Stocks/Income Tax Talk/4 Months Until Election Day!

Stocks, How Long of a Wait?

When we look at the current major index levels of the stock market, it certainly appears all is well.  If you fell asleep on December 31, 2019 and awoke on July 4th, 2020, you might say “hey, after a good year in 2019, this is just a little pullback…”   I certainly wish that was the case.  The average “large value” classified stock mutual fund is down over (-16%) year to date.  Mid and small cap value stock funds are down even more.  It’s certainly no secret to anyone that “growth” stocks are leading the market.

If we can move through Covid-19 sooner rather than later, we could see “value” gain momentum for a short-term period, as many of these companies are associated with the re-opening of the economy.

The overall market is suggesting that either Covid-19 will be behind us by 2021, or we’ll completely adapt to a new world.  I’m a bit concerned with how long we’ll need to wait, or better said, how long investors will wait to start seeing Corporate Earnings challenge profit levels back in 2019.  For now, enjoy the ride!

Last week markets moved higher with all major stock indexes showing gains over 1%, except the Dow Jones Industrial Average that finished up .36%.

Income Tax Time

Typically individual tax returns are filed by April 15th.  This year, taxpayers were granted an extension until July 15th.  That is the date the Federal Government should receive all owed funds from individual taxpayers from 2019.

Businesses were also able to delay the payment of their 1st Quarter 2020 taxes and any remaining 2019 taxes until July 15th.

I have not heard of any talk to delay the date to “pony up” any longer.  With that said, our Federal Government should be made whole from an income tax standpoint this month.   I’m a little concerned for small business that must pay their 1st quarter 2020 estimate and 2nd quarter estimate who suffered, from no fault of their own, because of the temporary closing of the economy.

Election Only 4 Months Away

Only 4 months until we know who will be the President of the United States for the next 4 years.  Perhaps equally important, is who will hold majorities in the House of Representatives and the Senate.  The results can certainly impact the direction of the US economy and markets over time.

Between now and November, the US government will continue to spend records amount of dough, with another stimulus talk heating up, as the additional free $600 per week unemployment benefit is expiring later this month.  Many prognosticators are suggesting the US economy really needs additional stimulus.  It’s beyond my pay-grade to know what is needed, however this being an election year, I’ll be surprised if we do not get more “juice” to the markets.

One thing for sure – I do not desire to pay a higher tax rate AND additional income tax.  Every time taxes are raised; it’s suggested the target is the top 1 -2% of taxpayers.  That rarely happens as Small Business men & women end up paying most of the new taxes.  I’m still a little blown away that an individual who earns over $200K pays an additional Medicare Tax.  This additional Medicare Tax does not go to Medicare; it simply goes to the general treasury to spend as desired.  Enough said as to what can happen!

Am I happy with the current tax climate?! NO!  However, there are some things we have little control over, which is why it’s extremely important to take a close look at your financial situation and employ as many tax-preference strategies that are available.  I welcome the opportunity to talk with you to discuss your situation to determine what strategies are available in your specific situation.  Feel free to Contact Us or Schedule a Consultation Online!

Regardless of the election results, as of now, I believe that tax rates will need to increase in the future to pay for all of the debt that has accumulated, and that will continue to accumulate on the US books.  For years, the attitude of the government has been – if it’s not going to blow up on my watch, who cares!! Well… I CARE!!

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