Groundhog Day also hit the market, with another all-time high being set last week. There was a drop on Wednesday, when the Federal Reserve held interest rates steady, and reported they will not be cutting rates in March. The jobs report came in strong later in the week, with over 350,000 new jobs being added in January. The robust economy and persistent inflation lead us to believe rate cuts are not coming any time soon. Reported earnings from large tech companies sent the market back up on Thursday and Friday.
You should have started receiving tax documents, with W2 and 1099-NECs due on January 31. Investment companies have longer to prepare and mail their forms. The IRS delayed 1099 requirements for any amount over $600 from cashless payment companies like Venmo and Paypal. Those companies are only required to send a 1099 if you have over $20,000 dollars and 200 transactions.
Receiving one of those 1099s doesn’t mean you’re paying taxes on the money. If you sold personal property, you want to be able to show the cost of the items you sold. If it was a gift from family or friends, you should be prepared to document that as well.
If you use credit card or frequent traveler rewards programs, you may also have received a surprise 1099. There’s a dollar value associated with those points, which can be used for gift certificates, travel, or other rewards. If the points you earn are strictly due to purchases you made, then the points aren’t taxable; they’re considered a rebate. If they are from referrals or other activities, it’s compensation, and you may receive a 1099 for the value of those points.
If you’re looking to offset tax liabilities, it’s not too late to contribute to an IRA or Health Savings Account for 2023 if you’re eligible.
Your action item this week is to check your Flexible Spending Account and Dependent Care Account, if you have one. With most plans, you have until March 15th to spend any remaining money in the account before it is forfeited.
Check out our website at covingtonalsina.com, or our Facebook page, for more information and resources.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.