Posts made in November 2019

With all the hustle and bustle of the holidays, taxes are likely the last thing on your mind. You have until April, right? Well, there are a few end-of-year tips that you should get ahead on now to save yourself time (and money) come April.

• Donate stock that has appreciated in value – You can donate stock that has appreciated in value that you’ve had for at least a year. This can result in significant income tax savings. Also, donating stock saves you more on taxes than donating cash because there’s no capital gains tax when these stocks are given to a nonprofit. You also save on future capital gains taxes.

• Increase your 401(k) contributions – You’re allowed to contribute up to $19,000 this year if you’re under 50 and $25,000 if you’re 50 and older, and contributing more to your 401(k) by the end of the year means that you will have a lower income tax. This is especially beneficial if you’re between tax brackets.

* 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 Kiplinger[9]

[9] www.kiplinger.com/slideshow/saving/T023-S002-money-moves-to-make-now-to-prepare-for-2020/index.html

The Week on Wall Street
Stocks declined last week as mixed signals emerged about the progress of U.S.-China trade negotiations.

The three major Wall Street benchmarks all took weekly losses. The Dow Jones Industrial Average declined 0.46%; the S&P 500, 0.33%, the Nasdaq Composite, 0.25%. Also pulling back, the MSCI EAFE index, tracking developed stock markets outside the U.S. and Canada, retreated 0.69%.[1][2]

Nothing Conclusive Regarding Trade
As the market week ended, there was still haziness surrounding the state of U.S.-China trade discussions. Were negotiators on the cusp of a phase-one deal or further away?

Friday, President Trump told reporters that a deal was “very close,” but Chinese President Xi Jinping said that his country could decide to “fight back” against certain terms. Last week, a bill intended to support Hong Kong protesters advanced through Congress, and that development was not taken well in Beijing.[3][4]

The Fed Assesses the Economy
Federal Reserve officials gathered for their October meeting “generally saw the economic outlook as positive” according to minutes from the central bank’s October monetary policy meeting released Wednesday. Some of them termed the economy “resilient.”

The minutes also noted that the Fed would wait to assess the impact of its recent interest rate cuts and that any upcoming policy decisions might be data dependent.[5]

Strength in the Housing Sector
Existing home sales improved 1.9% last month, by the estimation of the National Association of Realtors. Year-over-year, sales were up 4.6% through October, and the median sale price was $270,900, 6.2% above where it was 12 months earlier.

Wednesday, the Census Bureau said that single-family home construction increased for a fifth straight month in October. In addition, the pace of building permits for new homes hit a level unseen since 2007.[6][7]

What’s Ahead
This will be an abbreviated trading week on Wall Street. U.S. stock and bond markets are closed on Thanksgiving Day (Thursday), and then reopen for a half-day session on Friday.

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

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

[3] www.cnbc.com/2019/11/22/dow-futures-amid-us-china-trade-uncertainty.html

[4] www.cnbc.com/2019/11/22/hong-kong-rights-bill-unlikely-to-derail-us-china-trade-talks.html

[5] www.marketwatch.com/story/fed-minutes-show-worries-about-economy-had-eased-a-bit-2019-11-20

[6] www.inman.com/2019/11/21/existing-home-sales-pick-up-in-october-after-slump-nar/

[7] www.marketwatch.com/story/permits-for-new-home-construction-hits-post-recession-record-high-in-october-2019-11-19

Even though it’s only November, it’s never too early to start thinking about your
2020 taxes in April. There are a few things you can do to prepare early, including:

• Doing a paycheck checkup. We’ve recently talked about the importance of making sure your withholding status is correct, and if you haven’t already done so, now’s the time.

• Gathering your documents. You’ll need your W-2 and Form 1099 from any other payer (and if you’re self-employed).

• Confirming that your employer and bank have the accurate addresses. You should start to receive tax documentation in January.

• Setting up an e-Filing profile and signing up for direct deposit for a faster refund.
Remember, even though the filing deadline is April 15, you can always file your taxes before then as soon as you have all your documentation. The sooner you file, the sooner you will receive your tax refund. How early do you plan for the next year’s filing?

