17 January 2019 FT — Articles to Read

17 January 2019


Question: According to MSN: Money, what are eleven (11) situations in which you probably shouldn’t do your own taxes?


Shutdown threatens to spill over into economy – Pg. 3

–        The most immediate economic impact will stem from a reduction in work performed by federal employees.  In 2013 more than 800,000 federal workers were furloughed for 16 days, meaning they were told not to report to work and did not receive any pay.  The BEA estimated that real GDP growth was consequently trimmed by 0.3%

–        …WH economists suggest that the effect of work not being done by 380,000 furloughed federal workers this time around will shave 0.08% off GDP every week the shutdown carries on.  In addition, the loss of work done by federal contractors will trim an additional 0.05% from activity

–        The indirect effects, which are not captured by narrow economic modeling, include potential lost spending by individuals who are missing wages because of the impasse

–        …if the shutdown goes on long enough, questions will start rising over continued delivery of the supplemental nutrition assistance programme, formerly called food stamps, which help more than 40m Americans buy groceries every month


BlackRock’s Fink says recession unlikely despite stresses in global economy – Pg. 12

–        Financial markets suffered their worst month since the financial crisis in December, shrinking its assets under management to just under $6tn

–        …Mr Fink saw few signs the global economy was heading for a downturn

–        …BlackRock has not been immune to broader challenges.  Increased market volatility has spurred investor flight from riskier assets, while pressure to reduce fees, and increased regulatory costs have squeezed revenues

–        BlackRock is to cut 500 jobs and included a $60m restructuring charge in its results.  Falling markets and investor nerves dragged total assets under management to $5.98tn from $6.44tn at the end of the third quarter

–        The shares fell 24% last year against 26% across the sector but most analysts still make BlackRock their top pick in a struggling industry


Pearson hit by falling sales in US higher education – Pg. 13

–        Pearson, the UK educational publisher, relieved on cost cuts to keep it on track to meet its full-year guidance as declining sales in the US higher education sector weighted on revenues


Australia keeps nervous watch on faltering Chinese economy – Pg. 19

–        The Aussie dollar, often seen as a proxy for Chinese growth, bounced this month on hopes of a trade deal between Washington and Beijing, and as China moved to shore up its economy with stimulus measures

–        House prices have already stated to turn in Australia, one of the world’s most expensive property markets.  Prices fell 1.3% in December, the largest monthly fall since 1983, leaving the market down 6.1% last year

–        Household debt, pumped up by mortgages, sits at 120% of GDP – one of the highest levels in the developed world…

–        Growth is already showing signs of stalling


Answer: (1) The new tax laws are too overwhelming; (2) You are a high earner; (3) You are self-employed; (4) You itemize a lot of deductions; (5) You are a business owner; (6) You are a new homeowner; (7) You live and work in different states; (8) You are a landlord; (9) You are retiring; (10) You just do not have time; (11) You are afraid of the IRS (Prof Note: I have experience one forensic audit and that was enough to scare me to the professionals forever.  The IRS DOES call (despite the internet saying they do not) to announce an audit, i.e. I learned of mine through a phone call.  The phone call starts like this, “I am Jane/John Doe, special agent, badge #….”.  There is ONLY one correct answer, “I am represented!”  Do NOT play around.  Also, in fairness and transparency to the IRS, my audit was concluded with a favourable outcome, i.e. I felt it was fair and just and have no animosity towards the IRS.)