Latest on Taxes

Capitol Hill is producing more drama than Hollywood.

We’ve got bold statements, ultimatums, cliff-hangers, and confusing sequels.

We’ve even got folks paddling up to Senators’ party boats to discuss tax reform.

Let’s recap what we know with some educated speculation about what could happen next.

[Scroll down to the bottom for the nitty-gritty if you want to skip the details.]

Congress is currently debating two action items on President Biden’s “Build Back Better” agenda: The American Jobs Plan (which includes corporate tax increases) and the American Families Plan (which includes individual tax increases).1

Neither plan looks close to passing in its current form, so nothing is set in stone yet.

But the provisions below offer a blueprint for what could happen.

The House is negotiating a package of tax increases that would pay for expanding Medicare, free community college and prekindergarten, and increase the federal safety net.2

If passed as-is, it would:

  • Increase the top marginal income tax rate to 39.6% for individuals earning more than $400,000, joint filers above $450,000, and head of household filers above $425,000.
  • Raise the top long-term capital gains rate from 20% to 25% for those same folks.
  • Add a 3% tax on incomes of over $5 million.

But wait… there’s more. Here are a few other key provisions that bear watching:

Retirement accounts may see new restrictions.3

Roth conversions would be eliminated for individuals earning above $400,000.

Folks in that income bracket would also be prohibited from contributing to retirement accounts with an aggregate value over $10 million the prior tax year.

Another critical change that would affect all taxpayers: The bill prohibits all employee after-tax contributions to qualified plans and prohibits after-tax IRA contributions from being converted to Roth, thus potentially eliminating backdoor Roth conversion strategies.

Estate planning may get more complicated.3

Good news first: The “step-up” in tax basis on death is staying and the “deemed realization” rule that would trigger capital gains taxes on death is not included.

However, the estate tax exemption would revert from $11.7 to $5 million.

The deal would also eliminate certain tax benefits of “grantor trusts” as well as limit valuation discounts on non-business assets.

Currently, these provisions would apply only to future trusts and transactions that happen after the effective date of the law.

How likely are all these measures to pass?

Here’s where we start speculating.

To pass the American Families Plan using budget reconciliation, President Biden needs the votes from his entire party.

Progressives are committed to passing the full deal but centrists are balking at the price tag.1

To get through the Senate, it seems like both sides will meet somewhere in the middle.

A lower final cost to the bill would require less revenue to cover and might allow some of the tax increases to be eliminated.

Since the IRS has been targeting Roth conversions and large IRAs, it’s possible that those measures may pass.

When could the new laws go into effect?

It seems likely that most provisions would be effective on January 1, 2022 and apply going forward (not retroactively). However, separate deadlines could be negotiated for certain provisions.

Bottom line: Laws change. We adapt.

Here are the usual caveats:

We don’t know what the final bills will look like and when (or if) they will pass.

Taxes are just one part of your overall picture.

New laws usually contain a mix of positive and negative changes for you, me, and everyone else.

The long-term impact of the positives and the negatives won’t be visible for some time.

Have questions you haven’t asked me or concerns you haven’t raised? Please reach out.

If I see moves that I’d like you to make before year-end, I’ll contact you directly.


Aaron Schuler, CDFA®Mountain West Wealth

P.S. I’m also keeping an eye on the debt ceiling debate happening right now. I’ll update you if it’s needed.




Storms ahead? What you need to know

The stock market got a little crazy this week.

Is a storm coming?

Let’s take a look at what’s driving markets right now.

(Scroll to the end if you just want my takeaways.)

A few things are driving the market volatility:

Fears of a financial crisis in China.

China’s overheated real estate bubble is starting to pop and Evergrande, a giant Chinese property developer, is heading toward defaulting on more than $300 billion in debt.1

Its failure could trigger a cascade of defaults among banks, materials suppliers, and investors, potentially leading to broader financial issues in China and abroad.

Worries the Federal Reserve will start tapering soon.

The Fed meets this month and traders are uneasy about the idea that the central bank could start pulling back the support now that inflation is higher and the jobs market has improved.2 Firms that depend on low interest rates and easy credit could be hurt.

Concerns about COVID-19 case numbers.

