Posts made in May 2025

Help Get Your Federal Withholding Correct With This Tool From the IRS

The IRS has a handy tool called the IRS Tax Withholding Estimator to help taxpayers better understand their withholding. It’s essential to examine your federal withholding periodically to ensure you are comfortable with the amount of tax withheld.

Checking your withholding status may be a good idea to consider if you have experienced a change that may affect your tax status, such as:

  • Going through a marriage or divorce
  • Having or adopting a child
  • Purchasing a new home
  • Working two or more jobs at the same time
  • Only working part of the year
  • Claiming credits such as the child tax credit

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

Tip adapted from IRS9

Footnotes and Sources

  1. IRS.gov, August 20, 2024

Weekly Market Insights | Markets Cringe At Returned Tariff Talk

Stocks moved lower last week as fiscal fears and fresh tariff threats loomed over market sentiment.

The Standard & Poor’s 500 Index fell 2.61 percent, while the Nasdaq Composite Index dropped 2.47 percent. The Dow Jones Industrial Average slid 2.47 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, advanced 1.14 percent.1,2

Stocks Slip

On Monday, stocks were under a bit of pressure after credit rating agency Moody’s downgraded the U.S. as an issuer of government bonds.3,4

Stocks remained under pressure midweek as Treasury yields moved higher with the 30-year bond hit a 19-month high. Investors fretted about the budget deficit; some feared the deficit would be made worse by the spending bill winding its way through Congress. After the House of Representatives approved the bill, bond yields backed off their highs and stocks went sideways.5,6

On Friday, stocks dropped after President Trump warned of a 50 percent tariff on European Union goods following an apparent stall in trade negotiations. At the same time, the administration also threatened a 25 percent tariff on any iPhones manufactured outside of the U.S.7

Unexpected Tariff News

The president’s fresh tariff talk ended a week or so of relative tranquility on the trade front. While the EU tariff threat may end with a deal similar to deals with other countries and regions, the iPhone issue may prove stickier.

Some analysts estimate that making iPhones in the U.S. would increase manufacturing costs by as much as 50 percent, which might increase the price of an iPhone.8

Footnotes and Sources

  1. WSJ.com, May 23, 2025
  2. Investing.com, May 23, 2025
  3. CNBC.com, May 19, 2025
  4. CNBC.com, May 20, 2025
  5. CNBC.com, May 21, 2025
  6. CNBC.com, May 22, 2025
  7. WSJ.com, May 23, 2025
  8. MarketWatch.com, May 23, 2025

Tax Tip | The IRS May Send You One of Two Notices If Your Filed Returns Don’t Match Their Records

Have you wondered what happens if the information on your tax return doesn’t match the IRS records? The IRS mails out two notices, CP2100 and CP2100A, to banks, credit unions, businesses, and payers who may have made a mistake on their return.

The IRS mails these notices out twice yearly, in September/October and April of the following year. Payers may receive a notice if their return lacks a Taxpayer Identification Number, has an incorrect name, or both. The notices also tell payers that they are responsible for backup withholding.

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

Tip adapted from IRS9

Footnotes and Sources

  1. IRS.gov, September 11, 2024

Weekly Market Insights | U.S./China Tariff Truce Tames Markets

Stocks roared higher last week, powered by upbeat trade news and tame inflation reports.

The Standard & Poor’s 500 Index rose 5.27 percent, while the Nasdaq Composite Index spiked 7.15 percent. The Dow Jones Industrial Average added 3.41 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 0.80 percent.1,2

S&P, Dow Erase YTD Losses

Stocks pushed higher on Monday as investors cheered weekend news that the U.S. and China temporarily agreed to back off steep reciprocal tariffs.3

Then, a mild inflation report for April—the slowest annualized Consumer Price Index (CPI) reading in four years—boosted markets on Tuesday. Tech stocks powered the rally as the S&P 500 closed trading in the green for the year.4,5

Markets closed the week with modest gains, largely looking past weak consumer sentiment data released on Friday.

Friday was the Dow’s turn to erase year-to-date losses and get back in the green while the Nasdaq and S&P notched a five-day winning streak.6

All Eyes on Economic Data

The retail (CPI) and wholesale inflation reports (Producer Price Index) were mild, although most economists didn’t expect tariffs to impact prices in the first month of implementation.

Retail sales ticked up slightly (as expected), while industrial production and housing starts showed signs of tariff impact.7,8

Expect traders to continue to closely watch economic reports to better understand whether tariffs are showing up in the data.

Footnotes and Sources

  1. WSJ.com, May 16, 2025
  2. Investing.com, May 16, 2025
  3. CNBC.com, May 12, 2025
  4. WSJ.com,  May 13, 2025
  5. CNBC.com, May 15, 2025
  6. MarketWatch.com, May 16, 2025
  7. WSJ.com, May 13, 2025
  8. MarketWatch.com, May 16, 2025

Don’t Forget to Take Advantage of the Work Opportunity Tax Credit

The work opportunity tax credit is a federal tax credit for business owners who have hired individuals from target groups that would have otherwise faced significant barriers when looking for a job. Some target groups include summer youth employees, those receiving Supplemental Security Income, or qualified long-term unemployment recipients. There are ten targeted groups in total.

