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If you discover you made a mistake on your tax return, you can still file an amended return with corrections. Mistakes may involve filing status, income levels, credits, or deductions.

Here are some tips for filing an amended return:

• Fill out paper Form 1040X, Amended U.S. Individual Income Tax Return. Mail the form to the address in the form’s instructions. If you received an IRS notice, send the form to the address in the notice.
• Include other IRS forms or schedules with Form 1040X (if you used them during your initial filing).
• Don’t send an amended return to correct math errors. The IRS makes corrections.
• Don’t send an amended form if you forgot to include required forms or schedules. The IRS sends notices requesting any missing items.
• You’ll need to send separate 1040X forms (in separate envelopes) for each year you’re filing amendments.
• Wait for the refund from the original return before filing an amended return. You may cash the refund check.
• If you owe money and are sending an amended return, pay the tax as soon as possible. Interest and penalties accrue.
• Processing amended forms may take up to 16 weeks.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov[14]

[14] www.irs.gov/newsroom/what-taxpayers-should-know-about-amending-a-tax-return

Domestic markets fell last week due to negative trade news and declining tech stocks, with the S&P 500 and Dow both breaking their multi-week winning streaks. Meanwhile, the NASDAQ posted losses for 4 days in a row for the first time since April and experienced its worst September start since 2008.[1] Overall, the S&P 500 lost 1.03%, the Dow dropped 0.19%, and the NASDAQ gave back 2.55% for the week.[2]  International stocks in the MSCI EAFE also declined, losing 2.89%.[3]

The Cboe Volatility Index (VIX), which can help gauge market fears, increased 15.8% last week.[4] This increase matches what often occurs during September, when volatility returns after waning during the summer months. In fact, since 2007, volatility has been above average in September.[5] 

Of course, the change from one month or season to another isn’t enough to trigger market losses and rising volatility. Let’s analyze what drove these experiences last week.

1. Trade tension escalated between the U.S. and China. 

The U.S. is getting closer to resolving trade issues with Mexico, Canada, and the European Union – and the countries may unite against China’s trade approach. As a result, the likelihood of calming the trade dispute between the U.S. and China is fading.[6] Last week, President Trump said he was prepared to add tariffs to another $267 billion in Chinese goods. These tariffs would be in addition to the $200 billion that may launch soon, which one expert said could reduce the S&P 500 by 5%.[7] 

2. Tech stocks dropped. 

Last week, the technology sector declined by 2.9%.[8] Tech has performed better than any other sector this year and has been a market leader for 3 years. But concerns about increasing regulation – with a focus on social media companies – weighed on investors’ minds last week.[9] 

3. Wage growth increased.

The latest jobs report surpassed expectations, with the economy adding 201,000 jobs in August. Year-over-year wage growth also rose more than expected and hit its fastest pace since 2009.[10] This wage increase contributed to stock losses, because it could mean that 2018 will have 2 additional interest rate increases – with more on the horizon for 2019.[11] 

Last week certainly provided data and headlines for investors to digest. But the job market, economic fundamentals, and market remain strong.[12] For the moment, we’ll continue to review the data we receive and seek new ways to help you prepare for what lies ahead.

[1] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[5] www.bloomberg.com/news/articles/2018-09-07/summer-s-end-breaks-s-p-500-s-momentum-as-tech-trade-war-bite?srnd=markets-vp

[6] www.marketwatch.com/story/near-term-likelihood-of-us-china-trade-pact-seen-dimming-2018-09-07

[7] www.bloomberg.com/news/articles/2018-09-07/summer-s-end-breaks-s-p-500-s-momentum-as-tech-trade-war-bite?srnd=markets-vp

[8] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

[9] www.cnbc.com/2018/09/07/us-markets-jobs-report-and-data-in-focus.html

[10] wsj-us.econoday.com/byshoweventfull.asp?fid=485659&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[11] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

[12] www.marketwatch.com/story/stock-futures-point-to-lower-open-after-jobs-report-sp-500-could-have-4th-down-day-2018-09-07?dist=markets

Tuition at a private 4-year college can cost $35,000. Tack on another $12,000 for room and board and the annual bill can reach $50,000.

The IRS provides two tax benefits to taxpayers who are paying for higher education in 2018 for themselves, their spouses, or dependents. The American opportunity credit and the lifetime learning credit may help lower their tax load.

