As a global leader, the U.S. economy often sets the tone for worldwide economic trends. However, recent updates have revealed mixed signals, with a notable slowdown in GDP growth alongside persistent inflation challenges. According to the latest data, GDP growth decelerated to an annual rate of 1.6% for Q1 of 2024, the slowest pace in almost two years. This reduction in growth rate was largely due to decreases in private inventory investment and a rise in imports, which, despite boosting consumer buying power due to lower prices from a stronger dollar, could reduce the competitiveness of American exports on a global scale.
Shifting focus to the domestic front, inflation continues to be a central concern, as evidenced by the latest readings from the Personal Consumption Expenditures (PCE) price index. The PCE index, which the Federal Reserve uses as a primary gauge of inflation, rose at a 3.4% annualized rate during the quarter, its biggest gain in a year and up from 1.8% in Q4 of 2023. The core PCE, which strips out the volatile food and energy components, increased to 3.7% during the first three months of the year, well above the Federal Reserve’s target of 2%. These figures demonstrate the stubborn persistence of inflation within the economy, despite prior interest rate hikes designed to temper such pressures. Additionally, these economic challenges are compounded by the United States' escalating national debt, which has reached a record $33 trillion, with a debt-to-GDP ratio of 123%. This substantial fiscal burden influences monetary policy decisions, potentially impacting the nation's economic trajectory. In this complex economic environment, the Federal Reserve faces the crucial task of managing inflation without triggering a recession. The upcoming Federal Reserve meetings on April 30th and May 1st are poised to be insightful, promising to provide a clear view of the central bank's stance on controlling interest rates and providing indicators of how it views the economic recovery and inflation risks. In his role, it would be crucial to confront and clearly communicate the reality of economic pressures. The 22% surge in auto insurance prices over the past year, a direct result of supply chain disruptions increasing the costs of vehicle parts and labor, exemplifies these pressures. These disruptions not only raise the cost of vehicles, causing drivers to keep their cars longer and deal with more frequent breakdowns, but also lead insurers to hike premiums to manage pricier claims. Moreover, rising rental costs, influenced by investor and corporate ownership of homes as well as immigration factors, further compound the economic challenges. Despite these inflationary pressures, consumer spending has remained resilient, with a robust 0.8% increase in March, reflecting that consumers have adjusted to the higher inflation and interest rates. Yet, this trend cannot continue indefinitely. Evidently, there appears to be a conflict of interest between the strategic objectives of the Federal Reserve and the actions undertaken by the U.S. government, especially with recent fiscal initiatives that may exacerbate inflationary pressures. For effective macroeconomic management, it is imperative that the U.S. government policies align with the monetary strategies set by the Federal Reserve. This alignment is essential for addressing significant economic challenges such as persistent inflation and escalating public debt, both critical for the long-term fiscal health of the economy. Coordinating these efforts is vital for maintaining a stable economic trajectory and promoting conditions conducive to sustainable growth!
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A financial professional can help you find your balance Retirees save for a wide range of reasons. Some take pride in getting a deal, others want to put cash away for a big goal that arose after retirement planning, and some want to leave as much money as possible for heirs. There are also those who reduce expenses to hedge against inflation or a stock market downturn. Yet, if you have a solid retirement plan—including enough guaranteed income to match your essential expenses—and you're still pinching every penny, take a step back to examine your real reasons for doing so. You may have unrealistic financial fears, or need assistance transitioning away from the "saving" and toward the "withdrawing" phase of your financial life. If you have an inkling that you might be a bit too frugal or are continually urged by family or friends to enjoy your hard-earned money, it can be useful to work with a financial professional. Small cutbacks can make a big difference If you find that you do still want or need to reduce your spending, the good news is that even small reductions can have a big potential impact over the course of your retirement. One way of understanding this impact is by looking at how adjusting your spending can impact the "probability of success" of your retirement plan—meaning, the likelihood that you won't run out of money during your retirement plan. Here's how smaller savings, of just $2,000 per year, or larger cutbacks, of $6,000 per year, could impact those figures for a hypothetical 64-year-old pre-retiree. Ways to save big Once you