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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

  1. 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

  1. The Wall Street Journal, November 15, 2024
  2. Investing.com, November 15, 2024
  3. CNBC.com, November 12, 2024
  4. The Wall Street Journal, November 13, 2024
  5. The Wall Street Journal, November 14, 2024
  6. 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

  1. 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

  1. The Wall Street Journal, November 8, 2024
  2. Investing.com, November 8, 2024
  3. CNBC.com, November 4, 2024
  4. CNBC.com, November 5, 2024
  5. The Wall Street Journal, November 6, 2024
  6. The Wall Street Journal, November 7, 2024
  7. MarketWatch.com, November 7, 2024
  8. The Wall Street Journal, November 8, 2024
  9. 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

  1. The Wall Street Journal, November 1, 2024
  2. Investing.com, November 1, 2024
  3. CNBC.com, October 30, 2024
  4. The Wall Street Journal, October 30, 2024
  5. The Wall Street Journal, November 1, 2024
  6. The Wall Street Journal, November 1, 2024

Tax Tip! Is Your Office in a Historic Building? You May Be Eligible for a Tax Credit

To protect heritage sites and other history, the IRS implemented its rehabilitation tax credit, which offers an incentive to renovate and restore old or historic buildings. Here are some of the highlights to help you determine whether your building is eligible:

  • The credit may pay 20 percent of the qualifying costs of rehabilitating a historic building.
  • This 20 percent needs to be spread out over five years.
  • The credit doesn’t apply to the purchase of the building.
  • Taxpayers use Form 3468, Investment Credit, to claim the rehabilitation tax credit.

Although this credit might not significantly improve many situations, it’s still a step toward preserving our country’s history.

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, April 30, 2024

Weekly Market Insights: Stocks Mixed Ahead of Election

Stocks were mixed last week as fresh economic data points and election-related uncertainty slowed market momentum.

The Standard & Poor’s 500 Index fell 0.96 percent, while the Nasdaq Composite Index rose 0.16 percent. The Dow Jones Industrial Average dropped 2.68 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 2.30 percent.1,2

Nasdaq Leads

Stocks were mixed for the first half of the week as investors geared up for a steady stream of Q3 reports. The 10-year Treasury yield continued to trend higher, which caught the attention of some traders.

Markets fell Wednesday morning with news that existing home sales fell to a 14-year low in October; still slowed by higher interest rates, sales are on track for their worst year since 1995. Also, pre-election jitters remained an undertow with traders.3,4,5

News that durable goods orders rose in September buoyed sentiment a bit. At Friday’s close, the Nasdaq, fueled by technology names, marked its seventh consecutive week of gains but the S&P 500 broke its 6-week winning streak.6,7

Footnotes and Sources

  1. The Wall Street Journal, October 25, 2024
  2. Investing.com, October 25, 2024
  3. MarketWatch.com, October 23, 2024
  4. The Wall Street Journal, October 23, 2024
  5. The Wall Street Journal, October 23, 2024
  6. ABA Banking Journal, October 25, 2024
  7. CNBC.com, October 25, 2024

Tax Tip: Tax Incentives Can Help You Further Your Education

Tax credits help with the cost of higher education by managing the income tax you may need to pay. The two tax credits available are the American Opportunity Tax Credit and the Lifetime Learning Credit.

Some education savings plans offer tax benefits if the individual qualifies. Also, you may be able to deduct higher education costs – such as tuition, student loan interest, and qualified education expenses – from your tax return.

Knowing your potential tax benefits may save you money if you’ve always dreamed about returning to school, whether to further your career or just learn something new.

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

  1. IRS.gov, July 3, 2024

Weekly Market Insights: Sixth Week of Gains on Wall Street

Stocks posted modest gains last week, with quarterly earnings season in full swing and the election on the horizon.

The Standard & Poor’s 500 Index increased 0.85 percent, while the Nasdaq Composite Index rose 0.80 percent. The Dow Jones Industrial Average advanced 0.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 0.31 percent.1,2

Six in a Row

Stocks bolted out of the gate as the week began. The S&P 500 and the Dow Industrials hit record highs, with the Dow crossing 43,000 for the first time.3

Midweek, news of stronger-than-expected retail sales report contributed to overall market momentum. Retail sales rose a seasonally adjusted 0.4 percent in September, topping economists forecasts.4

As the week wrapped up, the technology sector helped fuel a rally that pushed the S&P and Nasdaq to another record high. It was the sixth straight week of gains for the S&P 500, Nasdaq, and Dow Industrials.5

Insight from Corporate Reports

There were many market forces pushing each other around last week.

Corporate earnings reports drove much of the market action. Some of the most extensive financial stocks surprised on the upside, supporting a narrative that the economy remains strong.

At the same time, a corporate report from one of the world’s largest chip manufacturing contractors revealed continued strong global demand for AI microchips. However, increasing investor anxiety was a constant undertow in trading as the November elections drew nearer.6

Footnotes and Sources

  1. The Wall Street Journal, October 18, 2024
  2. Investing.com, October 18, 2024
  3. CNBC.com, October 15, 2024
  4. The Wall Street Journal, October 17, 2024
  5. The Wall Street Journal, October 18, 2024
  6. The Wall Street Journal, October 18, 2024

Passport Power

Did you know that the IRS can revoke your passport if you owe the Internal Revenue Service $62,000 or more? That’s right; the IRS can revoke the passports of any taxpayer owing $62,000 or more, including penalties and interest.

Notably, if you’re currently paying off the debt or are contesting a tax bill in court, you should not be affected. However, anyone under an IRS tax lien could find their ability to travel hampered.

Contact a qualified attorney or tax specialist with questions about tax debts or other complex tax issues.

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, June 12, 2024