Tax Preparation

Estimated Taxes

estimating taxes for 2016

It’s a new year, and soon it is going to be time to file your tax returns. If you aren’t certain about posting your estimated taxes for 2015, this information could help.
What You Need to Know About Estimated Taxes

It’s not just self-employed individuals who are required by the IRS to pay estimated taxes.

There are numerous advantages to being self-employed. The top benefit that most full-time, must-report-to-the-office employees most envy the most is your ability to establish your own work schedule. You don’t have the commuting expenses, nor the hassle. No endless meetings with co-workers, and no dealing with office politics.

Self-employment has one major disadvantage, though: the self-employment tax. One of the benefits of being a W-2 employee of a company is, well, the W-2, which documents how much you paid into Social Security, as well as the big chunk your employer kicked in.

Others Owe, Too
But estimated taxes are not just for the self-employed. They’re owed by anyone who has at least some income that isn’t subject to withholding by an employer. For example, if you receive interest or dividends, rent, or income from selling an asset, you are required to pay estimated taxes.

Figure 1: The IRS establishes a payment schedule for your estimated tax payments.

In addition, if you’re not deducting enough income tax deducted from your salary, pension, or other income, you’re obligated to send the IRS a payment four times a year.

This is why it’s so important that you enter the correct number of allowances on your W-4 (and even add an additional amount if necessary), and that you track all income.

Failure to submit enough income tax dollars prior to filing your 1040 – and by the IRS’ scheduled deadlines — will result in penalties, even if the IRS owes you a refund.

How to Pay
The form you use to submit your estimated tax payments depends on what type of business entity you are. If you are a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you’ll need to make quarterly estimated payments if you think you will owe $1,000 or more (after you subtract withholding and refundable credits) or more come filing time. You would use the Form 1040-ES (Estimated Tax for Individuals) to calculate and pay. Corporations should use the Form 1120-W (Estimated Tax for Corporations) if they expect to owe $500 or more when they file.

If you are sending a check or money order, you can fill out and print the vouchers included at the end of Form 1040-ES on the IRS site.

Figure 2: If you are sending a check or money order to make estimated payments, you can use these.

There are multiple ways to pay estimated taxes electronically, either by credit or debit card, or by withdrawal from a bank account. They’re listed here, and they include EFTPS (the Electronic Federal Tax Payment System), a free service provided by the U.S. Department of the Treasury.

As Always, Exceptions
There are some individuals and businesses to whom these mandates don’t apply.
Farmers and fishermen, as well as some household employers and higher-income taxpayers have different rules that are explained in the Form 1040-ES instructions.

Also, you’re not required to pay estimated taxes if:

  • You were a U.S. citizen or resident alien for all of the previous year, and
  • You had zero tax liability for the full 12 months of the previous year.

How to Estimate Your Estimated Taxes
That’s the tricky part, especially if you are self-employed or for some other reason don’t know for a fact how much you’ll owe in income tax for the current year. You can use the previous year’s return as a guide, but there have, of course, been tax code changes since then. And your income and deductions may well be different this year.voucher forms found on the 1040-ES page.

This is really an area where you should sit down with us and make a plan. This might involve running monthly or quarterly reports, creating projections, etc. These are good habits, especially if your income is unpredictable. Year-round tax planning will not only help you make those quarterly payments – it will provide a clearer view of your company’s overall financial health.

Pete DiSalvo
CPA Vero Beach, Fl
Melbourne - Titusville - VeroBeach - Certified Public Accountant

 

 

 

 

 

 

 

 

Any Tax Tips  posted here are for informational purposes only. They are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Thinking of Renting Out Your Home?

DiSalvo CPA, Melbourne, Vero Beach, SebastianReal Estate is booming here in Indian River and Brevard Counties. If you are thinking about moving to a bigger, or even to a smaller place, but you would like to keep you current home, not sell it. Then you may face some tax implications if you decided to rent it out.

If you’ve made the decision to rent your primary residency instead of selling it, there are tax implications to be aware of. The tax code in this area can be complex, so it’s important to understand the rules and regulations upfront before you take the plunge.

First off, a residence is considered primary when you live in it full-time and it is not rented out for more than two weeks in any given year. Conversely, a residence is considered rental property if you use it personal use for no more than two weeks of the year or 10% of the days it is rented.

