Uncategorized

The Week on Wall Street
A positive jobs report sent stocks soaring last Friday, capping a solid week as evidence of a global economic recovery outweighed concerns over civil unrest and tensions with China.

The Dow Jones Industrial Average jumped 6.81%, while the Standard & Poor’s 500 advanced 4.91%. The tech-heavy Nasdaq Composite Index lagged, climbing 3.42%. The MSCI EAFE Index, which tracks developed stock markets overseas, gained 5.52%.[1][2][3]

Stocks March Higher
Despite multiple headwinds, stocks rode a wave of optimism over economic recovery and were encouraged by signs that a feared spike in COVID-19 had not occurred.

Firming oil prices and positive global manufacturing data helped boost stocks during the week. The market continued to be led by industry sectors that were most battered in the March decline, as price advances slowed in growth-oriented stocks, primarily technology names.

After a pause on Thursday, stocks surged on Friday when a jobs report surprisingly showed 2.5 million new jobs in May, with the unemployment rate falling to 13.3%. Wall Street expected a jobs decline of over 8 million and an unemployment rate of 19.5%.[4][5]

A Wall of Worry
While the markets continued to move higher last week, many investors are concerned that the recovery may be hindered by simmering tensions with China and the civil unrest that erupted last week.

China has been a longstanding source of market worry, but the civil unrest introduces a new challenge. For now, the market appears to have shrugged off these concerns.

Final Thought
This past Wednesday marked the best 50-day gain for the S&P 500 in the index’s history. During a period that approximates the lifespan of a mosquito, stock market sentiment has swung from near-absolute despair in late March to positively bullish.[6]

Often, the most impactful lessons in life tend to be those most recently learned. If the last three months have offered investors any lesson, it may be that trying to time the market is a challenging proposition.

[1] The Wall Street Journal, June 5, 2020
[2] The Wall Street Journal, June 5, 2020
[3] The Wall Street Journal, June 5, 2020
[4] CNBC, June 5, 2020
[5] CNBC, June 5, 2020
[6] The Wall Street Journal, June 4, 2020

Do you rent a spare room in your house or provide car rides for a fee? If so, you may be a part of the sharing or “gig” economy. If you made any income from such platforms, you have some key financial details to address when filing your taxes.

Is the income taxable?
Yes. No matter whether you made money full or part time, the IRS taxes the income you make.

Can you take deductions?
Some business-expenses deductions may apply for taxpayers who qualify. A deduction for a business expense could be an item, such as claiming the standard mileage rate if you use your car for business.

Do taxes apply if you rent a home you also live in?
You will generally have to account for specific tax rules if you rent a home that you live in at any point throughout the year. You can identify the status of taxable rental income using the IRS tax assistant tool.

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

Tip adapted from IRS.gov[7]
[7] IRS.gov, February 25, 2020

The Week on Wall Street
The shortened week, which began with a powerful two-day rally of trading, was enough to drive the markets into another week of solid gains.

The Dow Jones Industrial Average rose 3.75%, while the Standard & Poor’s 500 advanced 3.01%. The Nasdaq Composite Index climbed 1.77% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained 6.18%.[1][2][3]

Rising Optimism
Returning from Memorial Day weekend, stocks surged on rising optimism over economic re-opening, declines in new infections, and progress in the development of a vaccine.

Stocks continued their march higher, lifted by signs that the White House and Congress may be working together to put together another stimulus package. But the momentum lost steam, in part due to news of China’s vote to override Hong Kong’s autonomy. Comments by President Trump on the last day of trading eased concerns.[4][5]

Rotation in Leadership
The recovery from the March lows has been powered by large-cap growth stocks, especially the mega-cap technology names. However, this week saw new sectors leading the market higher, notably the financials and industrials, while the technology and health care sectors lagged.

This leadership rotation is being referred to by some market commentators as the “re-opening trade.” If these sectors are to remain leaders, it may hinge on a steady economic recovery and escaping a second wave of COVID-19 infections.

[1] The Wall Street Journal, May 29, 2020
[2] The Wall Street Journal, May 29, 2020
[3] The Wall Street Journal, May 29, 2020
[4] CNBC.com, May 28, 2020
[5] FoxBusiness.com, May 29, 2020

These days, you can do almost anything online, including filing taxes. That can sometimes mean being more vulnerable to security compromises, such as a breach of data or identity theft. Here are tips for keeping your data safe.

