Author: Ramsay Capital Group

It’s essential to choose a tax preparer that is suitable for your needs as well as reliable and ethical. After all, taxpayers are responsible for the info on their return, regardless of who prepared it.

Here are some tips from the IRS on how to choose a tax preparer who meets your needs:

• Check the IRS Directory of Federal Tax Return Preparers
• Check the preparer’s history with the Better Business Bureau
• Ask about fees
• Ask if the preparer plans to use e-file
• Make sure the preparer is available
• Ensure the preparer signs and includes their preparer tax identification number
• Understand the preparer’s credentials

Choosing a reputable and reliable tax preparer can help protect you and your tax return.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁷

Footnotes and Sources

7. ^{IRS.gov, September 20, 2022}

Stocks ended a shortened week of trading mixed amid revived recession fears on Wall Street triggered by weak economic data.

The Dow Jones Industrial Average gained 0.63%, while the Standard & Poor’s 500 slipped 0.10%. The Nasdaq Composite index lost 1.10% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced +0.37%.^1,2,3

Recession Fears Resurface

Renewed recession worries dented investor sentiment, and the week kicked off with a weekend announcement by OPEC+ nations of their intention to cut oil production.

The prospect of higher oil prices not only revived inflation fears, possibly hurting the chances of a rate-hike pause by the Fed, but it raised concerns over future consumer spending. Stocks weathered the news well but buckled on weak manufacturing and services data in subsequent days. Stocks trended lower again after a lower-than-expected open-jobs number and a slowdown in private-sector hiring.

Stocks stabilized to close on Thursday, despite an increase in jobless claims and a pick up in March layoffs.

Cooling Labor Market  

A string of labor reports last week reflected signs of a cooling labor market, beginning with an unexpectedly significant decline in the number of open jobs (falling below 10 million for the first time in nearly two years). The JOLTs report preceded payroll processor ADP’s employment report that saw a rise in private sector hiring of 145,000 (short of the consensus forecast of 210,000) and smaller wage gains.^{4, 5}

After reports of a jump in initial jobless claims on Thursday and a 15% rise in layoffs in March, Friday’s March employment report showed the smallest increase in nonfarm payrolls (+236,000) since December 2020.⁶

Footnotes and Sources

1. ^{The Wall Street Journal, April 6, 2023}
2. ^{The Wall Street Journal, April 6, 2023}
3. ^{The Wall Street Journal, April 6, 2023}
4. ^{CNBC, April 4, 2023}
5. ^{CNBC, April 5, 2023}
6. ^{CNBC, April 7, 2023}

The IRS Alternative Media Center offers a variety of resources and accessibility services for visually impaired taxpayers. Using this platform, they provide tax-related content in several formats, including:

• Text-only
• Braille-ready files (available in English and Spanish)
• Browser-friendly HTML
• Accessible PDF (available in English and Spanish)
• Large print PDF (available in a variety of languages)

The IRS also offers enhanced accessibility services. Taxpayers can complete Form 9000, Alternative Media Preference, to choose how they would prefer to receive their tax notices (ex: in Braille, large print, audio, or electronic formats). They also have an accessibility helpline that can answer questions related to accessibility services.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁵

Footnotes and Sources

5. ^{IRS.gov, January 4, 2023}

Stocks rallied last week on receding fears of a widening banking crisis, led by resurging investor interest in technology and communication services names.

The Dow Jones Industrial Average gained 3.22%, while the Standard & Poor’s 500 added 3.48%. The Nasdaq Composite index rose 3.37% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced by 3.34%.^1,2,3

Tech Leads Rally

An absence of further bad news in the banking sector made for a good week, with high-quality technology and communication services stocks leading the market. While easing banking worries laid the groundwork for the week’s positive gains, growing conviction that Fed rate hikes were ending and positive inflation data out of Europe helped support the renewed enthusiasm for stocks.

Encouraging inflation data on the domestic front on Friday also added to the gathering optimism, igniting further gains to cap a satisfying week for investors.

Inflation Grinds Lower 

In an otherwise news-light week, Friday saw the release of February’s personal income and outlays report, which provides insight into inflation and consumer expenditures, the dominant contributor to economic growth.

The Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred measure of inflation, rose 0.3% for the month, below market expectations and below the prior month’s 0.6% jump. The year-over-year increase of 5.0% improved from January’s rise of 5.3%. Energy prices declined, partially offsetting increases in food, goods, and services. Personal income rose 0.3%, while consumer spending increased 0.2%.⁴

Footnotes and Sources

1. ^{The Wall Street Journal, March 31, 2023}
2. ^{The Wall Street Journal, March 31, 2023}
3. ^{The Wall Street Journal, March 31, 2023}
4. ^{CNBC, March 31, 2023}

Many people file their taxes, but others choose to have a third party represent them. The IRS shares information about the different types of third-party authorizations that allow someone to represent you on its site.

• Power of Attorney – allows someone to represent a taxpayer in tax matters.
• Tax Information Authorization – appoints anyone to review or receive a taxpayer’s confidential tax information for the type of tax for a specified period.
• Third Party Designee – designates a person on the taxpayer’s tax form to discuss that specific tax return and year with the IRS.
• Oral Disclosure – authorizes the IRS to disclose the taxpayer’s tax info to a person the taxpayer brings into a phone call or meeting with the IRS about a specific tax issue.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁶

Footnotes and Sources

6. ^{IRS.gov, 2023}

Modest gains in major market indices masked sharp volatility amid the uncertainty arising from mixed messages emanating from public officials and revived banking fears.

The Dow Jones Industrial Average gained 1.18%, while the Standard & Poor’s 500 added 1.39%. The Nasdaq Composite index rose 1.66% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced by 3.29%.1,2,3

A Turbulent Week for Stocks

The stock market was unable to find sustained direction as investors weighed comments from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. Stocks initially rose as banking fears eased following a deal to acquire a troubled Swiss bank. Optimism was further fueled by Yellen, who said the government could intervene to protect depositors if more bank issues materialized.

Enthusiasm faded, however, when Yellen subsequently testified that the Treasury was not working on any blanket insurance for bank deposits and by the Fed’s warning that banking turmoil could shrink lending access — the volatile week ended with sharp intraday price swings, shrugging off revived European banking concerns.

Rate Hike Cycle Ending?

Last week, the Federal Open Market Committee (FOMC) meeting was particularly noteworthy. Fed officials were placed in the difficult position of balancing the banking system’s opposing risks of still-high inflation and stressors. The Committee had considered leaving rates unchanged given banking stressors but unanimously voted to raise rates by 0.25%, citing elevated inflation, resilient economic activity, and a strong labor market.⁴ 

The official announcement hinted that the Fed might soon be done with raising rates while also stating it was too early to ascertain the degree to which the economy could slow from the current banking strains.⁵

Footnotes and Sources

1. ^{The Wall Street Journal, March 24, 2023}
2. ^{The Wall Street Journal, March 24, 2023}
3. ^{The Wall Street Journal, March 24, 2023}
4. ^{The Wall Street Journal, March 22, 2023}
5. ^{The Wall Street Journal, March 22, 2023}

The IRS website has a wealth of information outside of just tax filing information. Here are some things you can find on the site that might help you as a taxpayer:

1. The Taxpayer Bill of Rights – This set of fundamental rights tells you what to expect when dealing with the IRS.
2. Resources on how to apply for 501(c)(3) status – There are webinars and resources to help organizations apply for and maintain their tax-exempt status.
3. Information on IRS tax volunteer opportunities – Learn how to give back and help people file their taxes.
4. Information on the latest tax scams – Know what to look out for and how to stay safe.
5. The Interactive Tax Assistant – Get personalized answers to your tax questions.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁵

Footnotes and Sources

5. ^{IRS.gov, September 26, 2022}

Amid the reverberations of two U.S. banks being taken over by regulators and the spread of uncertainty to European banks, stocks trended higher last week on the strength of the technology sector.

