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The Internal Revenue Service (IRS) has a handy tool called the Tax Withholding Estimator, which can help you manage having too much or too little tax withheld from your wages.

The tool can also help you determine if you must complete a new W-4 to submit to your employer, complete a new W-4P, or make additional payments to the IRS. It does this by estimating your annual income, how many children you claim for the Child Tax Credit and Earned Income Tax Credit, and other items that may affect your yearly taxes.

Before using the Tax Withholding Estimator, gather all necessary documents; this includes your W-2 from your employer, any 1099 forms you have from banks and other payers, and any other forms you need. Gathering as much information as possible will help because the estimator will only be as accurate as the information you enter.

*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.gov⁸

Footnotes and Sources

8. ^{IRS.gov, April 13, 2023}

A Friday rally overcame a shaky week, sending stocks mostly higher.

The Dow Jones Industrial Average slipped 0.30% for the week. Meanwhile, the Standard & Poor’s 500 gained 0.48%, and the Nasdaq Composite index added 1.60% for the five trading days. The MSCI EAFE index, which tracks developed overseas stock markets, fell 2.37%.^1,2,3

Friday Rally

Stocks rallied on Friday after a stronger employment report than Wall Street expected. The headline increase in September payrolls initially generated fears of further Fed rate hikes, leading to a spike in bond yields and steep early morning losses. A yield retreat may have triggered the turnaround as investors focused more on the month’s moderate wage growth.

Stocks were shaky for much of last week on rising bond yields. When Treasury yields hit their highest level since 2007 on Tuesday, stock prices dropped, leaving the Dow Industrials in negative territory for the year. The catalyst for the day’s spike in interest rates was a surprisingly strong JOLTS (Job Openings and Labor Turnover Survey) showing nearly one million more open jobs than investors had expected.⁴

All About Jobs

The labor market remains resilient. August JOLTS showed job openings exceeded 9.6 million, above the consensus estimate of 8.8 million. A weak Automated Data Processing (ADP) private payroll job growth (released Wednesday) that showed 89,000 new private sector jobs appeared to be an outlier compared to the other reports.^5,6

Friday’s monthly employment report showed a robust gain of 336,000 new jobs, nearly double the consensus forecast of 170,000. At the same time, the previous two months saw significant upward revisions of 119,000 (combined) from initial reports. Wage gains rose modestly, coming in below expectations and striking a hopeful note on inflation.⁷

Footnotes and Sources

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

Can you deduct expenses such as gas, depreciation, and lease payments on your tax returns? If you are a business owner or self-employed individual, you may be able to. If you use your car for business and personal purposes, you will want to base any deductions on the mileage used for business.

There are two ways to calculate the car expenses you can deduct. The first method calculates and deducts expenses, including depreciation, lease payments, gas and oil, tires, repairs and tune-ups, insurance, and registration fees.

The second is to use the standard mileage rate, which is a rate calculated to represent gas and some of the above factors. In 2023, the standard mileage rate is 65.5 cents per mile. Taxpayers who want to use the standard mileage rate for a car they own must use this method in the first year the vehicle is available for use in their business.

*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, April 6, 2023}

Rising bond yields and government shutdown fears left stocks in mostly negative territory for the week.

The Dow Jones Industrial Average lost 1.34%, while the Standard & Poor’s 500 slipped 0.74%. The Nasdaq Composite index was flat (+0.06%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.95%.^1,2,3

Stocks Follow The Bond Market

The bond market drove stock prices for much of last week as investors fretted about rising bond yields. After beginning the week with small gains, stocks resumed their September decline amid weak housing data and a decline in consumer confidence. However, it was the jump in bond yields, which sent the 10-year Treasury yield to near a 15-year high, that may have most undermined investor sentiment.⁴

After a failed attempt at a rebound mid-week, stocks staged a Thursday rally on a pause in bond yield increases–a rally that extended into Friday morning on an encouraging core personal consumption expenditures (PCE) price index report. (PCE is the Fed’s preferred inflation gauge.) But the rally faded as traders fixated on a potential government shutdown.

