Posts made in September 2018

Tax Tips – Monitor Your Tax Information Online*

Looking to monitor your federal tax information? The IRS provides taxpayers with secure access to their personal tax information at https://www.irs.gov/account.
You may view:

  • The amount of taxes you owe
  • Your payment history
  • Your tax history
  • Information about your most recent tax return

You're able to view the same information that is available to IRS representatives. If you owe taxes, you may use bank account access information or a debit card to make payments. You may also apply to pay over time by applying for a payment plan. Go to https://www.irs.gov/payments/online-payment-agreement-application.

The account balance information on tax payments updates once a day. Payments usually take up to three weeks to appear in payment history.

Other details may apply, and you can find more information on the IRS website.

* 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 advisor.

Tip adapted from IRS.gov[12]

[12]www.irs.gov/newsroom/taxpayers-can-monitor-their-irs-information-online

New Records and Changes – WEEKLY UPDATE – SEPTEMBER 24, 2018

Last week brought new tariffs and data, and another look at changes coming to equity classifications. Overall, the S&P 500 gained 0.85% and the Dow was up 2.25%, while the NASDAQ dropped 0.29%.[1] International stocks in the MSCI EAFE had sizable growth, posting a 2.89% increase.[2]

A Look Back: Last Week's Tariffs and Mixed Housing Data

For months, fears of a global trade war have dominated headlines. Last week, China and the U.S. launched new tariffs on each other's products, but the latest round of this trade skirmish had an interesting effect. Rather than feeling concerned, both analysts and investors interpreted the tariffs to be lower than what they expected. As concerns about the global trade war calmed, both the S&P 500 and Dow reached new record highs.[3]

In addition, we received some important economic information last week, including key updates on the housing industry. While the economy and markets are performing well, recent data indicates that the housing market isn't keeping up. The data revealed:

  • The Housing Market Index remained at the same relatively low point it reached in August.[4]
  • Housing starts jumped, but new building permits declined.[5]
  • Existing home sales were flat, marking the first time in 4 months that they didn't decline.[6]

A Look Ahead: This Week's Global Industry Classification Standard (GICS) Update 

Since 1999, the GICS has been classifying stocks based on their sectors and industries, including most of the world's equities.[7]

As of Monday, the S&P 500 has adjusted its sectors to change telecom into communications services and moved several big stocks into new classifications. This move is the largest GICS change since 1999 and is partly an attempt to reduce tech stocks' weight in the markets. As technology companies have grown in the past few years, they have come to represent 26% of the S&P 500. Some experts believe that is an unbalanced level and allows tech to have too much influence on the markets.[8]

The GICS reclassification affects many notable companies, including Facebook, Netflix, Alphabet, and Twitter. They all now join the new communications services sector.[9] This sector name change may not actually alter the sway that technology companies have on the markets, but it will likely have other effects on investors. In the near term, volatility may increase as stocks move to new industries and fund managers adjust their holdings.[10]

Many factors determine the reclassification's specific effects on individual investors, so if you have questions about your portfolio, please let us know. We want to ensure you understand what you hold - and why - and how we are helping you adapt to both short- and long-term changes. If you would like guidance on any of the details we've shared today, we are always ready to help.

[1] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[2] www.msci.com/end-of-day-data-search

[3] www.cnbc.com/2018/09/21/wall-street-turns-to-economic-data-and-trade-spat-news.html

[4] wsj-us.econoday.com/byshoweventfull.asp?fid=496710&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[5] wsj-us.econoday.com/byshoweventfull.asp?fid=485719&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[6] www.ftportfolios.com/Commentary/EconomicResearch/2018/9/20/existing-home-sales-were-unchanged-in-august

[7] www.investopedia.com/terms/g/gics.asp

[8] www.cnbc.com/2018/09/21/on-monday-google-facebook-and-netflix-will-make-a-big-market-move.html

[9] www.reuters.com/article/us-usa-stocks-gics-explainer/what-sector-overhaul-means-for-tech-stocks-wall-street-idUSKCN1LZ2JT

[10] www.reuters.com/article/us-usa-stocks-gics-explainer/what-sector-overhaul-means-for-tech-stocks-wall-street-idUSKCN1LZ2JT

 

Tax Tips – IRS Provides Businesses with Resources on Tax Reform*

Running a business in a complicated marketplace can pose quite a few challenges. In a constantly changing political climate, prospering-or even surviving-can get even more confounding.