The Dow Jones Industrial Average was flat (-0.15%), while the Standard & Poor’s 500 rose 1.43%. The Nasdaq Composite index picked up 4.41%. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 3.12%.1,2,3

Stocks Gain Despite Banking Woes

Stock prices gyrated as investors wrestled with banking troubles that appeared to spread to Europe. Worries of financial instability rocked financials and sent bond yields falling. While the rush into Treasuries was expected, the dash into technology stocks was a surprise. Falling yields made the high-growth names more attractive, though investors targeted their buying in high-quality companies that offered defensive characteristics, such as profits, healthy cash flows, and strong balance sheets.

When Switzerland’s central bank provided a lifeline to a troubled Swiss bank, and a group of U.S. banks provided aid to a struggling regional bank, stocks powered higher on Thursday. Banking jitters, however, returned on Friday, closing out a tumultuous week and paring some of the week’s gains.

Reverse Psychology

Less than two weeks ago, Fed Chair Jerome Powell testified interest rates might have to be hiked higher and faster. Since then, two U.S. banks were placed in receivership, sparking worries of financial instability and changing the market’s outlook on future rate hikes.

The question now is if the Fed will hike short-term rates at all. By Thursday, traders saw an 18.1% probability of no rate increase at the March Fed meeting, which concludes this Wednesday. Just a week ago, it was a 0% chance. Traders also see a 0% chance of a 50 basis point rate increase in March. A week earlier, there was a 68.3% probability. Where the market previously saw little likelihood of a rate cut this year, the probability of a rate cut by July was 63.7% by Thursday.⁴

Footnotes and Sources

1. ^{The Wall Street Journal, March 17, 2023}
2. ^{The Wall Street Journal, March 17, 2023}
3. ^{The Wall Street Journal, March 17, 2023}
4. ^{CME FedWatch Tool, March 16, 2023}

Unfortunately, instances of IRS-themed text scams are on the rise, and these scam attempts could put your sensitive tax data at risk. Most of these scam messages look like they’re coming from the IRS and have fake messages to lure you into providing information for things like COVID relief or tax credits. They may also ask for your information to help you set up an IRS account online.

Be aware of these scams to protect yourself and your data. Remember, the IRS does not send emails or texts asking for personal or financial information. If you receive a text like this, report it to the IRS by emailing phishing@irs.gov.

Tip adapted from IRS.gov⁵

Footnotes and Sources

5. ^{IRS.gov, October 11, 2022}

Stocks tumbled last week as investors reconsidered their interest rate expectations after Fed Chair Powell’s Congressional testimony that rates may need to go higher. Stocks also were rattled when a west coast bank was placed into receivership on Friday following a run on deposits.

The Dow Jones Industrial Average dropped 4.44%, while the Standard & Poor’s 500 lost 4.55%. The Nasdaq Composite index fell 4.71% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.37%.1,2,3

Rate Fears, Bank Scare

Congressional testimony on Tuesday by Fed Chair Jerome Powell that interest rates may require a higher increase faster than planned unnerved investors, dimming the hopes of any pause in rate hikes this summer. After stabilizing the following day, stocks trended lower as the financial sector came under pressure. The lower move was triggered by a specialty bank’s liquidity issues, though regional and money center banks could not escape the selling.

Labor market strength in a Friday report exacerbated rate-hike anxieties, though cooling wage gains balanced an above-consensus new jobs number. Markets appeared to take the employment report in stride but fell on worries arising from the shutdown of a tech-centric bank.⁴

Powell’s Congressional Testimony

Fed Chair Powell last week testified on Capitol Hill during which he acknowledged that the economy was running hotter than he had expected. He said that labor market strength and stubbornly elevated inflation may require the Fed to raise rates quicker than anticipated and above levels previously contemplated.

The market did not respond well to Powell’s change of tone. Many now see the potential of a 0.50% rate hike coming out of the Federal Open Market Committee’s (FOMC) March 21-22 meeting instead of the expected increase of 0.25%. Powell did say that the FOMC would consider the monthly employment report released last Friday and upcoming inflation reports before arriving at a decision.

Footnotes and Sources

1. ^{The Wall Street Journal, March 10, 2023}
2. ^{The Wall Street Journal, March 10, 2023}
3. ^{The Wall Street Journal, March 10, 2023}
4. ^{The Wall Street Journal, March 10, 2023}