Use Form 8863 (https://www.irs.gov/forms-pubs/about-form-8863).

The American opportunity credit is worth up to $2,500 per eligible student, applies only for the first four years of college, and is available for students pursuing degrees.

The lifetime learning credit is worth up to a maximum of $2,000 per tax return per year for all students. It is available for all years of postsecondary education.

Taxpayers must get Form 1098-T from an eligible educational institution.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov^[11]

[11] www.irs.gov/newsroom/tax-credits-help-offset-higher-education-costs

Trade continued to dominate the news last week and cause market volatility as investors monitored discussions of the North American Free Trade Agreement (NAFTA) and tension with China. While Mexico and the U.S. reached a new trade deal early in the week, talks with Canada stalled on Friday, August 31. Reports also came out that President Trump may be adding tariffs on another $200 billion in Chinese goods.^[1] 

Domestic markets increased for the week and ended August in positive territory. The S&P 500 and Dow each had their best August since 2014 – while the NASDAQ’s 5.7% growth was its best performance for the month since 2000.^[2] On Wednesday, the S&P 500 reached a new record high.^[3] For the week, the S&P 500 gained 0.93%, the Dow added 0.68%, and the NASDAQ increased 2.06%.^[4] International stocks in the MSCI EAFE joined the growth, adding 0.26%.^[5]

Key Data From Last Week

Although trade might have dominated headlines, last week provided a number of informative economic updates, including:

• Personal incomes grew in July. 
  The 0.3% increase fell slightly short of the projected growth but is still up 4.7% since this time last year. Combined with growth in personal consumption, this data indicates that consumers had a solid start to the 3rd quarter of 2018.^[6] 
• Gross Domestic Product (GDP) was higher than initially thought. 
  The 2nd reading of GDP expansion between April and June was 4.2%, higher than the initial reading and still the fastest economic expansion since 2014. Economists don’t believe this pace is sustainable, however, as rising interest rates, ongoing trade tension, and fading tax-cut benefits could slow growth later in the year.^[7]
• Consumer confidence soared in August.
  The latest consumer confidence data came in higher than it has since October 2000. This strong reading may indicate that consumer spending will remain healthy for now.^[8] Since consumer spending is more than ⅔ of the U.S. economy, its growth is a critical factor to track.^[9]

This week’s performance and reports once again underscore a message we have frequently shared with you: Instead of focusing on the headlines, pay attention to the fundamentals for a clearer understanding of the economy. If you have questions about how this data affects your financial life, we’re here to talk.

[1] www.reuters.com/article/us-usa-stocks/wall-street-mixed-as-u-s-canada-trade-talks-end-idUSKCN1LG1IU

[2] www.cnbc.com/2018/08/31/us-markets-global-trade-tensions-ramp-up.html

[3] www.bloomberg.com/news/articles/2018-08-30/asian-stocks-to-weaken-on-tariff-plan-yen-rises-markets-wrap?srnd=markets-vp

[4]  http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[5] www.msci.com/end-of-day-data-search

[6] www.ftportfolios.com/Commentary/EconomicResearch/2018/8/30/personal-income-rose-0.3percent-in-july

[7] www.bloomberg.com/news/articles/2018-08-29/u-s-second-quarter-growth-revised-up-to-4-2-on-software-trade

[8] www.marketwatch.com/story/consumer-confidence-soars-to-18-year-high-2018-08-28

[9] www.thebalance.com/consumer-spending-trends-and-current-statistics-3305916

Challenges in emerging markets affected both U.S. and global stock performance last week, with the S&P 500 experiencing several down days.[1] By market close on Friday, however, two of the three major domestics posted gains for the week. The S&P 500 added 0.59%, the Dow increased 1.41%, and the NASDAQ lost 0.29%.[2] Meanwhile, the MSCI EAFE international stocks slipped 1.18%.[3]

As several reports deepened our understanding of the economy’s underlying health, investors balanced the news with updates on Turkey and trade disputes.[4] Here are some key highlights of the various developments:

