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Beware of Phishing Scams

A phishing scam occurs when someone pretends to be a trusted source, such as a bank, tax preparer, or credit card company, to access your personal information.

If you believe you may be part of a phishing scam, here are some recommendations from the IRS:

Never open an email from a sender that you don’t recognize.
Never disclose personal information to anyone online, including your passwords, bank account numbers, credit card numbers, or Social Security number. The IRS will never ask for this information via email.
When possible, use two-factor authentication to protect your accounts. Two-factor authentication requires a secondary form of identification (such as a phone number) to access your account.

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

^{IRS.gov, July 29, 2024}

Weekly Market Insights | Goldilocks Returns; Market Ends Week “Just Right.”

Stocks roared back last week, fueled by upbeat Q4 corporate reports and economic news that stalled inflationary fears.

The Standard & Poor’s 500 Index rose 2.91 percent, while the Nasdaq Composite Index advanced 2.45 percent. The Dow Jones Industrial Average led, picking up 3.69 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 2.00 percent.^1,2

Goldilocks is Back

The “Goldilocks” narrative—an economy that’s neither too hot nor too cold—made a comeback last week.

Tuesday’s Producer Price Index report showed that wholesale prices rose less than expected in December—one piece of evidence suggesting a cooling economy.³

Stocks jumped out of the gate Wednesday after the December Consumer Price Index (CPI) report showed core inflation (minus volatile energy and food prices) rose less than expected. Investors also cheered Q4 reports from a handful of money center banks and positive news out of the Middle East.⁴

Stocks took a breather Thursday before pushing higher again on Friday.⁵

The S&P and Dow Industrials had their best week since early November, and the Nasdaq saw its best weekly performance since early December. The yield on the 10-year Treasury note fell roughly 20 basis points over the week.^6,7

Slowing Inflation

Investors welcomed the inflation reports, believing wholesale and consumer prices might trend lower in 2025.

First, producer prices came in at 0.2 percent, which was less than the 0.4 percent increase anticipated. Then consumer prices came in at 2.9 percent, slightly elevated, but the real story was core inflation. When you subtract out food and gas prices, CPI saw its smallest monthly increase since July.⁸

Footnotes and Sources

^{The Wall Street Journal, January 17, 2025}
^{Investing.com, January 17, 2025}
^{CNBC.com, January 14, 2025}
^{The Wall Street Journal, January 15, 2025}
^{CNBC.com, January 17, 2025}
^{MarketWatch.com, January 17, 2025}
^{CNBC.com, January 17, 2025}
^{The Wall Street Journal, January 15, 2025}

Self-Employed Tax Obligations

There are a few tax considerations to consider when you work for yourself. Generally, you’re required to file and pay estimated taxes during the year.

Make quarterly payments if you’ve determined you need to use Form 11040-ES.
Filing annually: If you’re filing annually, you must use Schedule C to report income or loss. To file your Social Security and Medicare taxes, you should file Schedule SE Form 1040.
Deductions: If you’re using part of your home for business, you may be able to make certain deductions, such as for your office or a portion of your home’s square footage used for business purposes.

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, September 30, 2024}

Weekly Market Insights | Investors Read Inflation Risk in Job Numbers

Stocks fell for the second consecutive week as a round of fresh economic data stoked inflationary fears among investors.

The Standard & Poor’s 500 Index declined 1.94 percent, while the Nasdaq Composite Index dropped 2.34 percent. The Dow Jones Industrial Average lost 1.86 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 0.49 percent.^1,2

Inflation Stymies Markets

Stocks rallied broadly to start the week, but two economic reports on Tuesday—job openings and the prices-paid index among service companies—raised fresh inflation concerns. Higher Treasury yields also put pressure on stocks.^3,4

Stocks flattened out on Wednesday. Investors reacted to news that most Federal Open Market Committee members agreed inflation risks had increased, per minutes from the Fed’s December meeting.^5,6

U.S. stock markets were closed Thursday in observance of President Jimmy Carter’s funeral.