feel comfortable with your reasoning, you can unleash a wide range of savings techniques. As you probably guessed, you'll need to make bigger changes for bigger savings. One simple way to potentially save thousands each year? Hold off on buying that new vehicle. Or, if it's no longer needed, selling a second car can potentially put some cash back in your pocket, while also helping you save on insurance and maintenance. For many people, the single most impactful way to reduce their cost of living is by taking a hard look at where they live. To be sure, moving is a deeply personal decision and comes with plenty of tradeoffs—including the transaction costs of buying and selling, the stress of moving, and the disruptions from adjusting your routines. But downsizing or moving to a lower-cost area can potentially bring the double benefits of unlocking equity and reducing ongoing expenses. Ways to save small Once you've evaluated your potential sources of big savings, consider turning your attention to your day-to-day spending. The first step is to find an approach that works for you. If you delight in finding the perfect outfit at a super-sale price, scour those clearance racks. If you relish the art of negotiation, -feel free to do so in appropriate settings. And if the idea of paying $14 for a glass of wine makes you shudder, then put together a list of all the BYOB restaurants in your area. Here are some more places to look for savings: Scrutinize your subscriptions: Review your credit card bills to ensure you're not paying for unused services. Be aware of subscriptions that renew automatically. Stay on top of those, as well as the end of free-trial periods, by setting a calendar reminder. Before re-upping for any subscription, weigh how much you spend against how much you actually use the service. Reduce energy use: You can potentially save hundreds of dollars a year with little effort. Among the tactics to deploy: Install a programmable thermostat that adjusts temperatures automatically, switch to energy-saving LED lights, seal up window cracks with caulk, and strategically use blinds, drapes, and other window coverings. If you're considering more significant upgrades, look into any federal or state incentives for improving your home's energy efficiency. Travel during off-peak times: As a retiree without a set work or school schedule, you can capitalize on the savings that come with taking a vacation during off-peak months. Another idea? Plan short trips, cultural events, and entertainment for midweek. Prices at hotels, as well as some restaurants, museums, and concert and theater venues, can be less than what you'd pay on the weekend. And always ask about discounts through any memberships or clubs you belong to. Consider your insurance: Shop around for home, auto, and other insurance to get the best deal. Many insurance carriers provide discounts when you buy more than one policy. Service providers may offer a better price if you call and say you're considering switching to a competitor. Use a rewards credit card: From getting money back on purchases to earning travel points, rewards cards can provide a wide range of perks. Making savings even simpler, many financial institutions will automatically deposit cash rewards into a checking, savings, or brokerage account. As with any credit card, pay your balance in full each month to avoid interest charges. Shop strategically: Avoid unnecessary purchases by creating, and sticking with, a shopping list. If you buy in bulk, portion out perishable food items like meat and freeze them before they spoil. And if you have a weakness for retail therapy, consider imposing a cool-off period on yourself to try to avoid impulse buys—like waiting a week before making an unplanned purchase. Enjoy your money with confidence While cutting costs can bring satisfaction, it's also important at times to let yourself spend. The key, as with most things in life, is in finding the balance. Start by gaining a clear understanding of how much money you can comfortably spend. That's where a comprehensive financial plan and a well-thought-out budget come into play. Creating a budget can help give you clear objective rules for your spending, so that you know if a given expense would put you over your limit. Then, before you swipe your credit card or pull out cash for a nonessential expense, consider the value you'll receive in exchange for your money. If you usually avoid pricey restaurants but a good friend invites you out somewhere nice for her birthday, you may decide that this time, the cost is worth it. If you've budgeted properly, you can order that Cabernet Sauvignon and comfortably raise your glass in a toast to friendship. Then, the next day, you can haggle with your cable company if it pleases you. Questions about the above article? Please reach out to Brien@TraditionsWealthAdvisors.com or call 979-694-9100.
Source: Fidelity Viewpoints: 8 March 2024. https://www.fidelity.com/learning-center/personal-finance/spend-less-in-retirement Did you know that the Federal Reserve, often simply referred to as the Fed, doesn't actually print money? This common misconception is just one aspect of the complex role the Fed plays in shaping the United States’ economic policy. Bear with me.
