The Coronavirus, The Market and Taxes

Historic and unprecedented market volatility in recent weeks has concerned investors wondering what to do now.

In an interview aired on a local CBS station, Moneta’s Chief Investment Officer Bill Hornbarger reminded people to avoid panicking.

“I would tell you emphatically that the worst thing to do right now is panic,” Hornbarger said. “People who make emotional decisions in the moment – typically it turns out to be the wrong decision.”

While we don’t have any control over the markets or the economy, Hornbarger reminded viewer that we do have control over our saving and spending. He also offered several practical steps investors can take when addressing their portfolios in this market environment:

  • Revisit Your Risk Tolerance, Saving and Spending Policies. Consider the risks you are taking and why you are taking them. For nearly all investors, longer-term objectives are only possible if taking an appropriate level of risk.
  • Maintain a Longer-Term Mindset. Do not let recent market volatility convince you to abandon a prudently designed, long-term investment plan. Short-term, reactive decisions can significantly impair portfolio returns.
  • Deploy a Portion of Excess Cash Reserves. For investors with excess cash reserves, consider investing a portion while markets are trading at more favorable levels. Create a plan to systematically put cash to work. Accept the fact that no one can “time the market.”
  • Thoughtfully Rebalance Over Time. After revisiting your risk tolerance, monitor your portfolio’s allocation and thoughtfully rebalance back to targets if the portfolio’s current allocation materially deviates from its target allocation.
  • Harvest Losses Where Available. Taxable investors should consider using market pullbacks as an opportunity to harvest losses. Replacing sold positions with a similar – but not identical – fund can help your portfolio maintain similar exposures in line with your target allocation.

Coronavirus Tax Relief

The Treasury Department and Internal Revenue Service announced in a press release that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on Businesses who need additional time must file Form 7004.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.

“Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically,” said IRS Commissioner Chuck Rettig. “Filing electronically with direct deposit is the quickest way to get refunds. Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience. I’m incredibly proud of our employees as we navigate through numerous different challenges in this very rapidly changing environment.”

Disclosure: © 2020 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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