Add into the mix changes in tax law, and you start to wonder where you can go to find some sound advice. How about the source?

To help businesses, the IRS makes available these resources:

• The Tax Reform page provides highlights and updates on changes in tax laws. Go to https://www.irs.gov/tax-reform.
• The agency regularly posts updates to its fact sheets. Go to https://www.irs.gov/newsroom/fact-sheets.
• The IRS provides publications on the new tax law, the Tax Cuts and Jobs Act of 2017. Go to https://www.irs.gov/publications/p15.
• The IRS has a section for frequently asked questions: https://www.irs.gov/newsroom/tax-reform-resources.
• Business owners may subscribe to receive emailed tax reform tips: https://www.irs.gov/newsroom/subscribe-to-irs-tax-tips and https://www.irs.gov/businesses/small-businesses-self-employed/subscribe-to-e-news-for-small-businesses.

Other details may apply, and you can find more information on the IRS website.

* 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 advisor.
Tip adapted from IRS.gov[11]

[11] www.irs.gov/newsroom/business-owners-can-visit-irsgov-for-resources-to-help-understand-tax-reform

Stocks Up as Milestone Passes – WEEKLY UPDATE – SEPTEMBER 17, 2018

Last week, the East Coast prepared for Hurricane Florence, which roared through the Carolinas and Georgia. As investors kept their eyes on the weather and its potential for destruction, estimates emerged of up to $27 billion in hurricane damage. This potential for damage contributed to insurance companies in the S&P 500 declining last week.[1] While the hurricane likely won't have a large effect on our economy, its destruction could influence data for months to come.[2]

Meanwhile, last week brought another milestone in our economy: the 10th anniversary of Lehman Brothers' bankruptcy.

For 158 years, the Wall Street firm weathered the markets' changes. By 2008, however, various challenges, including excessive risk-taking, led to its demise. The firm's unexpected bankruptcy announcement shocked investors and triggered market panic, leading what was a simmering financial crisis to become the Great Recession. A decade later, the markets are on more solid ground, and banks hold more capital and have stronger regulation. While some professionals or analysts warn of a potential looming recession, current market performance and economic data indicate just how far we've come.[3]

Let's examine last week's data to understand examples of where we are today: Domestic indexes rebounded to post healthy gains for the week, with the S&P 500 adding 1.16%, the Dow gaining 0.92%, and the NASDAQ increasing 1.36%.[4] International stocks in the MSCI EAFE were also up, gaining 1.76%.[5]

In addition, we received the following updates, which support a picture of a more robust economy:

• Consumer sentiment jumped: The September reading was at its 2nd-highest point since 2004. The data reveals that consumers expect the economy to grow and create more jobs.[6]
• Retail sales stalled but are primed for growth: Spending barely increased in August, after months of strong growth. However, analysts believe this data is "a blip" rather than an emerging trend, as tax
cuts and a healthy labor market leave Americans with money in their pockets.[7]
• Industrial production rose for the 3rd-straight month: Auto manufacturing contributed to higher than expected industrial production in August. For now, trade tensions have not yet hurt this sector.[8]

These data reports may not show blockbuster growth, but together they indicate our economy is doing well. In fact, they were strong enough to lead many economists and analysts to increase their projections of how fast the economy expanded during the 3rd quarter.[9]

Looking back, the markets have come far from where they were 10 years ago. But risks will always remain, as Hurricane Florence and Lehman Brothers remind us. Today and in the future, we are here to help you understand where you are and plan for whatever may lie ahead.

Also, for those affected by the hurricane, we're ready to support your recovery and provide the financial guidance you seek.