Established in 1913 by the Federal Reserve Act, the Fed serves as the central bank of U.S. Its primary functions include implementing the nation's monetary policy, regulating banks, ensuring financial stability, and providing banking services. Importantly, the Fed operates independently, meaning its decisions are not subject to presidential or governmental approval, though it remains under congressional oversight. The Fed's independence is crucial during election years, when there is intensified governmental pressure for economic stability to aid reelection campaigns. Historically, the Fed has adjusted interest rates in every election year since 1980, with the sole exception of 2012, when the economy was still recovering from the financial crisis and interest rates were at zero. Recently though, while initial speculations pointed towards a potential rate cut, the prevailing economic data has led to increasing expectations of a rate hike instead. Moreover, the Fed's financial activities are not for profit. It is required by law to transfer its net earnings to the U.S. Treasury, after covering all necessary expenses, legally required dividend payments, and maintaining a limited balance in a surplus fund. In terms of currency, while the Fed is responsible for putting money into circulation, it is the Bureau of Engraving and Printing, an agency of the U.S. Treasury, that actually prints the money. The Fed then purchases this currency at cost and puts it in the economy’s money circulation. Here is where it gets interesting. Despite how skilled the Fed members can be at implementing policies, if they do not work hand in hand with the government, it becomes extremely difficult to manage the economy. The current state is a perfect example. In the aftermath of the pandemic, which severely disrupted the global supply chain, the U.S. government chose to engage in foreign conflicts by providing aid. However, this aid does not directly leave American shores; instead, it finances the purchase of U.S. military equipment that is then supplied to those countries. The funds are directly drawn from the national budget. This action creates a budgetary deficit while paradoxically stimulating GDP growth as equipment involves both manufacturing and labor. Growth is the opposite of the Fed’s current goals as it contributes to inflation. Since April 2022, the Fed has been systematically increasing interest rates to keep inflation in check. Higher interest rates make loans more expensive, which can cool off spending and investment by making it costlier for consumers and businesses to finance new purchases and projects. This is a classic monetary tool used to temper economic activity when prices start rising too quickly, thus preserving the value of the currency and maintaining the purchasing power of consumers. The economy is thus showing resilience despite persistent inflation, largely driven by rising rent and auto insurance costs. Auto insurance prices have surged by 22% over the past year due to continuing supply chain disruptions that have increased the cost of vehicle parts and labor. The escalated cost of vehicles is causing drivers to keep their cars longer, leading to more frequent breakdowns and a greater need for repairs. Insurers, facing expensive claims, are raising premiums to cover these costs. Concerns are also mounting over rising rental costs, which are being influenced by investor and corporate ownership of homes, as well as immigration factors. Considering the imperative role of the Federal Reserve in managing the U.S. economy and recent governmental actions that inadvertently complicate its inflation-control efforts, it is evident that there is a need for closer alignment between government and the Fed. The government must reengage with the Fed and adopt a regulatory mindset that supports the Fed’s objectives. Such cooperation is crucial for harmonizing efforts to ensure economic stability, particularly in addressing challenges like inflation and budget deficits, which are critical for the long-term health of the economy. Kristina Badrak/Brien L. Smith, CFP® Professional Financial Analyst Intern/Chief Investment Officer celebrating 35+ years of fiduciary service Traditions Wealth Advisors, L.L.C. 2700 Earl Rudder Freeway S. Suite 2600 College Station, TX 77845 www.traditionswealthadvisors.com (979)694-9100 This communication may contain confidential and/or privileged information. If you are not the intended recipient (or have received this communication in error) please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of this material is strictly forbidden. Investment Advice offered through Traditions Wealth Advisors, LLC, a registered investment advisor. Traditions Wealth Advisors, LLC does not render legal or tax advice, and the information contained in this communication should not be regarded as such. Jerome Powell faces a relentless dilemma: whether to raise or cut interest rates, a decision that shadows him day and night. Initially, market speculation hinted at potential rate cuts as early as March, but reassessments have pushed these expectations further out, with June cuts now seeming highly unlikely. This re-evaluation stems from March’s Consumer Price Index (CPI) figures. The headline Consumer Price Index (CPI), which tracks the price changes urban consumers experience for a broad array of goods and services, recorded an increase of 0.4% for both headline and core CPI in March, surpassing the expected 0.3%. Although the core CPI, which filters out the volatile food and energy sectors, only exceeded expectations by 0.1%, it did so for the third consecutive month, surpassing forecasts. If this trend continues, inflation could solidify at over 4% annually—twice the Federal Reserve’s target rate.
