THE WEEK ON WALL STREET
The S&P 500 Index gained 4.59 percent, while the Nasdaq Composite Index picked up 6.73 percent. The Dow Jones Industrial Average lagged, adding 2.48 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased by 2.86 percent.
FACT OF THE WEEK
On April 28, 1953, Inventor Howard Ross received a patent for a "double coat"—an outer layer that can be extended to cover two people. The intended use? To protect spectators in athletic stadiums when it rains. The coat appeared like a conventional coat when collapsed, and could extend to fit two people.
MARKET MINUTE
Markets Rally
Markets opened the week lower as investors continued to fret about China trade tensions. But sentiment quickly shifted. Stocks rebounded Tuesday following news that the administration intended to de-escalate tensions with China over tariffs. The rally extended through two more consecutive sessions as investors responded favorably to reassuring comments from the administration.
Markets also were encouraged after the president said he had "no intention" of firing the Fed Chair Powell. They also liked hearing Treasury Secretary Scott Bessent’s comments that the U.S. had an "opportunity for a big deal” with a key trading partner. Megacap tech stocks, which had been under pressure for several weeks, regained momentum during the week, leading the market’s advance.
Housing Market Update
Fresh housing data released last week showed the median price for a newly constructed home ($403,600) and an existing home ($403,700) were virtually identical in March. This is unusual. Typically, the average new home costs more than the average existing home. But last month, the median new-home price while the median existing-home price rose and hit a new all-time high.
FINANCIAL STRATEGY OF THE WEEK
What If You Get Audited?
“Audit” is a word that can strike fear into the hearts of taxpayers.
However, the chances of an Internal Revenue Service audit aren’t that high. Between 2010 and 2020, the IRS only audited 0.49% of all individual tax returns.
And being audited does not necessarily imply that the IRS suspects wrongdoing. The IRS says an audit is just a formal review of a tax return to ensure information is being reported according to current tax law and to verify that the information itself is accurate.
The IRS selects returns for audit using three main methods.
Random Selection. Some returns are chosen at random based on the results of a statistical formula.
Information Matching. The IRS compares reports from payers — W2 forms from employers, 1099 forms from banks and brokerages, and others — to the returns filed by taxpayers. Those that don’t match may be examined further.
Related Examinations. Some returns are selected for an audit because they involve issues or transactions with other taxpayers whose returns have been selected for examination.
There are a number of sound tax practices that may reduce the chances of an audit.
Provide Complete Information. Among the most commonly overlooked information is missing Social Security numbers — including those for any dependent children and ex-spouses.
Avoid Math Errors. When the IRS receives a return that contains math errors, it assesses the error and sends a notice without following its normal deficiency procedures.
Match Your Statements. The numbers on any W-2 and 1099 forms must match the returns to which they are tied. Those that don’t match may be flagged for an audit.
Don’t Repeat Mistakes. The IRS remembers those returns it has audited. It may check to make sure past errors aren’t repeated.
Keep Complete Records. This won’t reduce the chance of an audit, but it potentially may make it much easier to comply with IRS requests for documentation.