Tax Implications
Once you have converted your primary residency to a rental property, you will be required to report any rental income as taxable income. On the reverse side, you will also be able to deduct expenses for repairing the property as well as general maintenance.

In addition, the IRS does allow you to use depreciation of the property to offset income received on the property as well as taking other deductions such as property taxes, insurance, mortgage interest, utilities, and association fees.

Any costs over the amount of the total rental income cannot be deducted unless you meet the following conditions:
-You actively participate in all real estate activities for the property
-Your adjusted gross income is under $100K for the year
-Your total losses for all real estate activity does not exceed $25K for the year

The basis for depreciation for rental property is the lower of your adjusted basis – capital improvements plus purchase price – or the fair market value. The property must be depreciated over a 27.5 year period. Also, you are only allowed to depreciate the portion of the residency that is used for income generation.

Happy Thanksgiving!

From all of us here at DiSalvo And Company, PA

We extend Good Wishes!! DiSalvo And Company, PA  

Forbes Offers 5 Ways to Avoid IRS Audit.

A recent Forbes article by Robert W. Wood offers these 5 ways to “audit proof” your tax return.

View the entire Forbes article here:

1. Don’t claim flaky deductions.

A wise man once said “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934).   Even so, thre are limits to what the IRS will buy when it comes to deductions.

2. Use a pro, or use software. 

tax preparation-VeroBeach-Melbourne-Titusville-FLWe at DiSalvo and Company heartily agree.  At least let a software guide you through the process to make sure you are asking all the right questions.  Forbes suggests you use one of the majors, such as Intuit’s Turbotax or H&R Block’s Taxcut.  We will say that from time to time someones asks us to have a look at the return that was prepared by a software program.  Just last week we found an oversight that let to our client receiving almost 10,000 back in additional refunds over the last few years.

In light of that, our advice would lean toward using the pro.

3. Disclose just enough.

If you report a transaction that you feel needs an explanation to be clear.  Forbes advises not to include lots of supporting documentation unless asked.  More than one taxpayer has provided the IRS with documentation which raised more questions than it answered.  They have ended up being hoisted on their own petard.

5. Account for every 1099 you receive. 

You receive IRS form 1099 for income you receive from someone for whom you are not considered an employee.  This may be work that you have done on a consulting basis.  Forbes advice makes sense.  Whoever sends you a 1099, also sends a matching copy to the IRS.  The IRS will certainly match up the 1099s reported on your return with the 1099’s they received for your tax id.   The same holds true for 1098 forms that lenders use to report interest paid.

In the final paragraph of the Forbes piece, they remind you that no matter how careful you are with your returns, there is a chance that someday you will have an appointment with the IRS, so be prepared.  Keep your returns and all of your written documentation to back up your deductions.

Disalvo CPA, a Dave Ramsey endorsed provider.If you are ever called to sit with the IRS, consider having one or the experts at DiSalvo and Company, represent you.  We have a strong track record of achieving favorable results for clients who have a dispute with the IRS.   Even if we did not prepare your original return, our knowledge of the process can often keep an inconvenient event from becoming a major financial setback for you, and your family.

View the entire Forbes article here:

DiSalvo and Company specializes in the accounting needs of individuals and small business in central Florida.  We offer all types of accounting services including, Quickbooks set-up and training, bookkeeping, payroll services, tax planning and preparation, financial auditing, representation before the IRS,  business consulting, business advisory services, forensic accounting, estate planning.

In addition to our new Vero Beach location, DiSalvo & Co. maintains offices in Titusville, and Melbourne, Florida for your convenience.  We encourage you to call us to arrange a visit to our new space for a free consultation to see if we can help your business expand in Vero Beach.

 

 

 

 

 

 

DiSalvo & Co Expands Vero Beach CPA Office

We are pleased to announce that Vero Beach CPA DiSalvo & Company, has completed our relocation to a spacious new headquarters at 1945 20th Street Vero Beach, FL 32960. This new space allows DiSalvo & Company more room to grow the best team to serve our clients  better than ever.

Along with the expansion, Peter DiSalvo is happy to announce that Rosemarie Hatch has agreed to join the team. Rosemarie specializes in tax preparation and is designated as an “enrolled agent” to practice before the IRS. Rosemarie has been serving individuals and business owners in Vero Beach for years. We are excited that Rosemarie has joined our team at DiSalvo & Co., Certified Public Accountants.

