Posts made in November 2020

Tax-related identity theft is when someone uses your personal information to file a fraudulent tax return. They can use information like your Social Security number and other personal details.

Here are some tips to protect yourself:

• Always use security software on your computer, including anti-virus protection.
• Use a strong and unique password for each of your online accounts.
• Look out for spam calls, emails, and texts and report them to the IRS.
• Protect your information and any of your dependents’ info, as well.

Today’s identity criminals are getting more creative, but you can protect yourself by taking these important steps. Always be careful of who you give your information to.

 

* 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[6]  

 

[6] IRS.gov, March 4, 2020

The Week on Wall Street

Despite news of another COVID-19 vaccine candidate, stocks were mixed amid investor anxiety over an increase in new infections and economic lockdowns.

The Dow Jones Industrial Average fell 0.73%, while the Standard & Poor’s 500 declined 0.77%. The Nasdaq Composite index rose 0.22% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.42%.[1][2][3]

Groundhog Week

The announcement of another potential COVID-19 vaccine ignited strong gains to begin the week. But, like the week that preceded it, the gains sparked by the vaccine news were eroded in the following days as worries over the economic impact of new infections moved to the fore.

The market has been grappling with conflicting narratives. One is the optimistic view that, with COVID-19 vaccines apparently near at-hand, the return to economic normalcy grows ever closer.  That hopeful outlook has been offset by anxiety over new infections, rising hospitalizations, and some local and state lockdowns.

These crosscurrents kept stocks range bound for the week, with the technology sector and small and mid-size stocks lending support to the overall market.

Powell Sounds a Warning

In a speech last week, Federal Reserve Chairman Jerome Powell warned that the nationwide increase in COVID-19 cases could hamper economic activity in the upcoming months. He expressed concern that consumer spending may trend lower despite efforts to control the spread of infections.[4]

Powell once again voiced his support for additional fiscal stimulus to assist small businesses, state and local governments, and the unemployed. He also said that even after full economic recovery, some businesses and workers may wrestle with an economic landscape altered by the coronavirus.

 

[1] The Wall Street Journal, November 20, 2020

[2] The Wall Street Journal, November 20, 2020

[3] The Wall Street Journal, November 20, 2020

[4] CNN.com, November 17, 2020

Veterans face unique tax considerations due to their status. This includes disabled veterans. Here are some things to consider for disabled veterans and their families:

• Disabled veterans may be eligible to claim a federal tax refund if they receive an increase in the percentage of disability from the Department of Veteran Affairs.
• They may also be able to claim this tax refund if they are granted Combat-Related Special Compensation.

A disabled veteran can file Form 1040X, Amended US Individual Income Tax Return, if they need to make changes to their return based on the above or other changing circumstances. The veteran may only have to file an amended return on the year that the change is made.

 

* 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, April 21, 2020

The Week on Wall Street

Stocks soared last week as investors anticipated that a split Congress would raise legislative hurdles to changing corporate taxes and adjusting regulatory oversight of big technology companies.

The Dow Jones Industrial Average jumped 6.87%, while the Standard & Poor’s 500 tacked on 7.32%. The Nasdaq Composite index surged 9.01% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 7.65%.[1][2][3]

Bulls Take Charge

Coming off a poor close to October, stocks surged throughout election week, jumping higher in pre-election trading on bargain hunting and strong factory activity. The rally picked up steam as Americans went to the polls and shifted into overdrive Wednesday morning.

Investors were buoyed by Congressional results that indicate that the next president would have to work with a divided Congress. Though a divided Congress might result in a smaller potential stimulus package and continued gridlock, investors seemed to believe that was outweighed by a diminished risk of higher taxes, greater regulation, and policy initiatives that might be challenging to businesses.

Stocks took a pause to close out the week, even as a solid jobs report saw the unemployment rate fall a full percentage point to 6.9%.[4]

Yields Gyrate

Overlooked amid the powerful rally in stock prices was the swing in yields last week. Action in the bond market is important since 10-year Treasury yields are a benchmark for setting borrowing costs for businesses and they represent another view on the strength of the economic recovery.

The 10-year Treasury note rose as high as 0.942% during after-hours trading on election evening and dropped to 0.768% by the end of normal trading hours on Wednesday.[5]

 

[1] The Wall Street Journal, November 6, 2020

[2] The Wall Street Journal, November 6, 2020

[3] The Wall Street Journal, November 6, 2020

[4] The Wall Street Journal, November 6, 2020

[5] The Wall Street Journal, November 5, 2020

Unfortunately, criminals often use the IRS as a gateway for common phone scams. These scams can differ, but they generally include someone posing as an IRS agent asking for payment. These calls can be scary, especially if you don’t know what to believe.

Here are some signs of a phone scam so you can recognize them and report them to the IRS immediately:

• Generally, the IRS will first try to reach you by mail if you owe money. If you haven’t received any previous notice, the call might be fraudulent.
• The IRS will never ask about personal information over the phone, such as your Social Security Number.
• The IRS will also never request immediate payment using specific payment methods such as prepaid debit cards, gift cards, or wire transfers.
• The IRS won’t demand that these taxes be paid without giving you the opportunity to ask questions about the amount owed.
• The IRS won’t threaten to immediately bring in law enforcement groups to have you arrested for not paying.

If you receive these scam calls, hang up immediately and report the call to the IRS using the IRS Impersonation Scam Reporting form or by calling 800-366-4484.

* 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[10]

 

[10] IRS.gov, March 9, 2020

The Week on Wall Street

Stock prices dropped last week as hopes for a fiscal stimulus bill faded and investors focused on rising COVID-19 infections, here and abroad.

The Dow Jones Industrial Average slid 6.47%, while the Standard & Poor’s 500 tumbled 5.64%. The Nasdaq Composite index lost 5.51% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 5.02%.[1][2][3]

A Difficult Week for Stocks

Stocks opened the week lower as lawmakers failed to pass a fiscal stimulus bill and a pick up in the number of new COVID-19 cases in the U.S. and Europe. Hardest hit were companies most exposed to pandemic-related economic impacts, including energy, travel and leisure, and industrials.

Losses accelerated mid-week on reports of rising coronavirus-related hospitalizations, along with news that Germany and France were reinstating partial shutdown restrictions.[4]

Stocks attempted to recover on Thursday, but took another leg lower on Friday as earnings reports from the mega-cap technology companies failed to impress investors.

 

Positive Economic News

There were several strong economic reports during the week, but investors paid little attention. Among the highlights were durable goods orders, which rose for the fifth consecutive month, a sharp drop in initial jobless claims that were the lowest since March 14th, and a 33.1% annualized jump in economic growth during the third quarter.[5][6][7]

Investors also ignored a strong start to earnings season, which has seen 85% of reporting companies in the S&P 500 index beating earnings estimates by an average margin of 19%.[8]

 

[1] The Wall Street Journal, October 30, 2020

[2] The Wall Street Journal, October 30, 2020

[3] The Wall Street Journal, October 30, 2020

[4] CNBC, October 27, 2020

[5] The Wall Street Journal, October 27, 2020

[6] CNBC, October 29, 2020

[7] The Wall Street Journal, October 29, 2020

[8] CNBC, October 29, 2020