Posts made in November 2024

Did You Know That You Have the Right to Challenge the IRS?

As a taxpayer, you can challenge the IRS’ position; this is part of the Taxpayer Bill of Rights, which outlines your fundamental rights when working with the IRS.

With this right, you can:

Raise objections to an IRS decision
Provide additional documentation in response to proposed or formal IRS actions
Expect the IRS to deliver a timely objection
Have the IRS consider any supporting documentation promptly and fairly
Receive a response from the IRS if they disagree with your position

In some circumstances, you may have a hearing before an independent Office of Appeals.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁸

Footnotes and Sources

^{IRS.gov, July 5, 2024}

Weekly Market Insights | Pre-Holiday Optimism Lifts Markets

Stocks advanced last week, powering ahead with pre-holiday optimism despite geopolitical tensions and two disappointing Q3 corporate updates.

The Standard & Poor’s 500 Index rose 1.68 percent, while the Nasdaq Composite Index gained 1.73 percent. The Dow Jones Industrial Average led, picking up 1.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, was flat (-0.05 percent).^1,2

Stock Push Ahead

Stocks showed mixed results during the first half of the week due to geopolitical tensions that boosted precious metals and put pressure on Treasury yields.³

The Dow Industrials jumped out in front midweek and never looked back. Disappointing earnings on Tuesday from a large box retailer held back some gains in the broader S&P 500. A mixed Q3 update report from the nation’s leading AI chipmaking company also tempered gains a bit.⁴

Year-end optimism, especially around consumers driving a healthy holiday shopping season, supported the rally for much of the week. Fresh data that weekly jobless claims dropped to a seven-month low also lifted spirits.^5,6

Small-Cap Focus

For several weeks, investors have favored small-cap names over larger-cap issues. This trend was again on display last week.

The Russell 2000, an index of 2,000 small-cap companies widely used as a benchmark for U.S. small-cap stocks, rose 4.50 percent for the five days of trading. In the month-to-date through November 22, the Russell is up nearly 9 percent.⁷

Footnotes and Sources

^{The Wall Street Journal, November 22, 2024}
^{Investing.com, November 22, 2024}
^{MarketWatch.com, November 19, 2024}
^{CNBC.com, November 20, 2024}
^{CNBC.com, November 21, 2024}
^{MarketWatch.com, November 21, 2024}
^{The Wall Street Journal, November 22, 2024}

What To Do If You Get Mail From the IRS

The IRS sends letters and notices for many different reasons. Some letters need a response or action item, while some are to keep you informed.

Here’s what to do if you receive mail from the IRS:

Don’t throw it away
Don’t panic
Don’t reply unless directed to do so
If a response is needed, respond promptly
Review the information to make sure it’s correct
Respond to a disputed notice
If you need to call the IRS, use the phone number printed on the notice
Avoid scams through email, social media, or text messages

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁷

Footnotes and Sources

^{IRS.gov, May 6, 2024}

Weekly Market Insights | Rally Loses Steam; Fed Weighs Move

Stocks fell last week as the postelection rally lost momentum amid an inflation uptick and cautious comments from Fed officials.

The Standard & Poor’s 500 Index fell 2.08 percent, while the Nasdaq Composite Index declined 3.15 percent. The Dow Jones Industrial Average lost 1.24 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, dropped by 2.38 percent.^1,2

Rally Fizzles, Data Rattles

Stocks began the week with modest gains as all three major indexes hit record highs. On Tuesday, stocks took a breather with monthly inflation pending.³

News that the Consumer Price Index (CPI) ticked up slightly in October injected some uncertainty into the markets. The Producer Price Index released the following day showed wholesale inflation ticked up last month. While both the CPI and PPI aligned with expectations, investors hoped for better news.

Comments from Fed Chair Powell that the Fed wasn’t “in a hurry” to cut rates were a bit unexpected, which put stocks under more pressure.^4,5

Stocks dropped again on Friday as strong October retail sales seemed to reinforce Powell’s comments about Fed rate adjustments. News that Boston Fed President Susan Collins expressed doubts about what the Fed might do in December, putting further pressure on stocks.⁶

Tug-O-War

The inflation data that came in last week—retail and wholesale—show that the path to the Fed’s stated goal of 2 percent inflation may prove bumpy.

For the past couple of years, inflation has been the focus of the Fed’s efforts to manage rising prices by tightening the money supply. Ironically, strong retail sales numbers—while a sign of a strong economy—send a mixed message to investors. Confident consumers tend to spend money, which may take some pressure off the Fed as it looks to manage economic activity.