Variants continue to pop up and the delta variant continues to keep cases and hospitalizations high. Investors are concerned that another winter resurgence (like we saw last year) could slow down business and economic activity.3

Fears of another debt ceiling showdown.

Once an ordinary part of federal accounting, adjusting the debt ceiling is now a political negotiation, threatening the Treasury Department’s ability to pay its bills next month.

Though it’s unlikely either party will allow the U.S. to default on its obligations, this political brinksmanship adds anxiety each time it comes up. Another government shutdown could exacerbate political risks to markets.4

Do you see a trend? Markets are being driven by fear, anxiety, and doubt.

Which of these squalls will fade away and which could blow into a tempest?

We can’t know.

So, here’s the real question:

could we see a 10%+ correction in the weeks or months ahead?


Corrections and pullbacks happen regularly and it wouldn’t be surprising to see a market drop.

To show you just how ordinary corrections are, here’s a chart that shows intra-year dips in the S&P 500 alongside annual performance.

(Take a look at the red circles to see the market drops each year.)

The big takeaway? In 14 of the last 20 years, markets have dropped at least 10%.5

Even years with strong performance saw big drops.

We’re dealing with a lot of uncertainty and investors are feeling understandably cautious about what’s ahead.

But, that doesn’t mean that we should panic and rush for the exits.

Pullbacks, corrections, and even downturns don’t last forever.

Trust the process. Trust the strategy.

I’m keeping an eye on the Chinese property market situation, as well as workings over in Washington. I can’t predict which way markets will go in the coming weeks, but I’ll be in touch as needed.

Have questions? Feeling uneasy? Please reach out. That’s what I’m here for.


Aaron Schuler, CDFA®Mountain West Wealth






This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. Securities offered through Securities America, Inc., Member FINRA/SIPC. Aaron Schuler, Registered Representative. Advisory services offered by Beam Asset Management. Aaron Schuler, Investment Advisor Representative. Mountain West Wealth LLC, Beam Asset Management, FIT Divorce Planning and Securities America, Inc. are separate, unaffiliated entities. (website) Securities offered through Securities America, Inc., Member FINRA & SIPC. Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm. BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated entities. 

Taper tantrum part deux?

How are you doing?

Are you making plans for fall or taking a step back to reassess?

There’s a lot to weigh right now, so I’m curious to hear your thoughts.

One big thing you may have heard about in the headlines is the Federal Reserve’s hint that it might start “tapering” soon.1

Could the Fed’s actions cause a correction or economic slowdown?

Let’s discuss.

First of all, what does ”tapering” mean?

In econ-speak, tapering means winding down the pace of the assets Fed has been buying since last summer.

Why is it a big deal?

Well, the last time the Fed tapered in 2013, during the recovery from the 2008 financial crisis, markets panicked and pitched a “taper tantrum.”2

That’s because traders worried that less Fed support would hurt fundamentals and potentially cause a market downturn.

Now, that old taper tantrum narrative is making folks worry that another market downturn could be ahead of us, especially with concerns about the delta variant.

Before we dive into what could happen, let’s talk about where we are and how we got here.

When the pandemic started, the Fed slashed interest rates and began buying $120 billion a month in bonds and mortgage-backed securities to reduce interest rates, lower borrowing costs, and give businesses and the economy a boost.1

However, now that the economy is much stronger, the employment situation has improved, and inflation is a concern, the Fed wants to start paring back those asset purchases to return interest rates to a more “natural” level.

What could that look like?

Obviously, we don’t know exactly when or how the Fed will decide to act, but analysts have some pretty good guesses.

The latest prediction by Bank of America suggests tapering could start this November as the Fed gradually pares back asset purchases through next year.1

The takeaway is that the Fed isn’t going to stop buying assets and raise interest rates immediately.

It’s going to gradually remove the support and see how the economy reacts.

So, will we see another taper correction?

The main reason folks worry about Fed reducing support is because of the effect higher interest rates could have on stocks, particularly companies that rely on borrowed money.

However, interest rates are just one piece of the puzzle. Economic fundamentals, earnings, and other factors also weigh on stock prices.