• Always use security software with firewall and anti-virus protections. Make sure your security software is always on and set to automatically update. You may want to go so far as to encrypt sensitive files such as tax records you store on your computer.
• Learn to recognize and avoid phishing emails, threatening calls, and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Shop at reputable online retailers. Treat your personal information like you do your cash; don’t leave it lying around.

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

Tip adapted from IRS.gov[10]
[10] IRS.gov, May 12, 2020

The Week on Wall Street
Upbeat comments by the Federal Reserve Chairman and more signs of an economic turnaround combined to help fuel a powerful rally in the stock market last week.

The Dow Jones Industrial Average rose 3.29%, while the Standard & Poor’s 500 advanced 3.20%. The Nasdaq Composite index climbed 3.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.87%.[1][2][3]

Stocks Cheer Fed Support
The markets surged higher to open the week, buoyed by a Sunday night “60 Minutes” interview with Fed Chair Jerome Powell, who said that the Federal Reserve would do everything necessary to support economic recovery. Rising oil prices and more states lifting restrictions added to the overall improving investor outlook.

After a day digesting those gains, stocks moved another leg higher on strong earnings from big retailers and growing optimism over the global economic recovery. Stocks drifted in the final two days of trading as investors worried about heightening tensions between the U.S. and China.

Different Views on the Economic Recovery
Treasury Secretary Steven Mnuchin and Fed Chair Powell testified last week before the Senate Banking Committee, providing Senators with two different views of the nation’s economic outlook.[4]

Secretary Mnuchin suggested a wait-and-see approach before moving ahead with additional fiscal measures. He wants to pause new spending in order to first assess the impact of the already-approved stimulus program. He believes that the economy will experience a “V-shaped” recovery.[5]

Fed Chair Powell, on the other hand, expressed worries that waiting too long for additional fiscal measures may hamper the fragile economic recovery. It was the third time in a week that the Fed Chair suggested more federal spending is needed to help the economic recovery.[6]

Final Thoughts
One of the challenges of assessing the U.S. economy using certain government reports, like the consumer price index or the employment report, is that they are considered “lag indicators.” Lag indicators provide good insight into where we’ve been, but are less helpful in looking at the current state of economic activity.

Looking at some “real-time” data can help investors better assess the here-and-now. For example, gasoline deliveries are trending higher, consumer confidence appears to have stabilized, and airlines are seeing more bookings. Even the supply of toilet paper seems less of a concern these days, with Google searches falling to near normal levels.[7][8]

[1] The Wall Street Journal, May 22, 2020
[2] The Wall Street Journal, May 22, 2020
[3] The Wall Street Journal, May 22, 2020
[4] The Wall Street Journal, May 20, 2020
[5] The Wall Street Journal, May 20, 2020
[6] The Wall Street Journal, May 20, 2020
[7] MarketWatch, May 20, 2020
[8] MarketWatch, May 20, 2020

If you discover that you’ve made an error on your tax return, you may need to file an amended return. Though you don’t need to file if you’ve made a simple math error or left out forms (the IRS corrects for those automatically), you should file an amended return for any missed credits, deductions, filing status, or income.

• Use Form 1040X to file an amended return.
• You’ll need to use separate forms for each year that you need to amend.
• If you use any other forms or need to submit new documentation, attach them to the 1040X form.
• Pay any additional taxes you owe as soon as possible to avoid accruing additional interest and penalties.

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

Tip adapted from IRS.gov[8]
[8] IRS.gov, June 4, 2019

The Week on Wall Street
Stocks drifted lower last week, weighed down by Federal Reserve Chairman Jerome Powell’s unsettling comments on the economy and signs of renewed tensions with China.

The Dow Jones Industrial Average fell 2.65%, while the Standard & Poor’s 500 retreated 2.26%. The Nasdaq Composite Index slipped 1.17% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, slid 3.66%.[1][2][3]

Stocks Pull Back
Stocks moved lower throughout most of last week on worries that the emerging economic reopening might accelerate the spread of COVID-19. Comments by Fed Chair Powell added to the downside pressure when he expressed concern about the path ahead for the U.S. economy.