The increase in March's CPI was predominantly driven by the shelter and energy sectors, which collectively accounted for more than half of the month-over-month (MoM) gain. According to the Bureau of Labor Statistics (BLS), gasoline prices rose by 1.7% MoM. In the shelter category, rent prices increased by 0.4% MoM, a slight decrease from February's 0.5% rise. Owners' Equivalent Rent (OER), which estimates the rental equivalent or potential rental income of homeowners' properties, also increased by 0.4%, maintaining the consistent growth rate as in February. Despite these monthly increases, the year-on-year (YoY) inflation for these shelter categories showed signs of cooling. Significant movements within the core CPI included motor vehicle-related costs, with insurance surging by 2.6% and repair costs climbing by 3.1%, along with a 0.5% increase in healthcare costs. Other categories displayed mixed trends; apparel and personal care products saw price increases of 0.7%, while there were decreases in the prices of used cars and trucks (-1.1%), recreational goods (-0.1%), and new vehicles (-0.2%). Another key economic indicator released was the Producer Price Index (PPI), which provides insights into the wholesale price trends of goods and services. Some of the drivers of the core CPI, such as motor vehicle insurance, are not included in the personal consumption expenditures price indexes, which the Fed monitors for its inflation target. Both headline and core PPI registered a 0.2% increase, with analysts having anticipated a 0.3% rise respectively. The 0.2% rise marked the lowest monthly growth in PPI since December and a decrease from February’s 0.6%. Nonetheless, the employment report offers some positive news. Although nonfarm payroll surged by 303,000 jobs last month, the unemployment rate remains below 4%, and YoY wage growth is stable at approximately 4.1%, lower than last year's end. This indicates that wages are rising at a manageable rate without adding to inflationary pressures. Despite some concerns about these measures, the upcoming release of the Personal Consumption Expenditures (PCE) index, which tracks consumer spending on goods and services is preferred by the Federal Reserve due to its broader aspect allocation of spending categories. In addition, it is important to note that Jerome Powell has consistently emphasized caution throughout the quantitative tightening process, underscoring the significance of this measure in shaping monetary policy. Sources: https://www.nytimes.com/2024/04/11/business/economy/federal-reserve-soft-no-landing.html https://perc.tamu.edu/blog/2024/04/inflation-and-wages-though-march.html Kristina Badrak/Brien L. Smith, CFP® Professional Financial Analyst Intern/Chief Investment Officer celebrating 35+ years of fiduciary service Traditions Wealth Advisors, L.L.C. 2700 Earl Rudder Freeway S. Suite 2600 College Station, TX 77845 www.traditionswealthadvisors.com (979)694-9100 This communication may contain confidential and/or privileged information. If you are not the intended recipient (or have received this communication in error) please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of this material is strictly forbidden. Investment Advice offered through Traditions Wealth Advisors, LLC, a registered investment advisor. Traditions Wealth Advisors, LLC does not render legal or tax advice, and the information contained in this communication should not be regarded as such. You work at your job, you pay taxes, then when you retire, you get Social Security benefits tax-free, right?
Wrong. Up to 85% of the Social Security benefits you get each year could be subject to tax, depending on your household income. What’s more, 100% of your withdrawals from traditional IRAs and traditional 401(k)s will likely be considered taxable income. There are ways to keep more of your retirement income—but first, it helps to understand how retirement income is taxed. Taxes on retirement income: In retirement, different kinds of income are taxed differently:
So as you work with financial and tax professionals, consider the following 2 strategies. (Note that if your and your spouse’s combined annual retirement income is more than $100,000, you will likely need additional tax planning.) 1. Converting savings into a Roth IRA: "One strategy to reduce the taxes you pay on your Social Security income involves converting traditional 401(k) or IRA savings into a Roth IRA," says Shailendra Kumar, director at Fidelity's Financial Solutions. Not everyone can contribute to a Roth IRA or Roth 401(k) because of IRS-imposed income limits, but you still may be able to benefit from a Roth IRA's tax-free growth potential and tax-free withdrawals by converting existing money from a traditional IRA or a workplace retirement savings account into a Roth IRA. This process of converting some of your IRA or 401(k) into a Roth IRA is known as a partial Roth conversion. "You can choose to convert as much or as little as you want of your eligible traditional IRAs. This flexibility enables you to manage the tax cost of your conversion," adds Kumar. "A Roth IRA or Roth 401(k) can help you save on taxes in retirement. Not only are withdrawals potentially tax-free, they won't impact the taxation of your Social Security benefit. This is an important aspect of a Roth account that most people are not aware of.” Remember: The amount you convert is generally considered taxable income, so you may want to consider converting only the amount that could bring you to the top