The Truth about Tax Extensions

Eagle Wealth Management |
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Weekly Market Commentary

Tax Day is rapidly approaching.  This year it falls on April 18th for federal income tax returns.  If you’re feeling stressed about filing on time, you may want to think about requesting a tax extension.  Here are a few things to consider.

Your Information and Documents
Compiling tax documents and information can be tedious, especially if you’re a freelancer or run your own business.  If you have a lot of paperwork to compile, had documents arrive late, or had a lot of personal changes in the last tax year, you may find an extension helpful.

Make Your Tax Filing Perfect
Filing an extension can reduce stress by avoiding the mad rush.  It also allows you to take your time getting documents in order which can improve the accuracy of your return.  

Expat Status
If you’ve moved out of the country in the last tax year, it may be advantageous to extend your time to file, especially if you haven’t qualified for the foreign earned income exclusion yet.

What a tax extension doesn’t mean:

  • “If I go on extension, I can wait until the return is filed to pay.”  Sorry, but Uncle Sam still wants the money.  Estimate and pay your taxes by April 18th so you avoid interest and penalties.
  • “Going on extension is expensive.”  Nope.  Not only will your return likely be more accurate because it reflects up-to-date information, but it could also mean you avoid an amended return (prepared at extra cost) if you found mistakes afterwards.
  • “Filing a return after the April deadline makes me more susceptible to an audit.”  Not at all. Your chances of an audit are not related to when you file.  Instead, the IRS uses a scoring system to compare returns of peer groups to look for significant differences in a person’s financial data.  

We understand it may feel uncomfortable if it’s your first time considering a tax extension.  But arming yourself with facts and considering your entire financial picture will give you the confidence to make decisions based on your real-life needs.  

If an extension is right for you, be sure to file IRS tax form 4868, Application for Automatic Extension of Time, to extend your deadline up to six months. For individuals, you can file this form online through the IRS Free File portal. And don’t forget to pay your estimated tax!

If you’re still feeling unsure whether filing an extension is the right move, please reach out to us.  And remember, we have our own Eagle Wealth accounting team now for added support and expertise.  Give us a call – we’re here to help.

Sincerely,
Your Eagle Wealth Team

You’re Invited on May 6th to our Eagle Wealth Shred & Sip Event

Please drop by the Eagle Wealth parking lot for a late afternoon Shred & Sip on Friday, May 6th from 3:30 p.m. - 6:00 p.m.   Come say hello to the team, enjoy drinks and small bites from Board in Bend, and meet Hans and Kim from our tax team if you haven’t had the chance to yet.  

We’ve asked Data Delete of Oregon to be at our office to shred your documents for free.  Afterwards, you’re welcome to leave your car in our parking lot, make a night of it, and head downtown to the First Friday ArtWalk! 
RSVP here.

Eagle Wealth to Sponsor NeighborImpact’s 2022 Foodie Crawl


For us, part of living a life we love is giving back to our community. That’s why we’re honored to be a sponsor of NeighborImpact’s 9th annual Foodie Crawl.  This downtown Bend progressive dinner allows guests to set their own dining pace and taste small plates and beverage pairings from local chefs.  

Not only does this fundraiser support small businesses but proceeds from The Foodie Crawl benefit NeighborImpact’s new food program warehouse, which collects and distributes more than 4 million pounds of food annually to Central Oregonians struggling with food insecurity.           

Check-in begins Sunday, April 24th at 2pm outside the Commons Café and Taproom.  If you’re interested in joining in on the fun, you can purchase tickets here.  A few Eagle Wealth advisors will represent our team so be on the lookout for us!

The Week on Wall Street

Stock prices fell last week in response to the Fed’s plan to combat inflation, which staked out a more aggressive stance than investors had anticipated.

The Dow Jones Industrial Average slipped 0.28%, while the Standard & Poor’s 500 fell 1.27%. The Nasdaq Composite index dropped 3.86% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slid 2.05%.1,2,3

Fed Roils Markets

After a positive start to the week, stock prices turned lower on a more hawkish tone from Fed officials. On Tuesday, investors were surprised by comments from Fed governor Lael Brainard, one of the Fed’s more dovish members, who suggested the Fed could take a more aggressive approach with interest rates.

The unease extended into Wednesday when minutes of the last Federal Open Market Committee (FOMC) meeting were released, signaling a potentially faster pace in both interest rate hikes and the wind-down of the Fed’s balance sheet. Yields climbed steadily throughout the week as the bond market digested this new information. Particularly hard hit were high valuation stocks, as reflected in the 4% drop in the Nasdaq.


Fed Minutes

With economic growth worries overhanging the market, last week’s employment reports showed continued strong demand for workers. The Job Openings and Labor Turnover Survey reported the number of open positions remained near record highs, with job openings exceeding the number of available workers by a record five million. Afterward, the Automated Data Processing employment report saw private payrolls grow by 455,000 in March, slightly above consensus expectations.4,5

Finally, the government’s monthly jobs report showed that employers added 431,000 jobs in March, lowering the unemployment rate to 3.6%. That’s approaching the 50-year low of 3.5% reached in February 2020.6

THE WEEK AHEAD:

KEY ECONOMIC DATA


Tuesday: Consumer Price Index (CPI).
Wednesday: Producer Price Index (PPI). 
Thursday: Jobless Claims. Retail Sales. Consumer Sentiment.
Friday: Industrial Production.

Source: Econoday, April 8, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD:

COMPANIES REPORTING EARNINGS

Tuesday: CarMax, Inc. (KMX), Albertsons Companies, Inc. (ACI).
Wednesday: JPMorgan Chase & Co. (JPM), Delta Air Lines, Inc. (DAL), BlackRock, Inc. (BLK).
Thursday:  UnitedHealth Group (UNH), The Goldman Sachs Group, Inc. (GS), Wells Fargo & Co. (WFC), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC).

Source: Zacks, April 8, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.