With the benefit of hindsight, we can see that the 2013 taper tantrum wasn’t even that bad. The S&P 500 tumbled 5.8% over the course of a month but quickly recovered (the caveat here is always this: the past does not predict the future).2

I think the main reason markets declined last time was that investors hadn’t experienced tapering before; they didn’t have context for what the Fed would do.

Since we’ve seen this happen before fairly recently, I think that uncertainty is lessened.

However, we also have other worries to consider: a deteriorating crisis in Afghanistan, continued pandemic worries, and political wrangling over infrastructure.

Any of these factors could derail the bull market.

But it’s not going to be the end of the world.

Corrections are always something we should expect. They happen regularly and are a natural part of markets.

The Fed is one more thing I’m keeping an eye on, and I’ll reach out if there’s more you should know.

Be well,


$50 burgers (should we worry about inflation?)

How much inflation can the country afford before we’re in trouble?

Let’s discuss.

First, let’s get on the same page about some basics.

If you’ve noticed the price of a thing increasing over time (say, your favorite candy bar or the cost of college tuition), that’s inflation in action.

Economists use the broad increase (or decrease) in prices of goods and services across the country as a measure of economic health.

When inflation is stable and predictable, it’s a sign of a basically healthy, growing economy.

But, high inflation can quickly eat away at the purchasing power of your dollars, indicating that the economy might be overheated.

Deflation, or a decline in prices, can be a warning sign of a shrinking economy.

Recent data highlighted a surprise spike in inflation, indicating that prices increased faster than economists expected last month.1

Could this be a worrisome sign that the economy is overheated? Could $50 burgers be in our future?


On the other hand, could it be a temporary blip caused by the economy emerging from the pandemic-driven slowdown, complicated by supply chain issues?

Very possible.

Are the headlines catastrophizing?

They usually are.

Let’s look at the data.

The Consumer Price Index (CPI), one of the major indexes economists use to track inflation, showed a surprising spike in April, igniting fears of runaway inflation.

Core CPI (which excludes the highly volatile categories of energy and food) showed a 0.9% increase in April month-over-month and 3.0% year-over-year. That’s much higher than the expected 0.3% and 2.3%, respectively.1

However, digging a bit deeper, we see that just two categories of goods (used cars and transportation services) accounted for the vast majority of the surge.2

That suggests things like flights and train travel suddenly became more expensive after a year of rock-bottom prices.

Is that runaway inflation or the normalization of prices as the world reopens?

We can’t tell from a single data point, but it’s not unusual to see prices increase in sectors that experienced a severe slowdown last year.

And the jump in used car prices? Well, many folks are turning to the second-hand market right now, in part because new cars are caught up in global supply chain bottlenecks for things like semiconductors and raw materials.3

Inflation is something to keep an eye on, especially in a year when so many of the usual variables have been thrown into flux. An ongoing surge in prices could hurt our wallets as our dollars buy less over time.

However, a single monthly spike following a very weird period for the economy is not cause for alarm yet; we should prepare ourselves for more odd numbers coming out of different parts of the economy in the weeks and months to come.

Shortages of everything from ketchup to gasoline could lead to price increases and fluctuations as supply chains attempt to disentangle from pandemic disruptions.4

Should we expect markets to react to inflation (and other) headlines?

A negative market reaction is not surprising after weeks of strong performance. We should expect volatility ahead as we (and the economy) adjust to a post-pandemic world.

Bottom line: Expect the unexpected in 2021.

Yours in an odd year,

Aaron Schuler, CDFA®Mountain West Wealth
Phone. 307-352-9330
Mobile. 801-694-9305

Economy & Taxes

Two things to discuss today: the economy (getting better) and taxes (going up?).

Let’s dive in.

The light at the end of the tunnel is getting closer and brighter.

  • The economy is booming and we’re getting much closer to pre-pandemic levels of economic growth.1
  • COVID-19 cases are declining, as the math starts to work for us (instead of against us as it did at the beginning of the pandemic).2 As more folks gain immunity, there are fewer ways for the virus to spread.
  • All U.S. adults are now eligible for a vaccine.3
  • Restrictions are easing and areas are opening up for travel, meaning we can start planning those missed vacations and seeing loved ones again.