of your current federal income tax bracket. You also may want to consider basing your conversion amount on the tax liability you may incur, so you can pay your taxes with cash from a nonretirement account. Consult a tax professional for help. Tip: To learn more about Roth conversions, read Viewpoints on Fidelity.com: Answers to Roth conversion questions 2. Delaying your Social Security benefit claim: "The other strategy,” says Kumar, “involves postponing when you first take Social Security. Both approaches can help shave dollars off your tax bill in retirement every year—it just takes a little forward planning." Consider a hypothetical couple named Natalie and Juan: For every year they delay taking Social Security past their full retirement age (FRA), they get up to an 8% increase in their annual benefit. In general, many people would benefit from waiting to age 70 to take Social Security. Others may need the income sooner and may lack the resources necessary to meet expenses during the delay period, or they may not live long enough to reap the rewards of delaying their claim. Natalie and Juan’s strategy is to reduce the amount they withdraw from their taxable IRAs over time and make up the difference in income by waiting until age 70 to claim Social Security. This has a big payoff for them because by delaying claiming Social Security until age 70, the percentage of their Social Security income that gets taxed is cut from 85% to 47.2%. It gets better: While Natalie and Juan’s retirement paycheck of $70,000 remains the same, they pay approximately 41% less in taxes and withdraw smaller amounts from their respective IRAs each year. Natalie and Juan should also look for ways to mitigate their tax liability between ages 65 and 70 while they delay Social Security and supplement their income with other sources. Withdrawing solely from taxable IRAs over this time period could result in relatively higher tax bills, potentially offsetting some the tax savings they expect to get at ages 70 and beyond. Bottom line: Social Security income becomes even more valuable for retirees when they realize that it is taxed less in retirement versus other forms of retirement income. Consider how long you may live, your financial capacity to defer benefits, and the positive impact the claiming decision may have on taxes you'll pay throughout your retirement. Tip: To learn more about timing and Social Security, read Viewpoints on Fidelity.com: Should you take Social Security at 62? Planning ahead: As you develop short- and long-term retirement income strategies, remember:
Tip: As you approach retirement, think about increasing your contributions to these preretirement savings vehicles such as Roth IRAs. These accounts are federally tax-advantaged and can help reduce your combined taxable income. This approach makes it possible to help reduce the taxes you pay on your Social Security benefit because you will likely have to withdraw less from traditional taxable IRAs to fund your retirement. Do you have more questions? Please reach out to Laurie or Brien at Laurie@TraditionsWealthAdvisors.com Brien@TraditionsWealthAdvisors.com We are here to serve you. Source: Fidelity Viewpoints. https://www.fidelity.com/viewpoints/retirement/taxes-on-social-security During a press conference on March 20th, Jerome Powell discussed expectations for interest rates, revealing no immediate plans for cuts but acknowledging a possible reduction in the future. The Federal Reserve's projections now anticipate three interest rate cuts in 2024, driven by the desire to support a healthy job market and economy despite ongoing inflation above the 2% target. This marks a slight adjustment from December's forecast of four cuts. The Fed expects core inflation to be at 2.6% by the end of 2024, a slight increase from the previously projected 2.4%.
Despite these inflation concerns, the Federal Reserve also plans on observing fluctuations within the labor market before starting to reduce rates. The objective is to witness cooling in the labor market to alleviate the burden of elevated rates on consumers. Currently, ten of the Fed's nineteen officials foresee the policy rate decreasing by at least three-quarters of a percentage point by year-end, implying short-term rates slightly above 4%. The economy's resilience, as evidenced by GDP growth, also factors into these considerations. On March 26, the Atlanta Fed verified their prediction of the robustness in economic growth, with a forecast of 2.1% GDP growth in the first quarter—a figure elevated by 10 basis points than the previous year and indicative of a resistant nature. The final quarter of 2023 saw a GDP growth rate of 3.1%, contributing to an annual growth of 2.5%. Complicating the economic landscape are rising oil prices and a slower-than-expected decline in housing costs, exacerbated by a nationwide housing shortage and an affordability crisis fueled by higher mortgage interest rates. These dynamics further introduce uncertainty regarding the likelihood of rate cuts within the year. While economic indicators may not strictly justify a reduction, political pressures suggest the necessity of a rate cut. Powell's navigation of these complex demands illustrates an effort to balance economic imperatives with political expectations, particularly considering the sticky inflation. The CPI update on April 10th for the month of March will be pivotal in offering insights into rate cut scenarios. Despite not providing any definite assurances during press conference, the U.S. stocks continue to see gains as the U.S. dollar weakens against other currencies. This indicates the market’s optimism about the Fed's cautious yet supportive stance towards economic growth and inflation management. Traditions Wealth Advisors