 

[1] fortune.com/2018/09/11/hurricane-florence-stock-market/

[2] www.bloomberg.com/news/articles/2018-09-12/florence-to-batter-u-s-data-but-harm-to-economy-likely-small

[3] money.cnn.com/2018/09/14/investing/lehman-brothers-2008-crisis/index.html

[4] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[5] www.msci.com/end-of-day-data-search

[6] www.cnbc.com/2018/09/14/september-consumer-sentiment.html

[7] www.marketwatch.com/story/retail-sales-grow-by-smallest-amount-in-six-months-but-spending-primed-to-rebound-2018-09-14

[8] www.marketwatch.com/story/us-industrial-production-up-for-third-straight-month-on-strength-in-autos-2018-09-14

[9] www.bloomberg.com/news/articles/2018-09-14/retail-sales-factory-output-signal-steady-u-s-economic-growth?srnd=markets-vp

 

Tax Tips – What Do You Need to Know About Amending Your Tax Return?*

If you discover you made a mistake on your tax return, you can still file an amended return with corrections. Mistakes may involve filing status, income levels, credits, or deductions.

Here are some tips for filing an amended return:

  • Fill out paper Form 1040X, Amended U.S. Individual Income Tax Return. Mail the form to the address in the form’s instructions. If you received an IRS notice, send the form to the address in the notice.
  • Include other IRS forms or schedules with Form 1040X (if you used them during your initial filing).
  • Don’t send an amended return to correct math errors. The IRS makes corrections.
  • Don’t send an amended form if you forgot to include required forms or schedules. The IRS sends notices requesting any missing items.
  • You’ll need to send separate 1040X forms (in separate envelopes) for each year you’re filing amendments.
  • Wait for the refund from the original return before filing an amended return. You may cash the refund check.
  • If you owe money and are sending an amended return, pay the tax as soon as possible. Interest and penalties accrue.
  • Processing amended forms may take up to 16 weeks.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov[14]

[14] www.irs.gov/newsroom/what-taxpayers-should-know-about-amending-a-tax-return

A Shaky Start to September – WEEKLY UPDATE – SEPTEMBER 10, 2018

Domestic markets fell last week due to negative trade news and declining tech stocks, with the S&P 500 and Dow both breaking their multi-week winning streaks. Meanwhile, the NASDAQ posted losses for 4 days in a row for the first time since April and experienced its worst September start since 2008.[1] Overall, the S&P 500 lost 1.03%, the Dow dropped 0.19%, and the NASDAQ gave back 2.55% for the week.[2]  International stocks in the MSCI EAFE also declined, losing 2.89%.[3]

The Cboe Volatility Index (VIX), which can help gauge market fears, increased 15.8% last week.[4] This increase matches what often occurs during September, when volatility returns after waning during the summer months. In fact, since 2007, volatility has been above average in September.[5] 

Of course, the change from one month or season to another isn’t enough to trigger market losses and rising volatility. Let’s analyze what drove these experiences last week.

  1. Trade tension escalated between the U.S. and China. 

The U.S. is getting closer to resolving trade issues with Mexico, Canada, and the European Union – and the countries may unite against China’s trade approach. As a result, the likelihood of calming the trade dispute between the U.S. and China is fading.[6] Last week, President Trump said he was prepared to add tariffs to another $267 billion in Chinese goods. These tariffs would be in addition to the $200 billion that may launch soon, which one expert said could reduce the S&P 500 by 5%.[7] 

  1. Tech stocks dropped. 

Last week, the technology sector declined by 2.9%.[8] Tech has performed better than any other sector this year and has been a market leader for 3 years. But concerns about increasing regulation – with a focus on social media companies – weighed on investors’ minds last week.[9] 

  1. Wage growth increased.

The latest jobs report surpassed expectations, with the economy adding 201,000 jobs in August. Year-over-year wage growth also rose more than expected and hit its fastest pace since 2009.[10] This wage increase contributed to stock losses, because it could mean that 2018 will have 2 additional interest rate increases – with more on the horizon for 2019.[11] 

Last week certainly provided data and headlines for investors to digest. But the job market, economic fundamentals, and market remain strong.[12] For the moment, we’ll continue to review the data we receive and seek new ways to help you prepare for what lies ahead.