After over a year of uncertainty and dread, the future is looking up.

How are you feeling?

Do you share my optimism? Hit “reply” and let me know your thoughts.

Things aren’t completely rosy, of course.

Major COVID-19 surges in India and Brazil mean millions are still suffering.4

Viral variants mean the pandemic may not be “over” for a long time and we still need to be careful not to undo all our gains.

Many folks are not experiencing the economic recovery and may need years to recover what they have lost.

However, let’s not let the work ahead take away from the progress we’ve made.

Let’s take a deep breath and appreciate how far we’ve come since March 2020.

… Deep Breath …

Now, let’s talk about taxes.

President Biden just unveiled a plan to increase taxes on high earners to pay for economic reforms as part of the American Families Plan.5

What’s on the table is likely to change as political wrangling continues, but here are a few things we’ve got to consider so far:

A higher top income tax rate of 39.6% (though it’s not clear yet who falls into that top tax bracket).

Raising the top tax rate on long-term capital gains to 39.6%. With the 3.8% Medicare surtax, that means the highest earners could pay a 43.4% rate on gains.

The elimination of the step-up basis for estates, meaning heirs could get stuck paying taxes on capital gains over $1 million (even if nothing has been sold) when they inherit.

This change could impact folks who, for example, inherit family homes that have appreciated in value. They might want to keep the home, but may not be able to afford the tax bill.

So, should I be worried?

Alert and informed, definitely. Anxious and worried, no.

Here’s why:

This is a proposal. It’s got a long way to go before becoming law and the details may change.

It’s still unclear how much impact these proposed changes will actually have. There are many advanced strategies that can help mitigate the impact of higher taxes. That’s why tax and estate strategies matter so much.

A study done by Wharton Business School suggests that tax mitigation strategies could help avoid 90% of the proposed tax increases on capital gains.6

Bottom line, the proposed changes are concerning, especially with so many details left to be determined, but it’s not time to panic.

We’re paying close attention to the process and will be in touch if we feel changes to your strategies are needed.

Be well,

Higher taxes in 2022?

More spending = higher taxes?

That seems likely with a $2 trillion American Jobs Plan (that could eventually cost trillions more) on the table to bolster America’s crumbling infrastructure and invest in R&D.1

What could those tax hikes look like? Let’s consider the possibilities.

Though President Biden committed to not raising taxes on folks earning less than $400,000 per year, it seems hard to believe that he’ll be able to keep that promise with such a massive bill to cover.2

Also, it appears that married folks filing jointly could find themselves facing a big marriage penalty if they get swept over the $400k threshold as a household.2

One option on the table is a new auto mileage tax, which would raise money for highway infrastructure. Another is higher fuel taxes, which could increase what Americans pay at the pump.3 However, both proposals would be difficult to get through Congress, so they seem unlikely to come to fruition.

Some economists favor funding long-term infrastructure spending with ultra-long bonds and it’s possible Treasury Secretary Yellen will consider issuing 50-year bonds for the first time since 1911 to take advantage of low interest rates.4

Bottom line: we don’t know exactly what will ultimately come out of Congressional haggling; however, it’s smart to prepare ourselves for potentially higher tax rates in 2022.

What could those look like? While I don’t have a crystal ball, the following changes seem very possible:

  • A higher top income tax rate
  • A higher capital gains tax rate
  • A higher corporate tax rate
  • A lower estate tax exemption amount

We’ll know more as the final deal shakes out, but it’s clear these possibilities make 2021 even more critical for tax and estate planning.

In other tax news, the IRS has extended the deadline for making 2020 IRA and HSA contributions to May 17, giving folks an extra few weeks to get them in.5

Also, folks who already filed and paid taxes on 2020 unemployment benefits and are due money back under the recent rule change will automatically get refunds from the IRS, avoiding the need to file an amended return (unless they became newly eligible for additional credits or deductions).6

There’s a lot going on right now in Washington and we can’t know what the final resolution will be until all sides have their say.

However, it’s wise to remember that laws and circumstances change all the time. All we can do is stay on top and plan ahead as best we can.

