Above the Fold        

Should You Be Prepared for an IRS Audit? 

For the average consumer, an IRS (Internal Revenue Service) audit can be stressful, time-consuming and potentially costly. Unfortunately, that may become a reality for a larger number of taxpayers. The “American Rescue Act” (essentially a tax bill), signed into law by President Biden in March 2021, made changes in the tax code and added several new IRS rules, including a reporting threshold of just $600 for third-party payment processors such as Venmo, Zelle, PayPal and Cash App. The law goes into effect this year and experts believe it’s going to trigger a wave of audits for Americans in every tax bracket. But with a little preparation and a few tactics, you can reduce your exposure.  

Before the change, payment apps were required to send users (and the IRS) a 1099-K form if their gross transaction income exceeded $20,000, or if they had 200 separate transactions within a calendar year. Now, all transactions over $600 are reported to the government and must be accounted for. And while payments for personal expenses, gifts, rent payments and losses on personal items are excluded, you will be required to “explain away” those payments, which could be commingled or similar to non-exempt payments. In other words, those of us who use payment apps have some more work to do. The IRS even issued a warning a few days ago, reminding taxpayers to report third-party payment earnings. Experts advise taking the alert seriously.   

To minimize your risk, keep your transactions focused within one app; this can help improve tracking and dealing with any errors at tax time. Splitting payments up or using the service for only a partial payment below the $600 threshold can also help reduce “trigger transactions.” Lastly, be sure and add notes to the transaction, if possible, so your tax professional can properly categorize and report your payments to the IRS.    

Three Things                             

Facebook Threatens to Remove News From Its Feed 

On Monday, Meta CEO Mark Zuckerberg threatened to pull all news from Facebook if a media-competition bill was passed. The “Journalism Competition and Preservation Act,” which legislators are trying to tack on to another bill, would require companies like Facebook and others to pay publishers for their news. Arguments against the bill believe it hasn’t been thought through enough and meddles with the free market and flow of information, while proponents say it keeps smaller news outlets in business. That said, Meta has not been idle with these types of threats. In 2021, the social-media behemoth banned Australian users from viewing, sharing or interacting with news completely. The ban was lifted once the bill was amended.  

Home Buyers Get a Break 

U.S. mortgage rates continued to slide last week, with the 30-year contract rate ending around 6.41%. The continued pullback marked the fourth week in a row for the critical borrowing rate and was the lowest since September. Rates continued to slide this week, touching 6%. The shift in trajectory can be mostly attributed to the less-hawkish tone offered by Federal Reserve officials as economic and corporate data continued to show deteriorating conditions, as well as a moderation in the pace of inflation. The Fed meets one more time this year from Dec. 13 to Dec. 14, where another 50-basis-point hike is largely expected.  

Chinese Exports Fall Sharply 

China’s government announced sweeping changes to its COVID-19 lockdown policies, which should get millions back to work, increasing output. But current pandemic restrictions and waning global demand for its goods drove exports lower at the fastest pace in more than two years. Shipments from China fell 8.7% year-over-year in November, the worst dip since February 2020, when the nation was locked down to stop the spread of the newly discovered coronavirus. Economists expected a 2% decline, with the miss being viewed by many as an economic warning for China and much of the world.   

In the Know                             

The Commonwealth of Independent States 

It was just 31 years ago on this day when the elected leaders of Russia, Ukraine and Belarus signed an agreement to form a new association of independent republics. The pact was made amid the crumbling of the Union of Soviet Socialist Republics (USSR). The Commonwealth of Independent States (CIS) was officially formed on Dec. 21, 1991, and quickly added a dozen more nations. Initially, CIS members pledged to keep both their armed forces and the former Soviet nuclear weapons stationed on their territories under a single unified command, but that agreement became hard to coordinate and sustain. Georgia was the first country to withdraw from the CIS in 2008 after Russian-backed forces in South Ossetia attacked other parts of Georgia. Russia then accused Georgia of genocide and launched a full-on assault, sparking the Russo-Georgian War. Sadly, history would repeat itself in Ukraine.