[1] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[5] www.bloomberg.com/news/articles/2018-09-07/summer-s-end-breaks-s-p-500-s-momentum-as-tech-trade-war-bite?srnd=markets-vp

[6] www.marketwatch.com/story/near-term-likelihood-of-us-china-trade-pact-seen-dimming-2018-09-07

[7] www.bloomberg.com/news/articles/2018-09-07/summer-s-end-breaks-s-p-500-s-momentum-as-tech-trade-war-bite?srnd=markets-vp

[8] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

[9] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[10] wsj-us.econoday.com/byshoweventfull.asp?fid=485659&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[11] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

[12] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

Tax Tips – IRS Provides Tax Credits to Help with College Expenses*

Tuition at a private 4-year college can cost $35,000. Tack on another $12,000 for room and board and the annual bill can reach $50,000.

The IRS provides two tax benefits to taxpayers who are paying for higher education in 2018 for themselves, their spouses, or dependents. The American opportunity credit and the lifetime learning credit may help lower their tax load.

Use Form 8863 (https://www.irs.gov/forms-pubs/about-form-8863).

The American opportunity credit is worth up to $2,500 per eligible student, applies only for the first four years of college, and is available for students pursuing degrees.

The lifetime learning credit is worth up to a maximum of $2,000 per tax return per year for all students. It is available for all years of postsecondary education.

Taxpayers must get Form 1098-T from an eligible educational institution.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov[11]

[11] www.irs.gov/newsroom/tax-credits-help-offset-higher-education-costs

Markets Up Again – WEEKLY UPDATE – SEPTEMBER 4, 2018

Trade continued to dominate the news last week and cause market volatility as investors monitored discussions of the North American Free Trade Agreement (NAFTA) and tension with China. While Mexico and the U.S. reached a new trade deal early in the week, talks with Canada stalled on Friday, August 31. Reports also came out that President Trump may be adding tariffs on another $200 billion in Chinese goods.[1] 

Domestic markets increased for the week and ended August in positive territory. The S&P 500 and Dow each had their best August since 2014 – while the NASDAQ’s 5.7% growth was its best performance for the month since 2000.[2] On Wednesday, the S&P 500 reached a new record high.[3] For the week, the S&P 500 gained 0.93%, the Dow added 0.68%, and the NASDAQ increased 2.06%.[4] International stocks in the MSCI EAFE joined the growth, adding 0.26%.[5]

Key Data From Last Week

Although trade might have dominated headlines, last week provided a number of informative economic updates, including:

  • Personal incomes grew in July. 
    The 0.3% increase fell slightly short of the projected growth but is still up 4.7% since this time last year. Combined with growth in personal consumption, this data indicates that consumers had a solid start to the 3rd quarter of 2018.[6] 
  • Gross Domestic Product (GDP) was higher than initially thought. 
    The 2nd reading of GDP expansion between April and June was 4.2%, higher than the initial reading and still the fastest economic expansion since 2014. Economists don’t believe this pace is sustainable, however, as rising interest rates, ongoing trade tension, and fading tax-cut benefits could slow growth later in the year.[7]
  • Consumer confidence soared in August.
    The latest consumer confidence data came in higher than it has since October 2000. This strong reading may indicate that consumer spending will remain healthy for now.[8] Since consumer spending is more than ⅔ of the U.S. economy, its growth is a critical factor to track.[9]

This week’s performance and reports once again underscore a message we have frequently shared with you: Instead of focusing on the headlines, pay attention to the fundamentals for a clearer understanding of the economy. If you have questions about how this data affects your financial life, we’re here to talk.

[1] www.reuters.com/article/us-usa-stocks/wall-street-mixed-as-u-s-canada-trade-talks-end-idUSKCN1LG1IU

[2] www.cnbc.com/2018/08/31/us-markets-global-trade-tensions-ramp-up.html

[3] www.bloomberg.com/news/articles/2018-08-30/asian-stocks-to-weaken-on-tariff-plan-yen-rises-markets-wrap?srnd=markets-vp

[4]  http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[5] www.msci.com/end-of-day-data-search

[6] www.ftportfolios.com/Commentary/EconomicResearch/2018/8/30/personal-income-rose-0.3percent-in-july

[7] www.bloomberg.com/news/articles/2018-08-29/u-s-second-quarter-growth-revised-up-to-4-2-on-software-trade

[8] www.marketwatch.com/story/consumer-confidence-soars-to-18-year-high-2018-08-28

[9] www.thebalance.com/consumer-spending-trends-and-current-statistics-3305916