Yours in tax news,

Aaron Schuler, CDFA®Mountain West Wealth
Phone. 307-352-9330
Mobile. 801-694-9305

Securities offered through Securities America, Inc., Member FINRA & SIPC.   Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm.  BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated entities.
Trading instructions sent via email may not be honored. Please contact my office at 307-352-9330 or Securities America, Inc. at 800-747-6111 for all buy/sell orders. Please be advised that communication regarding trades in your account are for informational purposes only. You should continue to rely on confirmation and statements received from the custodian(s) of your assets. The text of this communication is confidential, and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the communication without copying or further dissemination.

P.S. Questions? Concerns? Hit “reply” and we’ll set up a time to chat.







Rescue bill (what’s inside)

So, the next (final?) round of stimulus was signed into law by President Biden.

Let’s dive in.

The $1.9 trillion bill called the American Rescue Plan Act of 2021 includes stimulus checks, child tax credits, jobless help, vaccine-distribution money, healthcare subsidies, and aid for struggling restaurants. What’s not inside? A higher minimum wage. 

Here’s a quick visual of how it compares to prior rounds of stimulus.

Here are some immediate takeaways: 

More stimulus checks are coming: $1,400 checks could be hitting bank accounts and mailboxes this month, going out to adults, children, and adult dependents such as college students and elders. These adult dependents did not qualify for previous payments, so that’s good news for many.1

Who gets paid? Individual filers who earn as much as $75,000 (or joint filers making $150,000), plus their household members, qualify for the full $1,400 per person.1

Folks filing as a head of household can earn up to $112,500 and still qualify for the full payment. Phaseouts kick in quickly this round, and an individual with an income of $80,000 or a couple earning $160,000 get nothing.1

Not sure if you qualify? The Washington Post put out a handy calculator to help you figure it out. (Accuracy not assured, etc., etc.)

If you’ve filed your 2020 taxes, your check would be based on that income. If not, it would be based on your 2019 tax filing. If you’re waiting for a missed payment, individual tax returns have an extra line called “recovery rebate credit” to claim your stimulus payment. 

Enhanced unemployment benefits are extended through Sept. 6: Folks claiming jobless benefits will receive $300/week on top of what they already get from their state through the fall.2

Some unemployment income is now tax-free: Individuals who earned less than $150,000 in 2020 can shield up to $10,200 in unemployment benefits from taxes. For married couples filing jointly who both received unemployment, the tax-free amount goes up to $20,400, but the $150,000 income cap still applies. Unfortunately, if you earn over $150,000, it currently appears that all of the unemployment benefits become taxable with no phaseout.3

If this applies to you or someone you love, my advice is to wait to file or update your tax return until the IRS issues guidance on what to do.

The child tax credit is larger: The bill increases the child tax credit for one year to $3,600 for kids under 6, and $3,000 for kids between 6 and 17 (the current credit is a flat $2,000 per child under 17). 50% of the credit would be available as advance monthly payments that the IRS will start sending to families in July 2021.4

Unfortunately, not all families will qualify. Phaseouts begin at $75,000 for single filers, $112,500 for heads of households, and $150,000 for joint filers. However, families who earn less than $200,000 ($400,000 for joint filers) could still claim the regular $2,000 credit.4

Health insurance costs could drop on health exchanges/marketplaces: The bill removes the income cap on insurance premium tax credits for folks who purchase insurance on the federal health exchange or state marketplace (for two years). That means the amount you would pay for health insurance would be limited to 8.5% of your income as calculated by the exchange.5

Final thoughts

A lot of rules have changed in the last year, throwing an already complex tax season into a bit of confusion.

Could there be more stimulus passed this year? It seems unlikely if the U.S. economy continues to expand.

According to a fresh estimate, our economy will expand nearly twice as fast as originally expected, growing at an estimated 6.5% in 2021 versus the 3.2% projected in December.6

Obviously, these projections rest on a lot of assumptions about vaccination rates, reopening, and consumer spending.

Let’s hope we stay on track.

That was a lot of information to absorb. Have questions? 

I’m here for them. Just hit “reply” to this email or give me a call at (307) 352-9330.

Until next time,Aaron Schuler, CDFA®Mountain West Wealth

Biden’s pen (what’s in it for you)

I hope you’re well.