The stock market managed to find some firmer footing, posting a strong gain on Thursday. Stocks rallied again on Friday, overcoming headlines that suggested a souring relationship with China and a report that showed U.S. retail sales dropped 16.4% in April.[4]

Powell Speaks
Fed Chair Powell spoke last Wednesday and painted a somber economic outlook, remarking that “the path ahead is highly uncertain and subject to significant downside risks.” He urged the White House and Congress to pass additional financial relief to help the economic recovery, adding that there was no plan on the Fed’s part to cut the federal funds rate to below zero.[5]

Powell also referenced internal Fed research that found those least able to weather the current economic environment were most impacted, with nearly 40% of households making less than $40,000 per year having lost a job in March.[6]

[1] The Wall Street Journal, May 15, 2020
[2] The Wall Street Journal, May 15, 2020
[3] The Wall Street Journal, May 15, 2020
[4] CNBC.com, May 15, 2020
[5] The Wall Street Journal, May 13, 2020
[6] The Wall Street Journal, May 13, 2020

The Taxpayer Advocate Service is an independent group within the IRS that works to protect taxpayers under the Taxpayer Bill of Rights. They also help taxpayers resolve issues and act as the taxpayer’s voice within the IRS. Here’s what you should know:

• Advocates can help you resolve lingering issues with the IRS that you cannot resolve alone.
• They work with individuals, businesses, and tax-exempt organizations at no charge.
• You may be eligible for help if your IRS problem is causing financial stress or if you believe an IRS procedure is flawed.
• You can find a Taxpayer Advocate through your local directory and at www.taxpayeradvocate.irs.gov.

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

Tip adapted from IRS.gov[11]
[11] taxpayeradvocate.irs.gov, May 8, 2020

The Week on Wall Street
Despite a historic downturn in employment, stocks managed to climb higher last week as investors were emboldened by the pace of economic re-openings, both here and abroad.

The Dow Jones Industrial Average gained 2.56%, while the Standard & Poor’s 500 advanced 3.50%. The Nasdaq Composite Index jumped 6.00% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 1.09%.[1][2][3]

Tech Stocks Power NASDAQ
Last week’s trading was driven by a crosscurrent of emotions – worries about weak corporate earnings pace of business re-openings as well as optimism over the pickup in economic activity and progress on developing a vaccine.

Stocks posted back-to-back daily gains to end the week despite troubling employment data. Perhaps the headline of the week was that the technology-heavy NASDAQ Composite Index moved into positive territory year-to-date.[4][5]

A “Silver Lining” in the Jobs Report?
Last week brought into stark focus the number of jobs lost since the start of the economic shutdown. Since mid-March, unemployment insurance claims have reached 33.5 million. The pace of newly unemployed has slowed down, however, with recent weeks at about half the rate at the peak in late March.[6][7]

April’s employment report, released on Friday, saw a spike to 14.7% in the unemployment rate. As severe as these numbers may be, 88% of April’s newly unemployed characterized their job loss as temporary rather than permanent, as opposed to 47% of the newly unemployed in March who said their job loss was temporary.[8][9]

[1] The Wall Street Journal, May 8, 2020
[2] The Wall Street Journal, May 8, 2020
[3] The Wall Street Journal, May 8, 2020
[4] The Wall Street Journal, May 8, 2020
[5] The Wall Street Journal, May 8, 2020
[6] CNBC, May 6, 2020
[7] CNBC, May 6, 2020
[8] The Wall Street Journal, May 8, 2020
[9] The Wall Street Journal, May 8, 2020

With this year’s tax deadline moved to July 15th, you might be tempted to push your taxes to the back of your mind. Now is a good time, however, to set up a system that will keep your tax records safe and easy to find. Here’s how to make organizing your taxes even easier:

• Speak to a professional about tax minimization strategies you can employ.
• Already worried about next year’s tax burden? Adjust your withholding to avoid a big bill at tax time.
• Take action when your life changes. Getting married or divorced, having a child, incorporating a business – these are all life changes that may affect your taxes. Speak to a professional about updating your tax information.
• Keep all your tax documents organized in one place. Add files, documents, and receipts as they arrive.
• Find a tax specialist. If you’re not currently working with a tax professional, now is a good time to interview one.

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

Tip adapted from IRS.gov[9]
[9] IRS.gov, December 16, 2019