2017 Midyear Participant Letter – Midyear Tax Check: 9 Questions to Ask

Dear Participant,

The second quarter proved to be a bit bumpy for equities, but each of the benchmarks listed here closed the quarter ahead of their first-quarter closing values. April saw equities close the month ahead of March, buoyed by favorable corporate earnings reports, proposed tax cuts, and strong foreign economic advances. May was a slower month as consumer spending and wage growth were relatively weak, with only 138,000 new jobs added in May, compared with an average monthly gain of 181,000 over the prior 12 months. June saw mixed results for the indexes. However, for the first half of the year the below indexes ended up.

  • The Dow Jones Industrial Average returned 10.03%
  • NASDAQ Composite returned 10.00%
  • S&P 500 returned 13.33%
  • Barclays US Aggregate Bond Index returned 2.35%
  • MSCI EAFE returned 9.03%

There are many economic indicators that could improve in July and for the remainder of the year. The stock market generally have been steady through the first half of 2017, despite domestic and global turmoil. Oil prices continue to tumble, driving down energy prices and inflation. The housing market, which had stalled after a strong 2016, may be gaining steam, at least as to increasing home prices. The FOMC meets again in July following this year’s second interest rate hike in June. If inflation and economic growth continue to show signs of slowing, it is likely the Fed will wait until it meets again in September to consider another rate increase.

A midyear tax checkup will help you to prepare for the tax consequences of life changes.

Key takeaways

 Evaluate the tax impact of life changes such as a raise, a new job, marriage, divorce, a new baby, or a child going to college or leaving home.

 Check your withholding on your paycheck and estimated tax payments to avoid paying too much or too little.

 See if you can contribute more to your 401(k) or 403(b). It is one of the most effective ways to lower your current-year taxable income.

In the midst of your summer fun, taking time for a midyear tax checkup could yield rewards long after your vacation photos are buried deep in your Facebook feed.

Personal and financial events, such as getting married, sending a child off to college, or retiring, happen throughout the year and can have a big impact on your taxes. If you wait until the end of the year or next spring to factor those changes into your tax planning, it might be too late.

“Midyear is the perfect time to make sure you’re maximizing any potential tax benefit and reducing any additional tax liability that result from changes in your life,” says Gil Charney, director of the Tax Institute at H&R Block.

Here are 9 questions to answer to help you be prepared for any potential impacts on your tax return.

If you have any questions about the financial markets or your portfolio, please do not hesitate to contact your independent financial advisor, Heffernan Retirement Services at 1-800-437-0045 or email Rebecca Tapia at rebeccat@heffgroup.com to set up an individual consultation today.

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