Footnotes and Sources

^{The Wall Street Journal, November 15, 2024}
^{Investing.com, November 15, 2024}
^{CNBC.com, November 12, 2024}
^{The Wall Street Journal, November 13, 2024}
^{The Wall Street Journal, November 14, 2024}
^{CNBC.com, November 15, 2024}

Be On the Lookout for Tax Carryovers

Deductions or credits not used fully one tax year that may be eligible to be carried over into future years include:

When you have a net operating loss
When your total expenses for a permitted deduction exceed the amount you’re allowed to deduct in a given year
When a credit you qualify for exceeds the amount of tax you owe in a year
Adoption tax credits
Foreign tax credits
Credits for energy efficiency

Track these (or have your software do it) so you don’t forget them from one year to the next.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS¹⁰

Footnotes and Sources

^{IRS.gov, January 30, 2024}

Weekly Market Insights | Stocks Surge Post-Election; Fed Cuts Quarter Point

Stocks surged higher last week, fueled by the Fed’s rate cut decision and post-election enthusiasm as investors looked to future policy impacts of a Republican-controlled Senate and executive branch. (The House of Representatives remains undecided.)

The Standard & Poor’s 500 Index spiked 4.65 percent, while the Nasdaq Composite Index gained 5.74 percent. The Dow Jones Industrial Average rose 4.61 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, was flat (-0.02 percent).^1,2

Stocks Extend Rally on Election News

It was a shaky start to the week for stocks as investors anxiously awaited election results and the Fed’s interest-rate decision.³

On Election Day, stocks rallied broadly before polling places closed. After the election was called early the next morning, stocks opened higher and climbed throughout the trading session. The yield on the 10-year Treasury fell to 4.307 percent.^4,5

Stocks opened higher Thursday, and the rally picked up momentum after the Federal Reserve approved its second consecutive interest rate cut. Economic news that showed a 2.2 percent rise in third-quarter productivity helped support the move.^6,7

Stocks finished the week with a number of records: the S&P 500 crossed the 6,000 mark, and the Dow breached 44,000 for the first time on Friday. While the S&P and Dow closed slightly below those record levels, each had their best week in a year.⁸

Fed Cuts Rates

As expected, the Federal Reserve cut interest rates by a quarter percentage point at its November meeting.

However, Fed Chair Jerome Powell signaled some uncertainty about the pace of future rate cuts, which slightly unsettled the markets.

Citing a desire to “steer between the risk of moving too quickly and perhaps undermining our progress on inflation, or moving too slowly and allowing the labor market to weaken too much,” Powell said the Fed will continue to monitor the economy’s progress.⁹

Footnotes and Sources

^{The Wall Street Journal, November 8, 2024}
^{Investing.com, November 8, 2024}
^{CNBC.com, November 4, 2024}
^{CNBC.com, November 5, 2024}
^{The Wall Street Journal, November 6, 2024}
^{The Wall Street Journal, November 7, 2024}
^{MarketWatch.com, November 7, 2024}
^{The Wall Street Journal, November 8, 2024}
^{The Wall Street Journal, November 7, 2024}

Weekly Market Insights | Stocks Retreat on Jobs and Election Concerns

Stocks slid last week as mixed economic data and strong-but-not-spectacular Q3 corporate reports failed to inspire investors.

The Standard & Poor’s 500 Index fell 1.36 percent, while the Nasdaq Composite Index declined 1.50 percent. The Dow Jones Industrial Average edged down 0.15 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 0.96 percent.^1,2

Q3 Reports Uninspired

Stocks rallied early Wednesday after the gross domestic product report showed a strong economy that appeared on the path to a soft landing. However, stocks moved lower throughout the day as investors digested mixed Q3 reports from a few mega-cap tech names.^3,4

Stocks were under more pressure Thursday as disappointing outlooks for some key tech companies pulled the market down. A softer-than-expected jobs report on Friday unsettled investors, but stocks picked up as the day progressed, and attention shifted to how the Fed may interpret the jobs data.⁵

By Friday, the Nasdaq’s eight-week winning streak had ended, and the S&P fell for the second week.

Fed Back in Focus After Jobs Report

At its most recent meetings, the Fed has made it clear that it needed to balance the risks of both inflation and employment.

So Friday’s jobs report that showed 12,000 jobs created in October caught some by surprise. Economists expected the Labor Department to report 100,000, down from September’s 223,000 jobs.⁶

Investors parsed the data and determined the strike at a major aircraft manufacturer and two hurricanes caused the jobs report to fall short of estimates. Investors also appeared to believe the jobs report would prompt the Fed to move on rates at its two-day policy meeting, which ends on November 7.

Footnotes and Sources

^{The Wall Street Journal, November 1, 2024}
^{Investing.com, November 1, 2024}
^{CNBC.com, October 30, 2024}
^{The Wall Street Journal, October 30, 2024}
^{The Wall Street Journal, November 1, 2024}
^{The Wall Street Journal, November 1, 2024}