After months of election uncertainty, Joe Biden was inaugurated as our 46th president, bringing the peaceful transfer of executive power that defines us as a democracy.

President Biden’s pen has been busy, busy, busy so let’s dive into some new policies that could impact you.

Student loan freeze: The Department of Education extended the suspension of federal student loan payments through September 30, 2021, giving borrowers some extra breathing room this year. No interest will accrue during that period, and each month will count toward public service loan forgiveness as well as student loan rehabilitation. Unfortunately, private loans are again excluded from the freeze.1

Foreclosure and eviction moratoriums: The CDC extended the federal eviction moratorium through March 31, 2021, preventing renters from being evicted for non-payment of rent. Fannie Mae and Freddie Mac also extended foreclosure and eviction moratoriums until February 28, 2021.2

Rental assistance: Under a program passed in December, states will begin disbursing $25 billion in rent assistance to help tenants pay rent and utilities. Funds can be accessed locally through housing groups, 211/311 information lines, and local representatives.3

Will Americans receive more stimulus checks?

I think that’s likely, but it’s not yet clear who will get them or how much they’ll be. The new $1.9 trillion stimulus program Biden has proposed offers $1,400 stimulus checks, enhanced unemployment benefits, a $15 minimum wage, aid for states and local governments, money for COVID-19 vaccines and testing, as well as help for parents and schools.4

What will the final bill look like once Congress finishes negotiating? Unknown.

Opinions and criticism abound. Some think the proposal is too big, too costly, and risks overheating the economy. Some believe it doesn’t do enough to address the real pain many Americans are experiencing. Others think that getting it done (and done quickly) is more important than getting it perfect.

What do you think? Hit “reply” and let me know.

Tax season starts later this year, but the filing deadline is still April 15 (for now).5

The IRS has pushed back the start of tax season by several weeks, delaying the acceptance and processing of tax returns until February 12. Currently, the tax filing deadline is still April 15, but that could also change.

I’ve had some questions about how the 2020 stimulus payments could affect taxes, so I’ll answer a few right here:

Do I owe taxes on my stimulus money? No, the IRS does not consider stimulus payments to be income.

I didn’t receive my money (or the correct amount of money). Since stimulus payments were based on prior year tax returns, you’ll receive any money you’re owed when you file your 2020 return. If you think you may have received too much based on your income, you’re in luck. It doesn’t look like you’ll have to pay any back.6

So, that’s a lot of information to digest. And more will be coming as the new administration settles in and starts working on what’s promising to be a big agenda for the first 100 days.

If you have questions or need help figuring out assistance for yourself or someone you love, please reach out. It’s what I’m here for.

P.S. Will all the political back and forth trigger a big correction? With markets at highs, a pullback is always possible. As long as progress is made toward getting control of the pandemic and supporting the economy, a serious correction seems unlikely. However, setbacks or a sudden loss of investor optimism could definitely cause a sudden drop. Let’s be prepared for volatility.







Season two of 2020?

Does it feel like 2021 yet?

The twists and turns so far make it seem like 2020 is dragging into a second season.

As an American, I’m shocked and worried, and I’m wondering how political disagreements turned into excuses for violence.

As a financial professional, I know that the politics, protests, and rioting in DC are just one factor affecting markets.

I honestly don’t know what will happen over the next few weeks, but I can help you understand how it affects you as an investor.

Why did markets surge the day the Capitol was attacked?

While the world watched the violence in DC with horror, markets quietly rallied to new records the same day.1

That’s weird, right?

Well, not really.

I think it boils down to a few things.

  1. Computers and algorithms are dispassionate, executing trades regardless of the larger world.
  2. Markets don’t always react to short-term ugliness. Instead, they reflect expectations about economic and business growth plus a healthy dose of investor psychology.
  3. With elections officially at an end, political uncertainty has dissipated.

Overall, I think investors are looking past the immediate future and hoping that vaccines, increased economic stimulus, and economic growth paint a positive picture of the future.

The Democrats control the White House and Congress. What does that mean for investors?

If you’re like a lot of people, you might think that your party in power is good for markets and your party out of power is bad.

That makes for a stressful experience every four years, right?