Brien L. Smith, CFP®/Kristina Badrak TWA CEO/Financial Analyst Intern February 23, 2024 Consumer Price Index Amid fluctuating economic forecasts, January 2024 Consumer Price Index (CPI) data release stands as a testament to resilience in the face of adversity. Capturing the spending patterns of urban households, which constitutes about 93% of the U.S. populace, the CPI saw a year-over-year increase of 3.1% and a month-over-month growth of 0.3% in January—figures that exceed the modest 2.9% annual inflation rate anticipated by analysts. This unexpected rise not only indicates concerning developments for markets and policymakers alike but also signals that the Federal Reserve might need to maintain higher interest rates for an extended period to counter inflationary pressures. According to the Bureau of Labor Statistics (BLS), the shelter sector emerged as the dominant driver of January's inflation, contributing 36.191% to the CPI's weight. This sector experienced its most significant price jump since April 2022, with a 6% rise on an annual basis. The shelter index is broken down into four critical components: owners' equivalent rent (OER), rent of primary residence, lodging away from home, and tenants' and household insurance. Notably, OER and rent of primary residence, with CPI weightings of 26.770% and 7.671% respectively, stress the extensive nature of housing costs. OER, an estimate of what homeowners would pay in rent for comparable living spaces, alongside rent of primary residence—the direct rent costs faced by tenants—underline the scope of housing expenses. Despite the Bureau of Labor Statistics (BLS) updating its approach in January 2023 to use one year of spending data for CPI calculations, thereby reducing the data inclusion lag from consumer purchases from 36 to 24 months, the Federal Reserve continues to prefer the Personal Consumption Expenditures (PCE) Price Index for assessing inflation. Economic Outlook The forthcoming PCE report, due on February 29th, is anticipated to have a significant impact on the Federal Reserve's monetary policy decisions. The index is highly regarded by the Fed over CPI for several reasons: it covers a wider range of household expenditures, including those paid on behalf of consumers, and more accurately reflects changes in consumer behavior and the substitution effect. Recent evaluations by Morgan Stanley indicate an expected uptick in January's core PCE to 0.29% monthly, marking a rise from the previous 0.17%, spurred by CPI increases. In a similar vein, Goldman Sachs has recalibrated its economic forecast, trimming its prediction for first-quarter growth from 2.9% to 2.3% and elevating its projection for January's core PCE inflation from 0.35% to 0.43%. The upcoming week is anticipated to shed light on these inflationary patterns in hopes of providing a more detailed understanding of the current and future fiscal environment. With the PCE prized by the Fed for inflation monitoring, the indicator will play a crucial role in guiding interest rate strategies. The notable gap between PCE and CPI, especially given the persistent rise in shelter costs affecting the CPI, stresses the complex challenges of navigating the lasting effects of the pandemic. Sources: https://www.reuters.com/markets/us/us-consumer-prices-rise-more-than-expected-january-2024-02-13/ https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm https://www.economicsuncoveredresearch.com/p/shelter-and-the-cpi-everything-you Tax season is here! Tax-related identity theft happens when criminals use your personal information to file a return in your name and claim your refund. Victims are waiting an average of almost 19 months for the IRS to process their returns and issue refunds, the National Taxpayer Advocate reported. There are also two key steps taxpayers can take to protect themselves.
1. File EARLY! One of the best ways to avoid tax-related identity theft this season is by filing your return early. Do not let the scammers have time to come in and steal your information. File before they can! Further, protect your online filing with strong passwords and multi-factor authentication. 2. Get an identity protection pin! If you’re looking for added protection, experts suggest getting an identity protection PIN, or IP PIN, from the IRS. This six-digit number blocks others from using your Social Security number or individual taxpayer identification number to file a tax return. Once you enroll, the agency generates a new IP PIN for you each year. Previously, IP PINs were only for identity theft victims. Now, they’ve opened it to everyone. However, it is too last minute to get an IP pin before filing your 2023 return. It is best to file your 2023 return now, and get an IP PIN for next year. Want to learn more about the IP PIN and how to get one? Click here. Source: https://www.cnbc.com/2024/01/18/how-to-protect-yourself-from-tax-identity-theft-this-season.html?__source=sharebar|email&par=sharebar Please reach out to our in-house, tax-smart planning director, Laurie@TraditionsWealthAdvisors.com or call her at 979-694-9100 with more details and questions about the above article. Source: https://www.eatonvance.com/tax-smart-planning.php?item=evt-fa-46610
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