Coronavirus worries hit financial plans

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The novel coronavirus pandemic is causing the biggest drop in Americans’ financial situation in over a decade.

The American Institute of CPAs’ Q1 2020 Personal Financial Satisfaction index experienced a 20 percent decline from the fourth quarter of last year, marking the largest quarterly drop the PFSi has seen since the fourth quarter of 2009 during the Great Recession.

The main factor driving the quarter-over-quarter PFSi decline was the PFS 750 Market index, an AICPA proprietary stock index made up of the 750 largest companies trading on U.S. capital markets. In comparison to its Q4 2019 record high, the market index is down 21 percent (20.9 points), wiping out all its gains from the past three years.

“We’re hearing from CPA financial planners across the country that now more than ever their clients are relying on their guidance to navigate these extraordinary times,” said AICPA director of financial planning Andrea Millar in a statement Thursday. “From giving clients peace of mind that principles of financial planning haven’t changed, to proactive planning with tax-efficient portfolio moves, and small business loans, CPAs have been working tirelessly to secure their clients financial future and to help them realize their life goals.”

Michael Landsberg, a member of the AICPA PFP Executive Committee, suggested that tax planning moves can help make up for investment losses.

“Coronavirus-fueled investment losses can help cut your taxes if you know how to work those losses,” he said in a statement. “Review your investment portfolio to see what potential investments you can sell now to lock in the tax benefits. Even better, if you’d like to maintain exposure to that asset class, you can buy a similar investment and eventually buy back into that original investment after 30 days. Be sure to wait at least 30 days in order to avoid ‘wash sale’ rules which are in place to prevent taxpayers from deducting loses from trading substantially similar securities within 30 days of each other. This strategy is known as tax loss harvesting and can help to lower your potential tax hit.”

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Financial planning Tax planning AICPA Coronavirus
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