Economy: Mixed Picture

The latest unemployment data beat expectations, indicating continuing strength as the labor market is near full employment. However, new home construction missed its 7.4% projected growth, increasing only 0.9% in July – following June’s 12.3% decline.[5] Nevertheless, more positive news emerged: Thanks to tax cuts, a solid labor market, and economic growth, retail sales increased 6.4% in July year-over-year. Retail sales have now risen for the past 6 months.[6] 

Turkey: Sanctions and a Tumbling Lira 

On Monday, August 13, the Turkish lira hit its lowest point ever against the U.S. dollar.[7] The U.S. has threatened more sanctions on Turkey if the country does not release U.S. Pastor Andrew Brunson. In addition, Turkey’s inflation is swelling, and President Recep Tayyip Erdogan may be suppressing the central bank’s ability to increase interest rates. The lira may continue to decline in value until interest rates rise.[8] Some analysts are optimistic that these developments won’t create contagion in other markets. Not only is Turkey’s economy relatively small and investors have priced in some risk, opportunities still exist to help calm Turkey’s challenges.[9]

Trade Update: Positive Movement

Later in the week, we received positive updates on trade challenges with China and the North American Free Trade Agreement (NAFTA). Mexican economy minister, Ildefonso Guajardo, announced that he hoped to finalize some NAFTA negotiations by this week.[10] In addition, officials from the U.S. and China will be meeting in Washington, D.C. this week to discuss the ongoing trade disputes. These talks come before the anticipated meeting in November between President Trump and Chinese Leader Xi. A trade war with China has been one of the market’s largest concerns, so if the tension lessens, that is likely good news for equities.[11]

Looking Ahead

This week, we’ll receive more information about the housing market that reveals how this key industry is currently performing. We will also continue to track developments in trade and Turkey. As always, if you have any questions about what you read here or what you’re hearing elsewhere we’re available to talk.

[1] lplresearch.com/2018/08/16/market-update-thursday-august-16-2018/

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/08/17/us-markets-china-us-trade-developments-earnings-data-on-the-agenda.html

[5] lplresearch.com/2018/08/16/market-update-thursday-august-16-2018/

[6] www.ftportfolios.com/Commentary/EconomicResearch/2018/8/15/retail-sales-rose-0.5percent-in-july

[7] www.cnbc.com/2018/08/13/turkish-lira-turkey-currency-hits-new-record-low.html

[8]www.cnbc.com/2018/08/17/us-markets-china-us-trade-developments-earnings-data-on-the-agenda.html

[9] lplresearch.com/2018/08/16/market-update-thursday-august-16-2018/

[10] www.reuters.com/article/us-usa-stocks/wall-street-rises-on-upbeat-trade-news-idUSKBN1L215L

[11] www.cnbc.com/2018/08/17/us-markets-china-us-trade-developments-earnings-data-on-the-agenda.html

The IRS provides resources to people who have recently retired or who are planning to retire. The resources can help taxpayers with challenges and tips to prepare for retirement.

Here are some links with information for retirees.

• “The Individual Arrangement FAQs – Withdrawals” answers basic questions about retirement account withdrawals: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals.

• “Publication 915” provides an in-depth look at Social Security and Equivalent Railroad Retirement Benefits: https://www.irs.gov/pub/irs-pdf/p915.pdf.

• “The Interactive Tax Assistant” provides answers to questions about taxes on Social Security and Railroad Retirement Tier I Benefits: https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable.

• “Publication 575” discusses pension and annuity income: https://www.irs.gov/forms-pubs/about-publication-575.

• “Publication 590-B” examines distributions from individual retirements accounts: https://www.irs.gov/forms-pubs/about-publication-590b.

• “Retirement Topics” delves into required minimum distributions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds.

• “Publication 721” is a tax guide to U.S. civil service retirement benefits: https://www.irs.gov/forms-pubs/about-publication-721.

