five years.

Assuming you meet the criterion stated above, you may exclude up to $250,000 from your taxes if you’re a single filer (or up to $500,000 if you’re filing jointly). This¬ exclusion may be used no more than once every two years. (Please note that the Net Investment Income Tax will not apply to the excluded gain.)

Keep in mind that this tip is for informational purposes only. Be sure to consult your tax or accounting professional for more information about the possible tax treatments when selling a home.

Please be aware that if you claimed the first-time homebuyer credit when purchasing your home, special rules may apply to the sale. If you’d like to read more about tax rules when selling a home, you can check out Form 523 on IRS.gov.

* 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] IRS.gov, February 6, 2020

Markets React to Oil Prices – WEEKLY UPDATE – APRIL 27, 2020

The Week on Wall Street
Stock prices bounced around last week as investors reacted to wild swings in the price of oil and reports that called into question the efficacy of two potential virus treatments.

The Dow Jones Industrial Average retreated 1.93%, while the Standard & Poor’s 500 lost 1.32%. The Nasdaq Composite Index slipped 0.18%. The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.21%.[1][2][3]

Oil Wavers, Promising Virus Treatments Disappoint
Stocks opened the new week lower on the heels of a plunge in oil prices that saw the May oil futures contract fall into negative territory. While negative prices were largely reflective of technical issues associated with trading the contracts rather than the actual price of oil, the unprecedented move unsettled investors.

Stocks found some positive momentum as the week wore on, buoyed by corporate earnings reports that showed solid performance amid a challenging environment.

On two separate days, however, solid moves to the upside were derailed by disappointing news on promising COVID-19 treatments. One drug failed to produce positive results in its first trial, followed the next day by an FDA warning against taking chloroquine and hydroxychloroquine to treat COVID-19. Stocks managed to rally and trim the week’s losses during the market’s final hours on Friday.

The Economic Reopening Begins
States across the nation, including Georgia, Tennessee, South Carolina, and Texas, have begun the process of slowly reopening commerce, while Montana’s governor announced the first phase of restarting its economy.[4][5]

Each state is taking a different approach, potentially serving as a laboratory to help guide other states in their efforts to reopen businesses. From the market’s perspective, these early steps are not only hopeful signs that the journey to normalization may have begun, but they may provide important clues to how quickly business activity can rebound and the degree to which individuals resume social engagement – two important metrics that may influence the market in the weeks ahead.

[1] The Wall Street Journal, April 24, 2020. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
[2] The Wall Street Journal, April 24, 2020. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
[3] The Wall Street Journal, April 24, 2020
[4] US News & World Report, April 21, 2020
[5] US News & World Report, April 22, 2020