Mixed Economic Signals

Amid recent signs of a labor market cooling (a hopeful sign for ending rate hikes), last Thursday’s initial jobless claims report showed only a slight increase of 204,000. That was the second-lowest reading since January and below economists’ expectations of 215,000. Continuing claims declined by 12,000.⁵

That same morning, the final estimate of second-quarter GDP was released, indicating a 2.1 annualized growth rate–unchanged from the previous estimate. However, beneath the headline number, consumer spending was cut to a 0.8 percent rise from its earlier estimate of 1.7 percent–a worrisome revision since consumer spending is the engine of the U.S. economy.⁶

Footnotes And Sources

1. ^{The Wall Street Journal, September 29, 2023}
2. ^{The Wall Street Journal, September 29, 2023}
3. ^{The Wall Street Journal, September 29, 2023}
4. ^{CNBC, September 26, 2023}
5. ^{FX Street, September 28, 2023}
6. ^{MarketWatch, September 28, 2023}

Here are a few facts about credits and deductions that can help you with year-round tax preparation:

• Taxable income remains after someone subtracts any eligible deductions from their adjusted gross income, including the standard deduction. Some taxpayers may itemize their deductions to manage their adjusted gross income.
• Generally, if a taxpayer’s itemized deductions are larger than their standard deduction, they should consider itemizing. Depending on the situation, some taxpayers may even be required to itemize.

Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records showing their eligibility. Some major tax credits include the Child Tax Credit and the Child and Dependent Care Credit, the American Opportunity Credit or Lifetime Learning Credit, and the Earned Income Tax Credit.

*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, January 31, 2023}

Rising bond yields and fears of a government shutdown hammered stocks last week, with technology shares bearing the brunt of the retreat.

The Dow Jones Industrial Average lost 1.89%, while the Standard & Poor’s 500 dropped 2.93%. The Nasdaq Composite index tumbled 3.62% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.77%.^1,2,3

Stocks Sell Off

Investor sentiment took a decidedly negative turn last week when investors were caught off-guard by the Fed signaling another potential rate hike this year, upending hopes that the Fed might finish its current rate-hike cycle.

Stocks declined sharply following the Federal Open Market Committee (FOMC) announcement and continued to fall the following day as bond yields spiked. The 10-year Treasury yield hit 4.48% on Thursday, touching its highest point in more than 15 years.⁴ 

Stocks also reacted to news that the House of Representatives went into recess on Thursday, increasing the prospect of a government shutdown. The sell-off cooled on Friday, adding only incrementally to the week’s accumulated losses.

Fed Signals Rate Hike

As expected, the Fed held interest rates steady but surprised many investors by signaling another rate hike before year-end and suggesting that rates may need to remain high through 2024. In his post-announcement press conference, Fed Chair Powell remarked the inflation battle would continue, and upcoming economic data would inform the FOMC’s future rate hike decision.

In their economic projections, 12 of 19 Fed officials expect to raise rates once more this year. (The FOMC meets again on October 31-November 1, and in December.) The Fed also lowered their unemployment projection from their June estimate and revised their projection for annual core inflation to 3.7% in the fourth quarter, down from June’s 3.9% forecast.⁵

Footnotes and Sources

1. ^{The Wall Street Journal, September 22, 2023}
2. ^{The Wall Street Journal, September 22, 2023}
3. ^{The Wall Street Journal, September 22, 2023}
4. ^{CNBC, September 21, 2023}
5. ^{The Wall Street Journal, September 23, 2023}

If an organization wants to apply for tax-exempt status under Section 501(c)(3), it starts by filling out a Form 1023-series application. They must submit a complete application as well as the user fee. To complete the application, the organization also needs its employer identification number. Generally, an organization that is required to apply for the recognition of exemption must notify the Internal Revenue Service (IRS) within 27 months of the date of formation.

Some organizations (including churches or public charities whose annual gross receipts are less than $5,000) may not need to apply for 501(c)(3) status to be tax-exempt. When the IRS determines an organization qualifies for exemption under Section 501(c)(3), it will also be classified as a foundation unless it meets the requirements to be a public charity.

*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, January 31, 2023.}

Stocks ended the week roughly where they began as investors digested a mixed set of new economic data.