DiSalvo and Company specializes in the accounting needs of individuals and small business in central Florida.  We offer all types of accounting services including, Quickbooks set-up and training, bookkeeping, payroll services, tax planning and preparation, financial auditing, representation before the IRS,  business consulting, business advisory services, forensic accounting, estate planning.

In addition to our new Vero Beach location, DiSalvo & Co. maintains offices in Titusville, and Melbourne, Florida for your convenience.  We encourage you to call us to arrange a visit to our new space for a free consultation to see if we can help your business expand in Vero Beach.

Melbourne - Titusville - VeroBeach - Certified Public Accountant

60,000 sq. ft. Florida Mansion only $139,000,000.

Any takers?



As the Florida real estate market prepares for a strong year ahead, think of the return on your investment with this little property.  If values rise just 5% you could pocket a cool $7M

This information is brought to you by the accounting firm of DiSalvo and Co.    DiSalvo & Company, with offices in Vero Beach, Titusville, and Melbourne, FL, is endorsed by Dave Ramsey to provide tax preparation, and accounting services for individuals and small businesses in the Indian River and Brevard County areas.  We are dedicated to meeting the accounting and tax planning needs of small business and individuals throughout the Space Coast and Treasure Coast, with clients from Titusville to West Palm Beach.

Melbourne - Titusville - VeroBeach - Certified Public Accountant

 

Case Shiller Index Shows Home Prices Rise in September

The Case Shiller composite index, a closely watched indicator of home price trends, showed U.S. single-family home prices rise was stronger-than-expected, year over year, in September. However, the pace of the increase slowed compared to August.

US Housing Market RiseDavid M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, stated “The overall trend in home price increases continues to slow down.”  The team at DiSalvo and company Certified Public Accountants  tends to believe that any home price increase is a good home price increase.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.9 percent in September over September 2013.  In August, it rose 5.6 percent year over year. A Reuters poll of economists forecast a 4.6 percent increase.

On a seasonally adjusted monthly basis, prices in the 20 cities rose 0.3 percent in September. A Reuters poll of economists had forecast an increase of 0.1 percent.

The prospects for an increase in sales as well as sales prices in Florida brighten as the show belt braces for another cold and snowy winter.  Some areas like Buffalo,  NY have seen nearly a years worth of show already and it is only November!  The ice, wind and snow may be making life miserable for northern New Yorkers and Mid-westerners, but at the same time it sets the stage for a motivated set of potential home buyers heading our way.

As goes the real estate market, so goes many other industries such as floor covering, window treatments, appliances, landscaping, and of course your neighborhood tradesmen.    As we saw several years ago when the real estate market slowed abruptly, the ripple effect had far reaching effects on industries such as recreational vehicles,  that one might not have predicted.  That being the case, rising real estate values may just make homeowners feel more confident to spend money on the products and services you offer.

This information is brought to you by DiSalvo & Co. Certified Public Accountant, with offices in Vero Beach, Titusville, and Melbourne, FLDiSalvo & Company offers  accounting services,  Quick-books training, tax planning and tax preparation for individuals and businesses throughout Indian River County.

Please give Pete DiSalvo a call for a free consultation to discuss your accounting needs.

Melbourne - Titusville - VeroBeach - Certified Public Accountant

 

 

Still Awaiting Your IRS Refund Check?

Are you still waiting and wondering about your refund check from the IRS?  Here is a link to a website that may help you track down  that check.  While you are waiting for the check to show up, take a moment and think about the process of submitting your tax return this year.   Are you happy with the way it went.   Did the “do it yourself” tax tax preparation-VeroBeach-Melbourne-Titusville-FLpreparations software leave you adrift, and wondering at any point?  Did your current tax professional fully understand your situation, and catch all possible deductions for you.

If any part of the process of filing your 2013 tax returns left you dissatisfied with your current arrangement, why not let Pete DiSalvo provide you another option. If you find yourself needing skilled representation before the IRS auditors, let Pete speak with you about providing you expert representation.

Pete DiSalvo, CPA, has been preparing tax returns ranging from the most complicated multi-state filings, to the simplest personal return, for over 30 years.  With offices in Melbourne, Titusville, and Vero Beach, Florida, Pete would love to meet with you and let you know if there is a way for you to have greater piece of mind when it comes to submitting your tax return to the IRS.