* 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/not-too-early-here-are-steps-taxpayers-can-take-now-to-get-ready-to-file-their-taxes-in-2019

The Week on Wall Street
Stock benchmarks were little changed for much of last week, but a rally occurred Friday after news broke that the U.S. and China could be closing in on the first phase of a new trade pact.
At Friday’s close, the Dow Jones Industrial Average crossed the 28,000 level. The Dow rose 1.17% for the week, outgaining the S&P 500 (which advanced 0.89%) and the Nasdaq Composite (which added 0.77%). The MSCI EAFE index, representing developed overseas stock markets, fell 0.77%.[1][2]

Will There Be a Trade Breakthrough?
Friday, Secretary of Commerce Wilbur Ross told the media that “in all likelihood,” a phase-one trade deal between China and the U.S. would presently happen, stating that the talks were “down to the last details.” Thursday evening, White House economic adviser Larry Kudlow expressed similar optimism, noting that negotiations were “coming down to the short strokes.”

That said, the Wall Street Journal reported last week that President Trump is not yet committed to signing a phase-one trade deal. Secretary Ross noted that such an agreement would be “relatively limited in scope.”[3][4]

Consumers Boost Their Buying
Retail sales advanced 0.3% in October, according to the Department of Commerce. That surpassed the 0.2% gain forecast by economists polled by MarketWatch. Even so, households bought fewer big-ticket items than they did in September.[5]

[1] www.wsj.com/market-data
[2] quotes.wsj.com/index/XX/990300/historical-prices
[3] www.bloomberg.com/news/articles/2019-11-15/kudlow-says-phase-one-china-deal-down-to-the-short-strokes-k2zgbx0k
[4] www.foxbusiness.com/politics/u-s-china-trade-deal-near-but-trump-not-signing-yet
[5] www.marketwatch.com/story/us-retail-sales-rebound-in-october-but-a-small-group-of-stores-reap-most-of-the-gains-2019-11-15

The thought of filing taxes might be overwhelming to some, but the IRS has many resources available to help make it easier. These include their Frequently Asked Questions page, some basic tools about PTIN requirements, contact information, disaster relief resources, and more. In addition, they also make it easy to access some of their most-popular publications, including:

• Publication 5307, Tax Reform Basics for Individuals and Families

• Circular 230, Regulations Governing Practice Before the Internal Revenue Service

• Publication 4557, Safeguarding Taxpayer Data

• Publication 5293, Data Security Resource Guide for Tax Professionals

If you have questions before, during, or after filing your tax return, the IRS is happy to help. You can also reach out to enrolled agents and find out more information about what EAs are and how you can become 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[7]

[7] www.irs.gov/newsroom/irsgov-has-many-resources-for-tax-preparers

The Week on Wall Street
Domestic and international stocks rose last week. Risk appetite outweighed concerns about the state of U.S.-China trade discussions.

The Dow Jones Industrial Average, Nasdaq Composite, S&P 500, and MSCI EAFE all ended the week with gains. Blue chips led the way, as the Dow added 1.22%. The Nasdaq improved 1.06%; the S&P, 0.85%. The EAFE, tracking developed stock markets away from North America, was up 0.76%. The Dow recorded its third straight weekly gain; the S&P, its fifth. [1][2][3]

Will Tariffs Phase Out or Remain?
Thursday, a spokesman for China’s commerce ministry said that U.S. and Chinese trade representatives had “agreed to remove” existing tariffs in “phases,” while working toward a new trade deal.

On Friday morning, President Trump told the media that he had not agreed to any such condition. President Trump and Chinese President Xi Jinping are still expected to sign off on “phase one” of a new bilateral trade agreement.[4]

Service Sector Activity Picks Up
A closely watched index of U.S. business activity posted an October gain. The Institute for Supply Management’s Purchasing Managers Index for non-manufacturing firms rose nearly two points last month to 54.7. ISM also noted an October increase for new orders.

As most U.S. companies provide services rather than manufacture products, this news is encouraging and suggests more momentum in that sector.[5]

Final Thought
Monday is Veterans Day; the stock market will be open, but the bond market, plus all federal government offices, will be closed.