On Friday, a warmer-than-expected December jobs report caused investors to question whether the Fed will adjust rates in 2025. News that consumer sentiment ticked down also pushed stocks lower.⁷

When Good Becomes Bad News

The economy added 256,000 jobs in December—100,000 more than economists expected. That’s the second-highest monthly job gain for 2024. Unemployment ticked down to 4.1 percent, which was also better than anticipated.

Job growth and lower unemployment signals good news for the economy but bad news for the markets. A stronger jobs market puts less pressure on the Fed to adjust rates, especially with inflation top-of-mind among investors.^8,9

Footnotes and Sources

^{The Wall Street Journal, January 10, 2025}
^{Investing.com, January 10, 2025}
^{CNBC.com, January 6, 2025}
^{The Wall Street Journal, January 7, 2025}
^{CNBC.com, January 8, 2025}
^{MarketWatch.com, January 8, 2025}
^{CNBC.com, January 10, 2025}
^{The Wall Street Journal, January 10, 2025}
^{TradingEconomics.com, January 10, 2025}

Tips for Good Recordkeeping

When you file your tax return, the first step is to prepare your records. Good recordkeeping throughout the year can make filing your taxes easier.

Here are some recordkeeping tips:

Identify all sources of income.
Keep track of expenses.
Add tax records to your files as you receive them to make filing easier.
Organize support items that you may need to clarify your tax return.

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, October 2, 2024}

Weekly Market Insights | Stocks Decline Slightly as New Year Dawns

Stocks edged lower last week despite a powerful end-of-week rally.

The Standard & Poor’s 500 Index lost 0.48 percent, while the Nasdaq Composite Index slid 0.51 percent. The Dow Jones Industrial Average fell 0.60 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, dropped 0.90 percent.^1,2

Selling Then Buying

Stocks were under pressure right out of the gate on Monday for no apparent reason other than worries over the loss of year-end momentum. By the end of trading on Monday, markets recovered some losses, but the selling picked up again on Tuesday.^3,4

After being closed for the New Year’s holiday, stocks opened higher for the first trading day of 2025. But sellers gained the upper hand by the end of trading. On Friday, Investors perked up with tech stocks leading a recovery rally that erased most of the week’s losses.^5,6

Megacap’s Mega Influence

Megacap tech stocks have captured many headlines over the last two years as the S&P 500 posted double-digit returns (24 percent for 2023 and 23 percent for 2024).

And for a good reason—megacap tech stocks were doing most of the work. For example, during the past 12 months of trading, more than half (53 percent) of the S&P 500’s return can be attributed to the Magnificent Seven–the seven megacap tech companies that most investors would consider household names.⁷

Footnotes and Sources

^{The Wall Street Journal, January 3, 2025}
^{Investing.com, January 3, 2025}
^{CNBC.com, December 30, 2024}
^{The Wall Street Journal, December 31, 2024}
^{CNBC.com, January 2, 2025}
^{CNBC.com, January 3, 2025}
^{The Wall Street Journal, December 31, 2024}
^{IRS.gov, October 2, 2024}

Do You Have To Pay Taxes On Your Hobby?

Whether you picked up embroidering, dog grooming, or making jewelry, a side hobby may or may not require paying taxes.

Does your kids’ lemonade stand need to pay taxes? Probably not but if you’re doing something like selling cookies out of your kitchen, you might need to check out the rules.

Here are some things to consider when determining whether your activity is a hobby or business:

Is your hobby carried out in a businesslike manner?
Do you maintain complete and accurate books and records for your hobby?
Is the effort you put into your hobby intended to make a profit?
Do you depend on the income from your hobby for your livelihood?
Do you know how to carry out your hobby as a successful business?
Have you made a profit from your hobby?

If you receive income from your hobby with no intention of making a profit, you may have to report the income to the IRS.