To schedule your  free consultation contact Pete DiSalvo, CPA, at 772-770-6008

VERO BEACH OFFICE
900 20th Place
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Vero Beach, FL 32960
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MELBOURNE OFFICE
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Melbourne - Titusville - VeroBeach - Certified Public Accountant

June 16th Tax Deadline.

June 15th is ordinarily  the date that  second quarterly estimated tax payments are due, if you are self employed.  This year June 15th falls on a Sunday so this year, Monday the 16th takes on added significance.  If you are not sure whether, or how much  you should be posting for quarterly estimated payments, last week would have been a great time to Give Pete DiSalvo a call.

If you tax preparation-VeroBeach-Melbourne-Titusville-FLare still not sure at this point,  we invite you to call Pete right now! The sooner you answer this question the more Pete can do to help you minimize your taxes along with any penalty for underpayment.

Pete DiSalvo specializes in working with small businesses to help maximize profits and minimize taxes.

For those of you who like to plan ahead, September 15th is the 3rd tax deadline… Is your business ready?

Usually during the rush of tax season you have to decide upon what to base your 2014 estimates. You would have considered the safe harbors and chosen the one that best fits your circumstances at the time.

Click & let us answer all your tax questions!

Self employed taxpayers pay estimated taxes to avoid a penalty for underpayment of  tax liability. The Internal Revenue Service requires taxpayers to pay the lesser of 110% of the prior year tax or 90% of the current year tax. Generally it is easier to calculate 110% of your 2013 than to estimate 2014 income.

Now that five months of the year have passed you may have a clearer picture of your income for the year. If there has been a significant change from what you used for the first quarter estimate a re-calculation now could either save you cash flow (if you will owe less) or give you an opportunity to start paying that April 15, 2015 liability now if income is higher.

If you think there is a change in your income and would like to explore with us the possibility of a change in your estimates, please click to take advantage of our Free Consultation.  Don’t forget, Pete DiSalvo is the Dave Ramsey endorsed tax expert for small business.

Melbourne - Titusville - VeroBeach - Certified Public Accountant, forensic accounting

Northrup Grumman Set to Bring Jobs to Brevard CO.

Brevard County, Florida (May 8, 2014) – The Economic Development Commission of Florida’s Space Coast has announced that Northrop Grumman Corporation has selected Brevard County for a sizeable expansion that could add  up to 1,800 jobs at full program capacity with an average salary of $100,000 per year.

The effort, known as Project Magellan , is the largest economic development project in the country in terms of job creation numbers and average wage associated with employment. Northrop Grumman plans to invest approximately $500 million in new capital investments at the Melbourne International Airport.

This is a huge victory for families on the Space Coast, “We are excited that Northrop Grumman has decided to expand here in Florida, which could bring up to 1,800 new jobs to Brevard County. We’ve worked to grow jobs and opportunities for Florida families by cutting taxes, paying down debt and cutting government waste – and this announcement is a testament to our success in creating an opportunity economy. This is a huge win, and we’ll continue to build on this success with our recently completed legislative session where we cut $500 million in taxes and fees and made higher education more affordable for every family. These victories will attract more-and-more businesses to the Sunshine State. We must continue to grow our opportunity economy so that companies like Northrop Grumman can continue to create jobs for Florida families.”

~ Rick Scott, ” Governor of Florida

Northrop Grumman Jobs to Brevard, Melbourne, Titusville

The project will roll out in two phases.  Phase One will consist of the construction of an approximately 220,000 square foot building and the addition of 300 jobs by the end of 2015.   If phase one business objectives are achieved, the company will move on to Phase Two with the construction of an additional approximately 500,000 square foot facility and 1,500 more jobs.

Large scale projects like this one often bring much more positive  economic impact to an area like Brevard County than just the direct employment alone.  Each high salary job brings with it a ripple effect because employees have the resources to buy homes, and consume products and services offered by local merchants of all types and sizes.

We at Di Salvo, and Company CPA firm are very happy to hear this news.  DiSalvo and Company CPA, with offices in Melbourne, and Titusville Florida, specializes in providing book keeping, accounting, and tax preparation services for  local merchants so we are pleased to hear any news that may help to make our clients more profitable.  If you own a business in Melbourne, or Titusville, and you would like a free consultation with DiSalvo and Company about your business needs, please contact us at 321-269-0450, or 772-770-6008.
Melbourne - Titusville - VeroBeach - Certified Public Accountant- forensic accountant