• “Retirement Savings Contributions Credit” explores eligibility for credits for contributing to retirement accounts: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov[13]

[13] www.irs.gov/newsroom/retirees-can-visit-irsgov-for-helpful-tools-and-resources

Domestic markets ended last week in positive territory, as the S&P gained 0.76%, the Dow was up 0.05%, and the NASDAQ increased 0.96%._[1] This performance marked the 5th week in a row that the S&P 500 and Dow posted gains._[2] Meanwhile, international stocks in the MSCI EAFE stumbled, losing 1.47% for the week._[3] 

Once again, trade and corporate earnings were in the news last week. We learned that the U.S. is considering increasing tariffs on $200 billion of Chinese imports. In response, China announced their own tariffs ranging from 5%-25% on $60 billion of U.S. products._[4]

Corporate earnings season also continued, and so far, more than 78% of S&P 500 companies have beaten estimates._[5] If the trend holds, the 2nd quarter will likely average more than 20% growth in earnings per share. Companies have also detailed positive perspectives for the rest of 2018, showing that this strong corporate performance should continue._[6]

Of course, last week’s trade and earnings weren’t the only topics on investors’ minds. We also received a number of data reports that shaped our understanding of the economy’s health.

Key Findings from Last Week

• Consumers are earning and spending more. The latest data for personal consumption and personal income revealed both measures increased by 0.4% in June. In addition, the report included revised data from 2013-2017, which indicated that people earned $1.05 trillion more during that time period than initially thought._[7] 

• Tariff concerns are affecting manufacturing. The manufacturing sector continues to expand at a faster rate than in 2017, but the pace of growth slowed more than anticipated in July. Respondents to the ISM Manufacturing Index survey shared concerns about tariffs, steel and aluminum disruptions, and transportation challenges._[8]

• The Federal Reserve is on track for a September rate hike. The Fed didn’t raise rates this month, but projections show a 93.6% chance that it will do so in September._[9] The latest jobs report detailed steady wage increases, which helped ease Fed concerns about inflation._[10] 

This week is relatively light on economic data, but we will continue to analyze last week’s reports and the remaining corporate earnings releases. If you have any questions about where the economy is today or what may lie ahead, we’re here to talk.

[1] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[2] www.cnbc.com/2018/08/03/us-stocks-point-to-lower-open-as-investors-await-jobs-report.html

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/08/03/us-stocks-point-to-lower-open-as-investors-await-jobs-report.html

[5] www.reuters.com/article/us-usa-stocks/wall-street-gains-as-upbeat-earnings-trump-trade-jitters-idUSKBN1KO1IH

[6] www.barrons.com/articles/after-the-bell-stocks-steamroll-tariff-and-job-worries-to-end-higher-1533330996

[7] www.ftportfolios.com/Commentary/EconomicResearch/2018/7/31/personal-income-and-personal-consumption-both-rose-0.4percent-in-june

[8] www.bloomberg.com/news/articles/2018-08-01/u-s-manufacturing-cools-as-orders-gauge-falls-to-one-year-low

[9] www.cnbc.com/2018/08/03/us-stocks-point-to-lower-open-as-investors-await-jobs-report.html

[10] wsj-us.econoday.com/byshoweventfull.asp?fid=485658&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

You get a letter from the IRS. First, don’t panic.

The agency sends millions of letters to taxpayers every year.

What do you do? Here are some tips:

• Don’t ignore the letter. Most IRS correspondences are about tax returns or tax accounts and deals with specific issues. The letters provide specific instructions about what to do.

• Don’t panic. Most of the time taxpayers need only to read the letter carefully and do what it says.

• Be prompt. IRS notices may refer to changes in taxpayers’ accounts, taxes owed, or payment requests. Responding to inquiries helps minimize potential charges for interest or penalties.

• Review the letter carefully. Notices may request changes or corrections to tax returns. Compare the information in the letter with your original return. If you agree with the changes, make the changes on your personal copy of your return. Keep it for your records.

• Don’t respond unless you’re told to. You don’t have to respond to an IRS notice unless the agency specifically requests a response. However, if you owe money, respond promptly. Go to https://www.irs.gov/payments for more information.

• Respond to a dispute. If you don’t agree with the IRS, mail a letter to the agency explaining why you disagree with the information in a notice. Mail your letter to the address on the stub at the bottom of the notice. Include documents and other information to support your position. Allow at least 30 days for the IRS to respond.

• Don’t call. You usually don’t have to call the IRS. If you do, use the number on the upper right-hand corner of the notice.

• Avoid the scams. The IRS doesn’t use social media or text messages to make contact. The agency’s first contact is usually by mail.

Other details may apply, and you can find more information on the IRS website.

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

Tip adapted from IRS.gov_[12]

[12] www.irs.gov/newsroom/dos-and-donts-for-taxpayers-who-get-a-letter-from-the-irs