Posts made in May 2019

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

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

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

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

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

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

Cybercriminals are looking for any opportunity to steal your tax and financial data. Theft of your Social Security number could result in a false tax filing. Take these extra steps to protect your financial information, Social Security numbers, and credit card data:

Avoid unprotected Wi-Fi. Unprotected, public Wi-Fi, available in coffee shops or other public places, could give thieves the ability to view your browsing activity.

Check your URLs for the “s.” If there is an “s” in “https” at the start of the URL, then the site is secure. There may also be a “lock” icon in the browser’s URL bar. Also, be careful making purchases at unfamiliar sites or clicking on links from pop-up ads.

Secure your computer. Lock down your computers, phones, and tablets using security software. This will help to protect your devices from malware that could steal data or infect the device with a virus.

Password length matters. Use a minimum of 10 characters or longer, with a combination of letters, numbers, and special characters. Avoid words, if possible.

* 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/follow-these-tips-to-protect-data-when-shopping-online

The Week on Wall Street
Stocks were up and down last week, and the three major benchmarks ended up little changed after five trading days. The S&P 500 rose 0.20% for the week; the Nasdaq Composite, 0.22%. The Dow Jones Industrial Average declined 0.14%.

The MSCI EAFE index, a benchmark for international stocks, declined 0.21%.[1][2]

The Fed Emphasizes Patience
The Federal Reserve held interest rates steady at its May meeting. Its May 1 policy statement noted “solid” job growth and economic activity, but only tame inflation pressure.

While the Fed was not expected to make a move, some investors wondered if its latest policy statement might hint at the possibility of a rate cut later this year. No such hint appeared. Fed chair Jerome Powell told the media Wednesday that “we don’t see a strong reason for moving in one direction or the other.”[3]

Indications of a Thriving Economy
Employers added 263,000 net new jobs in April. Economists polled by Bloomberg forecast a gain of 190,000. The jobless rate fell to 3.6% last month, the lowest in half a century.

This better-than-expected employment snapshot comes on the heels of a first-quarter gross domestic product reading that surprised to the upside. In another bit of good news, personal spending rose an impressive 0.9% in March.[4][5]

Final Thought
On Wednesday and Thursday, stocks fell in the wake of the Fed policy statement. Friday, they more or less recouped their losses after the impressive April jobs report. Ups and downs like these come with the territory when you invest; the key is to stay patient and think long term instead of short term.

[1] markets.wsj.com/usoverview

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

[3] www.bankrate.com/banking/federal-reserve/fomc-meeting-recap-april-may-2019

[4] www.nytimes.com/2019/05/03/business/economy/jobs-report-april.html

[5] www.marketwatch.com/tools/calendars/economic

You may be able to take the credit if you are 65 years of age or older or if you retired on total and permanent disability and have taxable disability income. There are certain limits that your income cannot exceed.

Claiming the Senior Tax Credit if You’re 65 Years or Older
Based on your filing status, there are certain qualifications. If you are married, you and your spouse must file a joint return to claim the credit.

Claims for Those Under 65 and Permanently Disabled
You’ll need to procure a physician’s certification stating that you cannot engage in gainful activity due to your mental or physical condition, and in addition, that the condition has existed or is expected to exist continuously for a minimum of 12 months or if it is expected to result in your death.

You May Not Qualify Due to Taxable Income
You may meet the above qualifications detailed above and may still be ineligible for the credit if your taxable income exceeds certain limitations. To find out more visit https://www.irs.gov/pub/irs-pdf/p524.pdf.

* 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/pub/irs-pdf/p524.pdf

The Week on Wall Street

Stocks returned to record territory, with both the S&P 500 and the Nasdaq Composite closing at historic highs. The S&P gained 1.20% for the week; the Nasdaq, 1.85%. The Dow Jones Industrial Average lagged, losing 0.06%. The MSCI EAFE index of international stocks lost 0.52%.[1][2]

The S&P took only 17 weeks to fully rebound from its December low.[3]
A Shift in Focus
Last month, Wall Street fixated on trade, reacting to even the slightest hint of progress in U.S.-China negotiations. This month, the trade talks have taken a back seat, and the fixation is on earnings.

Anxieties about a possible earnings recession may be fading. So far, first-quarter results for S&P 500 firms are 5.3% above expectations; that compares to a 5-year average of 4.8%.[4]

At some point, trade talk will come back, or other developments will lead Wall Street to chase other trends. The thing to remember is that Wall Street is fickle: what preoccupies it one week may be shrugged off the next. Short-term trends ultimately amount to background noise during the long-term pursuit of your financial goals.

A Strong First Quarter
Friday, the Bureau of Economic Analysis said that the economy expanded at a 3.2% pace in Q1. The number surprised to the upside. Economists surveyed by Dow Jones estimated Q1 gross domestic product would increase 2.5%.[5]

What’s Ahead
Investors have all kinds of news to consider this week. There will be a plethora of earnings calls, plus important reports on consumer spending and hiring. Also, Federal Reserve chair Jerome Powell will hold a press conference following the central bank’s May meeting.

[1] markets.wsj.com/usoverview

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

[3] www.bloomberg.com/news/articles/2019-04-23/abyss-averted-in-stocks-as-valuations-and-rates-restore-bull-run

[4] insight.factset.com/earnings-season-update-april-26-2019

[5] www.cnbc.com/2019/04/26/gdp-q1-2019-first-read.html