The work opportunity tax credit equals 40% of up to $6,000 in wages paid or incurred, with a maximum credit of $2,400. The WOTC may consider up to $24,000 in wages for certain qualified veteran-targeted groups. The restrictions are on the IRS website.

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

  1. IRS.gov, November 11, 2024

Weekly Market Insights | Fed Talk Calms Volatility for the Week

Stocks were mixed last week as volatility dropped despite ongoing trade concerns and the Federal Reserve’s update on short-term rates.

The Dow Jones Industrial Average added 0.16 percent, while the Standard & Poor’s 500 Index lost 0.47 percent. The tech-heavy Nasdaq Composite Index slipped 0.27 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 0.37 percent.1,2

Stocks Go Sideways

Stocks dropped on Monday, ending the S&P 500’s 9-day winning streak as the trade anxiety weighed on investors.3,4

Sentiment picked up midweek, however. In a widely expected move, the Fed held short-term interest rates steady but warned of lingering uncertainty around tariffs’ effects on inflation and unemployment.5,6

On Thursday, the U.S.-U.K. trade deal sparked a slight rally, but stocks flattened as the week ended. Investors appeared to be risk-averse with U.S.-China trade talks scheduled for the weekend.7

The Fed Fans Out

The Federal Reserve wanted to get its message out last week. Within 48 hours of the Fed’s decision to leave interest rates unchanged, nearly every Fed governor gave a solo speech or discussed the decision on a panel.

One Fed official spoke about the benefits of long-term stability from an independent Fed. At the same time, another said the Fed was paying close attention to what consumers did—and not just what they said, suggesting that flagging consumer sentiment didn’t necessarily mean a slowdown in spending.7

The Fed seemed to focus on managing expectations. Perhaps more importantly, Fed officials spoke from a coordinated playbook, possibly designed to help settle financial markets.

Footnotes and Sources

  1. The Wall Street Journal, May 9, 2025
  2. Investing.com, May 9, 2025
  3. CNBC.com, May 5, 2025
  4. CNBC.com, May 6, 2025
  5. The Wall Street Journal, May 7, 2025
  6. CNBC.com, May 8, 2025
  7. The Wall Street Journal, May 9, 2025

Not All Third-Party Payroll Service Providers Are Equal

Be sure to ask your payroll company how it handles payroll tax. A business needs to pick this service wisely because failing to do so could contravene IRS guidelines.

To avoid missed deposits for employment taxes and other important bills, here are some choices to help ensure business owners have a trusted payroll service:

  • Use a certified professional employer organization.
  • Use a reporting agent.
  • Enroll in the Electronic Federal Tax Payment System (EFTPS) to ensure your payroll service providers use EFTPS to max tax deposits. This free platform gives employers quick access to their payment history for deposits under their EIN.

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

Tip adapted from IRS9

Footnotes and Sources

  1. IRS.gov, November 18, 2024

Weekly Market Insights | Positive Indicators Lift Stocks into May

Stocks pushed higher last week as investors cheered the White House’s constructive comments on trade, upbeat Q1 corporate reports, and an encouraging jobs report.

The Standard & Poor’s 500 Index gained 2.92 percent, while the Nasdaq Composite Index rose 3.42 percent. The Dow Jones Industrial Average added 3.00 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, advanced 2.56 percent.1,2

Longest Winning Streak in 20 Years

During the first two trading days, stocks increased as investors responded favorably to White House comments on tariff deals.3

Then midweek—on the last day of the month—fresh data showed the economy contracted by 0.3 percent in Q1—the first decline in gross domestic product (GDP) in three years. Stocks initially fell on the news, but staged a stunning recovery to add a seventh day to the S&P 500’s and Dow Industrial’s winning streaks.4

Q1 corporate reports from a couple of mega-cap tech companies boosted all three major averages over the next session, with Nasdaq leading the rise. By Thursday’s close, Nasdaq had returned to its pre-April 2 levels.5

The rally accelerated on Friday as a better-than-expected April jobs report eased some concerns about the economy’s strength. Signs of a potential thaw in Washington-Beijing trade relations also boosted enthusiasm. The Dow Industrials rose for a ninth straight session, as did the S&P 500—its longest winning streak in 20 years.6

Solid Jobs Report

The April jobs report showed employers added 177,000 jobs last month—34,000 more than economists expected.

The report quieted talk about a recession, which was welcomed news. The April figure also showed the economy was still adding jobs despite a sluggish Q1 GDP report. However, the strong report did prompt some traders to push out expectations for an interest rate adjustment until the Fed’s July meeting.7,8

Footnotes and Sources

  1. The Wall Street Journal, May 2, 2025
  2. Investing.com, May 2, 2025
  3. CNBC.com, April 29, 2025
  4. The Wall Street Journal, April 30, 2025
  5. CNBC.com, May 1, 2025
  6. CNBC.com, May 2, 2025
  7. MarketWatch.com, May 2, 2025
  8. CNBC.com, May 2, 2025