[1] www.wsj.com/market-data
[2] quotes.wsj.com/index/XX/990300/historical-prices
[3] www.marketwatch.com/story/stock-futures-bounce-around-as-wall-street-weighs-china-us-tariff-rollback-talk-2019-11-08
[4] www.cnbc.com/2019/11/08/trump-says-he-has-not-agreed-to-roll-back-tariffs-on-china-after-week-of-trade-optimism.html
[5] www.briefing.com/Investor/Calendars/Economic/Releases/napmserv.htm

In today’s age of online shopping, online banking, and email databases, it’s more important than ever to be safe online. The IRS shares some of their top tips on how to protect your data:

• Update Your Security Software – Most computers come with a built-in security software in their operating system, and it’s important to always keep your computer up to date to make sure it’s running properly. You can also purchase security software from external companies. Just make sure to research the company first to make sure they’re not a scam.

• Only Provide Data to “https://” Sites – Earlier this year, Google released an update requiring any sites that gather data, such as credit card information, to be a secure site. This means that their website will start with “https://” instead of “http://.” This update helps keep your data safe.

• Be Cautious When Using Public Wireless Networks – Working in a coffee shop with free Wi-Fi is convenient, but these wireless networks aren’t always secure. Be careful about what information you share while connected to these free wireless networks, especially if they don’t require a password.

* 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/seven-tips-to-protect-your-computer-online

The Week on Wall Street
A better-than-forecast jobs report prompted a stock market rally Friday, two days after traders witnessed another interest rate cut by the Federal Reserve.

Both the S&P 500 and Nasdaq Composite ended the week at historic peaks, while the Dow Jones Industrial Average settled less than 12 points under its all-time record close. The Nasdaq rose 1.74% for the week; the S&P gained 1.47%. The Dow added 1.44%. MSCI’s EAFE benchmark, which measures developed stock market performance outside the U.S. and Canada, improved 0.58%.[1][2][3]
Economy Adds 128,000 Jobs in October
This net increase far surpassed the gain of 85,000 projected by a Bloomberg poll of economists. These job gains occurred even as last month’s General Motors strike impacted hiring in the manufacturing sector.

Unemployment rose slightly to 3.6% in October, an effect of more people entering the job market. Likewise, the U-6 rate, counting both unemployed and underemployed, Americans ticked up to 7.0%.[4]

The Fed’s Latest Interest Rate Decision
Last week, the central bank made its third quarter-point rate cut since July, leaving the target range for the federal funds rate at 1.50-1.75%.

Something was missing from the latest Fed policy statement. Since June, a passage had noted that the Fed was ready to “act as appropriate to sustain the expansion.” In the latest statement, that language disappeared. At a press conference Wednesday, Fed Chair Jerome Powell commented that Fed officials “see the current stance of monetary policy as likely to remain appropriate.”[5]

Where Trade Talks with China Stand
There were further negotiations between U.S. and Chinese officials Friday, and China’s commerce ministry announced that both sides had “reached consensus on principles” integral to the first phase of a new trade pact. U.S. Trade Representative Robert Lighthizer noted only that the latest round of conversation had brought “progress in a variety of areas.”[6]
[1] www.reuters.com/article/us-usa-stocks/sp-500-nasdaq-set-records-on-jobs-data-trade-headway-idUSKBN1XB3ZD

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

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

[4] time.com/5716189/us-adds-128000-jobs-october-2019/

[5] www.cnbc.com/2019/10/30/fed-decision-interest-rates-cut.html

[6] www.foxbusiness.com/markets/us-china-trade-talks-reach-consensus-on-principles?cmpid=prn_investors

There are many good reasons to file your tax return online, including the fact that it’s:
• Accurate and complete – Filing your tax return digitally is the most-accurate, complete way to file. This means that it’s processed faster, and you get your tax return in your pocket sooner.

• Safe and secure – Software companies and accountants that have the ability to eFile tax returns have met strict security guidelines set forth by the IRS. When you eFile, you can receive notifications from the IRS ensuring that everything was filed correctly.

• Faster refunds – Compared to paper returns, eFiled tax returns are usually processed faster. In addition, you can choose direct deposit and have your refund deposited directly into your bank account.

• It’s easy and free – You can eFile on your own through IRS Free File, the IRS free tax preparation and eFiling service. You can also eFile your taxes using online platforms, many of which offer a free level of service as well as a premium one if you have more-complex filing needs.
* 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/five-good-reasons-to-e-file-your-tax-return