The Dow Jones Industrial Average gained 0.12%, while the Standard & Poor’s 500 slipped 0.16%. The Nasdaq Composite index fell 0.39% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 1.23%.^1,2,3

Stocks Struggle for Direction

Stocks traded around the flatline without any catalyst in either direction. On Thursday, investors welcomed the European Central Bank, signaling its rate-hiking campaign may be nearing its conclusion and a successful IPO that revived optimism in the capital markets. Investors also cheered a stronger-than-forecast retail sales report and a modest increase in core producer prices, overlooking a higher-than-expected headline number.

But sentiment quickly reversed on Friday as a drop in consumer confidence, troubling news in the semiconductor space, and a labor strike at the nation’s major automakers dented Thursday’s optimism, sending major averages to a mixed close for the week.

Inflation Progress Stalls

Surging gasoline prices drove August’s inflation rate to its highest monthly rate this year, rising 0.6%, while the year-over-year Consumer Price Index posted a 3.7% increase, up from July’s 3.2% annual rate. Core inflation (excludes energy and food) was more encouraging, rising 4.3%– down from July’s reading of 4.7%.⁴

Producer prices also came in higher than expected, rising 0.7% in August, above the estimate of a 0.4% increase and the biggest monthly gain since June 2022. The year-over-year increase was a more modest 1.6%. Gasoline prices significantly contributed to the month’s jump; excluding food and energy, prices aligned with forecasts, ticking up 0.2% in August.⁵

Footnotes and Sources

1. ^{The Wall Street Journal, September 15, 2023.}
2. ^{The Wall Street Journal, September 15, 2023.}
3. ^{The Wall Street Journal, September 15, 2023.}
4. ^{The Wall Street Journal, September 13, 2023.}
5. ^{CNBC, September 14, 2023.}

If you want to give back to your community and help people with low to moderate incomes, consider applying to volunteer with the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs. These programs offer free tax help to senior citizens, persons with disabilities, and those who speak limited English to understand their tax situations.

Here are some of the perks of being a VITA or TCE volunteer:

• Flexible hours: Generally, volunteers contribute 3-5 hours per week. Some sites are open all year, but most programs are available from January–April.
• Convenience: Thousands of VITA and TCE sites exist in neighborhoods across the country, so it’s convenient to volunteer at a location close to you. Usually, these locations are in community centers, libraries, schools, and malls.
• No experience needed: You don’t have to be a tax pro to volunteer because all volunteers receive special training and can serve in various roles.

Tip adapted from IRS.gov⁶

Footnotes and Sources

6. ^{IRS.gov, January 11, 2023}

Concerns that the Fed may raise interest rates soured investor sentiment, sending stocks lower in a holiday-shortened trading week.

The Dow Jones Industrial Average slipped 0.75%, while the Standard & Poor’s 500 declined 1.29%. The Nasdaq Composite index dropped 1.93% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.28%.^1,2,3

Stocks Resume Their Decline

Stocks were bedeviled by rising bond yields and higher oil prices last week, with technology shares bearing the brunt of the decline. Hopes that the Fed may not find it necessary to raise interest rates were dented by economic data reflecting higher prices, rising labor costs, and fewer-than-forecast initial jobless claims.

The inflationary implications of higher oil prices also contributed to the growing sense that the Fed may implement additional rate hikes. While bond traders generally still expect no rate hike in September, the likelihood of a 0.25% rate hike or higher in November jumped to 43.3% by Friday morning from 35.4% a week ago.⁴

Oil Prices Spike

Last week, Saudi Arabia and Russia announced they would extend their oil production cuts to the end of the year. Investors had expected these cuts to be stretched to October, so the three-month extension surprised the markets.

The announcement sent oil prices higher on supply shortage worries in the coming winter months, with the West Texas Intermediate (WTI) oil price climbing to a 10-month high.⁵

Higher oil prices also sparked concerns that it would make the Fed’s inflation fight more difficult, potentially forcing the Fed to hike rates above market expectations.

Footnotes and Sources

1. ^{The Wall Street Journal, September 8, 2023}
2. ^{The Wall Street Journal, September 8, 2023}
3. ^{The Wall Street Journal, September 8, 2023}
4. ^{CME Group, September 8, 2023}
5. ^{Reuters, September 5, 2023}