Financial Intel Monthly

The Markets (as of market close November 30, 2022)
A late rally at the end of the month helped push stocks higher in November, marking the second monthly advance in a row. Each of the benchmark indexes posted solid monthly gains, led by the Global Dow, which advanced nearly 11.0%. The large caps of the S&P 500 and the Dow rose more than 5.0%. The Nasdaq climbed 4.4%, while the Russell 2000 added 2.2%.

Investors welcomed news from Federal Reserve Chair Jerome Powell, who announced that the pace of interest-rate hikes can slow as soon as December, which likely means a 50-basis point increase, ending the string of 75-basis point rate hikes. The Fed may be taking note of the fact that the labor market has begun to cool (see the employment report below), while consumer price increases are showing signs of moderation. Nevertheless, prices remain elevated entering the holiday shopping season. However, business conditions remained generally positive, and consumers continued to spend, despite rising interest rates and decreasing levels of confidence (see report below).

With the holiday season upon us and the end of the year approaching, we pause to give thanks for our blessings and the people in our lives. It is also a time when charitable giving often comes to mind. The tax benefits associated with charitable giving could potentially enhance your ability to give and should be considered as part of your year-end tax planning.

Tax deduction for charitable gifts
If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. This may also help increase your gift.

In late September 2022, the U.S. dollar hit a 20-year high in an index that measures its value against six major currencies: the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc. At the same time, a broader inflation-adjusted index that captures a basket of 26 foreign currencies reached its highest level since 1985. Both indexes eased slightly but remained near their highs in October.^1–2

Intuitively, it might seem that a strong dollar is good for the U.S. economy, but the effects are mixed in the context of other domestic and global pressures.

The Markets (as of market close October 31, 2022)
October saw stocks close higher for the first monthly gain since July. Investors were uplifted by hopes that the Federal Reserve will pull back from its aggressive interest-rate hike policy. In addition, solid third-quarter earnings could be a sign that the economy can withstand the battle to lower inflation. Each of the benchmark indexes listed here posted notable gains led by the Dow, which rose nearly 14.0%. The Russell 2000 gained about 11.0%, followed by the Global Dow, the S&P 500, and the Nasdaq.

Here are some things for Fortune 500 employees and retirees to consider as they weigh potential tax moves between now and the end of the year.

1. Defer income to next year
Fortune 500 employees must consider opportunities to defer income to 2023, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rent, and payments for services. As a Fortune 500 employee, doing so may enable you to postpone payment of tax on the income until next year. 

Medicare premiums, deductibles, and coinsurance amounts change annually. Here's a look at some of the costs that will apply in 2022 if you're enrolled in Original Medicare Part A and Part B.

Medicare Part B premiums
According to the Centers for Medicare & Medicaid Services (CMS), most people with Medicare who receive Social Security benefits will pay the standard monthly Part B premium of $170.10 in 2022.

People with higher incomes may pay more than the standard premium. If your modified adjusted gross income (MAGI) as reported on your federal income tax return from two years ago (2020) is above a certain amount, you'll pay the standard premium amount and an Income-Related Monthly Adjustment Amount (IRMAA), which is an extra charge added to your premium, as shown in the following table.

Many IRA and retirement plan limits are indexed for inflation each year. Although the amount you can contribute to IRAs remains the same in 2022, other key numbers will increase, including how much you can contribute to a work-based retirement plan and the phaseout thresholds for IRA deductibility and Roth contributions.

How Much Can You Save in an IRA?
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2022 remains $6,000 (or 100% of your earned income, if less). The maximum catch-up contribution for those age 50 or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2022, but your total contributions cannot exceed these annual limits.

Can You Deduct Your Traditional IRA Contributions?
If you (or if you're married, both you and your spouse) are not covered by a work-based retirement plan, your contributions to a traditional IRA are generally fully tax deductible.

If you're married, filing jointly, and you're not covered by an employer plan but your spouse is, your deduction is limited if your modified adjusted gross income (MAGI) is between $204,000 and $214,000 (up from $198,000 and $208,000 in 2021) and eliminated if your MAGI is $214,000 or more (up from $208,000 in 2021).

For those who are covered by an employer plan in San Francisco for example, deductibility depends on income and filing status. If your filing status is single or head of household, you can fully deduct your IRA contribution in 2022 if your MAGI is $68,000 or less (up from $66,000 in 2021). If you're married and filing a joint return, you can fully deduct your contribution if your MAGI is $109,000 or less (up from $105,000 in 2021). For taxpayers earning more than these thresholds, the following phaseout limits apply.