Fortunately, that’s not the case at all. Markets are pretty rational with respect to politics and policy.

While businesses and investors generally dislike increased taxes and corporate regulation, the Democrats hold such slim majorities in the House and Senate that it limits their ability to pass many big policy changes.

Also, the Democrats’ immediate agenda is very likely to be focused on fighting the pandemic and passing more stimulus aid, both of which should support stock prices.

Does that mean markets will continue to rally?

No guarantees, unfortunately. With all the frothy market activity and rosy expectations about the future, bad news could knock stocks down a peg or two.

A correction is definitely possible, and some strategists think certain sectors are in a bubble.

Bottom line, expect more volatility.

Well, what comes next?

I wish I could tell you.

I’m optimistic that the light at the end of the tunnel is getting closer and we can start going back to normal.

I’m proud of what scientists and medical professionals have been able to accomplish in such a short amount of time.

I’m grateful for the folks around me.

I’m hopeful about the future.

How about you?

What’s your take? I’m interested to hear your thoughts.

Stimulus bill (what’s inside)

I’m dropping you a quick note about the new economic relief package that was just signed into law.

What’s in the box?

The rescue package includes:1

  • $600 direct payments to adults and dependent children
  • An extra $300/week in unemployment benefits through at least mid-March 2021
  • $325 billion in small business aid
  • Vaccine distribution funding
  • Food assistance for low-income households
  • Emergency rental relief

Who is eligible for the stimulus payments?

It appears that lawmakers are following slightly different income limits than they used for the CARES Act. Individuals who earned less than $75,000 in 2019, heads of household earning less than $112,500, and couples earning less than $150,000 are eligible for the full $600/person payment. The payment starts phasing out after $75,000 and disappears entirely for individuals earning more than $87,000 (or couples earning over $174,000).2

While dependent children under 17 will also receive $600 each, it doesn’t appear that adult dependents like college students or elders qualify for the payments.

If your family added dependents in 2020 or you earned too much in 2019 to qualify (but would qualify in 2020), you may not receive full payments immediately but can request additional money once you file your 2020 taxes. If you qualified based on your 2019 income but your 2020 income would have reduced your payment, you won’t have to pay it back; nor will it count as taxable income.

How do I claim a stimulus payment?

Like the CARES Act payments earlier this year, the stimulus payment should end up in your bank account or arrive in the mail. If you’ve moved or changed bank accounts since you filed your taxes, you can update your address with the IRS here. It appears that you can’t update direct deposit information due to fraud risks.

While the IRS hasn’t released a timeline for sending out payments, it’s possible electronic payments could start before the end of the year. When the last round of stimulus passed, the IRS began distributing payments two weeks later; however, plenty of eligible folks still haven’t received them many months later.3

What else do I need to know?

Small business relief: Congress included another round of relief for small business owners by extending the Paycheck Protection Program with another $284 billion in forgivable loans. Some of the funds will be set aside for very small businesses, and the PPP is now available to nonprofits and local media outlets.4

An extra $20 billion has also been appropriated for Economic Injury Disaster Loans for businesses in low-income communities, and $15 billion more is earmarked for live venues, movie theaters, and cultural institutions that have been financially damaged by the pandemic.

The deal also clarifies that PPP borrowers will be able to deduct expenses paid for with forgiven loans, clearing up a potentially nasty tax issue.

Unemployment benefits: The package also extends unemployment benefits of $300/week for another 11 weeks, beginning as early as December 27 and lasting at least until March 14, 2021. A benefits program specifically for contract and gig workers that was slated to expire at the end of the year is also extended through March.

What should I do with my payment?

If you’re one of the millions of Americans struggling to stay afloat right now, please use the stimulus payment to pay for your three basics: food, shelter, and medicine. If you’re in a better place, I’d recommend paying down any high-interest debt you’ve accumulated or beefing up your emergency savings.

If you’re among the very fortunate who don’t need to shore up your finances, I’d recommend putting it toward your retirement savings, other financial goals, or investing it in yourself through a course or hobby.

That’s it for now. I hope you and your loved ones are safe, warm, and well.

Questions? I’m here. Reach out at (307) 352-9330

Happy Holidays and Warmest Wishes!