Don’t Give The IRS A 0% Loan

Karl Eggerss discussed IRS tax day with Trey Ware this morning. Karl explained that your taxes may have gone down or up, but that doesn’t necessarily mean your refund went up or down. In addition, if you got too large of a refund, now is a good time to make an adjustment.

Trey Ware:          The economy grew by 3% last year, and the best part of all this is you’ve got higher now wages. You’ve got people who are making more money and they are less afraid of losing their job. Another important part of this for the Tax Cut and Jobs Act, business investment of capital goods has sky rocketed to the point of $26 billion. Business is expanding and investing in their businesses.

Trey Ware:          Karl Eggerss from EggerssCapital.com joins me every Monday at this time, and we talk about the economy and the stock market. And all this is really, really good all the way around. It looks good right now, Karl.

Karl Eggerss:       Well, then you also had tax cuts last year. Today’s tax day, and I saw stats that only 17% of the population that took a survey believed they got a tax cut. People need to understand that this is a good time to look at what your tax is, your total tax number did, and then adjust your withholding-

Trey Ware:          Right.

Karl Eggerss:       … because if your income changed, your circumstances changed, obviously your amount you get as a refund or you have to pay is going to change regardless of what the taxes did. And so there’s all these moving parts, so you can’t just look at what your refund was. But if you did get a tax cut and your refund’s too big, obviously you need to adjust that, because you don’t want to be loaning your money to the government for a year. This is a good time, over the next couple of weeks as these returns get filed, to really look at that and see what the adjustment was.

Karl Eggerss:       You throw that tax cut on top of what you were just talking about. And yeah, the economy is humming along and it’s in a position right now, where again, it doesn’t require the fed to be very aggressive, but at the same time, there’s no recession in sight. That’s the Goldilocks scenario, and that’s a scenario that obviously, investors like, because we’re very close to all-time highs.

Karl Eggerss:       Now, remember. We were about 20% lower around Christmas eve. So the stock market is up over 20%, since Christmas eve. I mean, it’s been a fascinating v-shaped recovery in just the last few months.

Trey Ware:          We are somewhere around … what? 26,000 on the stock market, is that where it closed down on Friday?

Karl Eggerss:       About 26,400.

Trey Ware:          Yeah. So I mean, these are definitely all-time highs that we’re seeing here. And with these kind of economic numbers that continue to come in, we expect those numbers to go up and rise, don’t we?

Karl Eggerss:       Yeah. Look, like I said, you always have … When the companies report their profits, that’s what the key is-

Trey Ware:          Correct.

Karl Eggerss:       … and if these tax cuts trickle into the companies, and consumers have more money in their pocket … the consumer’s two thirds of the economy, so if the consumer continues to spend, obviously what’s going to happen is these companies are going to report better profits. Because of that, the stock market continues higher. So we need to continue to watch the corporate profits and see if they continue to accelerate. Because remember, in the last few months, that was what the fear was in December, was that, “Hey. What’s going to happen over the next few quarters is, these companies are going to report lower growth. They’re actually going to have negative earnings.” For example, instead of making a dollar per share, it’s going to be 90 cents per share. It’s actually going to see a deceleration, and if that doesn’t happen, the market continues higher.

Trey Ware:          And that’s where we are right now. Thank you, Karl. Karl Eggerss at EggerssCapital.com. Check him out over there.

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