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, March 18, 2024}

Weekly Market Insights | Holiday Spending Up

Stocks notched a slight gain over the holiday week. A tech-driven rally in the first half of the week was clawed back in the second half as investors took profits following the market holiday.

The Standard & Poor’s 500 Index advanced 0.67 percent, while the Nasdaq Composite Index rose 0.76 percent. The Dow Jones Industrial Average added 0.35 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.54 percent.^1,2

Ho-Ho, Then No-Go

Stocks rallied during the first half of a shortened holiday trading week. Holiday cheer won out despite news of declining consumer confidence in December, a drop in durable goods, and new home sales reporting below expectations.^3,4

The “Santa rally” lost its ho-ho-go after the midweek holiday. Megacap technology stocks led markets down on Friday, giving back most of the gains from the first half of the week.^4,5

The Real Santa

While Santa got the headlines, the consumer drove the holiday shopping sleigh this year.

Holiday spending—defined by the period from November 1 through December 24—rose 3.8 percent in 2024, compared with 3.1 percent in 2023. Economists closely follow consumer activity since consumer spending makes up roughly two-thirds of total gross domestic product. Market watchers attributed the strong job market and growth in household wealth as the primary drivers of consumer strength.⁶

Footnotes And Sources

^{The Wall Street Journal, December 27, 2024}
^{Investing.com, December 27, 2024}
^{MarketWatch.com, December 23, 2024}
^{CNBC.com, December 26, 2024}
^{The Wall Street Journal, December 27, 2024}
^{MarketWatch.com, December 26, 2024}

What is the Lifetime Learning Credit?

The Lifetime Learning Credit (LLC) is a tax credit for qualified tuition and related expenses. It can help pay for undergraduate or graduate studies and courses to acquire or improve job skills. The credit is worth up to $2,000 per tax return.

Another thing about this tax credit is that it’s available for unlimited tax years, unlike the American opportunity tax credit which is only for the first four years at an eligible institution.

To claim the LLC, you must pay qualified education expenses for higher education and enroll at an eligible educational institution. Check out the IRS guidelines for more details and to see whether you may qualify.

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

^{IRS.gov, January 10, 2024}

Weekly Market Insights | Powell Signal Leaves Investors Cold

Stocks were under pressure last week as the Fed Chair’s hawkish comments unsettled investors ahead of the holiday season.

The Dow Jones Industrial Average received the hardest hit, falling 2.25 percent. The Standard & Poor’s 500 Index lost 1.98 percent, while the Nasdaq Composite Index dropped 1.78 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, retreated an eye-catching 3.38 percent.^1,2

No Santa Yet

Divergence marked the start of the week as megacap tech stocks rallied while the Dow Industrials fell for the eighth-straight session—its longest losing streak since 2018.³

Following its scheduled December meeting, the Fed announced it was cutting short-term rates by a quarter point, as widely expected. However, Fed Chair Jerome Powell also signaled fewer rate reductions next year. “From here, it’s a new phase and we’re going to be cautious about further cuts,” he said in his post-meeting news conference.

The rate news surprised investors, who were anticipating more dovish comments from the Fed Chair.^4,5

Markets were under pressure again early Friday as the spending bill to fund the federal government appeared to stall. But a lower-than-expected inflation update boosted the market and helped erase some of the earlier losses.^6,7

Holiday Cheer

Despite a difficult week, stocks are on track to have their second consecutive year of double-digit returns. Year to date, through Friday’s close, the S&P 500 was ahead by about 24 percent. In 2023, the S&P 500 also tacked on 24 percent for the full year.⁸

Footnotes and Sources

^{The Wall Street Journal, December 20, 2024}
^{Investing.com, December 20, 2024}
^{CNBC.com, December 16, 2024}
^{CNBC.com, December 17, 2024}
^{The Wall Street Journal, December 18, 2024}
^{CNBC.com, December 19, 2024}
^{CNBC.com, December 20, 2024}
^{The Wall Street Journal, December 20, 2024}