Are You Saving Enough Money?
Incomes are rising, unemployment is going down, new businesses are popping up and things in general are looking quite a bit more hopeful than they did just a few years ago? For some of you, that means you had a great year, and perhaps you used some of that new found money to purchase things you have been putting off for several years. It also means that you were able to pay off some debt, and even save a little money.
This year it might be a good idea to save a little more of that money. Look at your budget, see where you got a little careless with your spending in 2016, and perhaps you can cut out some of those expenses, are at least bring them down, and start saving a little more.
CNN had a great post this week about how much we our saving these days, and how much more we should be:
“Roughly half of Americans are saving 5% or less of their incomes, including 18% that are not saving anything, according to a survey from Bankrate. Only about a quarter of people are saving more than 10% of their earnings. So how much should you be saving? Bankrate recommends 15%.
“Between emergency savings and the ever-increasing burden of retirement savings that is on the individual, the goal should be 15% of your income,” said Greg McBride, the personal finance website’s chief financial analyst.
“For a lot of people, it won’t happen overnight. It’s going to take some time, but it’s doable, as the middle class is showing.”
Those in the middle class are proving to be the super savers with 35% of people with an annual income of $50,000-$74,999 saving more than 10% of their earnings.
Of those taking home more than $75,000 a year, 32% were saving more than 10% of their income, according to McBride.
Saving more is easier said than done, which is why McBride suggests making it automatic by having a portion of each paycheck be directly deposited into a savings account and a retirement plan. “Saving needs to happen before you pick up your paycheck.”
Bankrate’s Financial Security Index, which surveyed 1,000 adults in the U.S., also showed consumers are feeling better about their debt and financial situation compared to a year ago, which could actually be bad news for savings accounts.”
If you are a member of a Credit Union, it’s easy to sign up for automatic deductions from your Payroll Checks. Or, if you use online banking, just have an automatic transfer set up to take a small amount our of your regular checking account each month. You can always add more to that on months when your income is a little higher, or expenses are lower, but at least you will have something in savings. We can help you go through your statements and even give you some advice on the best type of investments.
Pete DiSalvo, CPA
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Self Employment and Home Purchase
Now that the bank statement loans have gone by the wayside because they were abused by some people in the Mortgage Industry, what is the self employed person to do when they want to purchase a home? Continue reading
What Do We Do When Tax Season Has Passed?
I think that some people are under the misconception that when their tax returns have been completed and filed that everyone in the DiSalvo and Company CPA Offices just goes on vacation. While that might be a nice idea, other than perhaps taking a day or two off after tax season, we are here, ready to work with you during the remainder of the year. Continue reading
Re-Hiring Former Employees
During the economic downtime of the mid 2000’s there were plenty of employers who were forced to lay off good employees. Now that work has picked up for many of those companies, is it a good idea for them to hire back some of their old workforce? Continue reading
Planning for Home Purchase
Real Estate is once again an appreciating asset. If the stock market is not your thing, then investing in Real Estate could be a good avenue for investing your money. In a market like the one we are currently in, Real Estate Values are rising.
I say that, but I will also say that if you don’t invest in the right ways, you could lose everything. I am not advising you to invest in Real Estate, but if you think you would like to, please come see me first.
We will need to go over all of your assets, if you are self employed, we will need to make certain you will be able to qualify for a home purchase. Then we will to discuss the safest way for you to invest. There are costs to consider that you may know nothing about if you have never owned a home.
Not to be discouraging, because owning your own home can be a good investment. Here, in Vero Beach, rents have reached the point where it could actually be less expensive to pay a monthly mortgage than it is to pay rent.
Pete DiSalvo
CPA
Thinking of Renting Out Your Home?
Real 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.
Our Accounting Services
As you prepare for the end of another great year, we would like to let you know that DiSalvo and Associates has all of your accounting needs covered. We offer:
- Accounting & Bookkeeping
- Tax Planning & Preparation
- QuickBooks
- IncorporationsBusiness
- Consulting
- IRS Problem Resolution
- Payroll Services
Peter A. (Pete) DiSalvo, CPA the leader of our firm, has been an accounting and tax professional for over 30 years. Pete and his staff work primarily with small and medium sized businesses and individual clients. Pete is active in his community and he and his associates value the relationships they have built serving businesses in Indian River and Brevard County. It has always been his mission to serve local businesses. Pete graduated Upon from Florida Atlantic University in 1981 and hung out his shingle. He became a Florida Certified Public Accountant in 1984 and has been going strong ever since.
His firms provides all facets of accounting services, from bookkeeping, compilation and review services for all different types of businesses including banks, construction companies, physicians, lawyers, automobile dealers, wholesale and retail distributors. He also works various Homeowners Associations and more, but his area of expertise remains Small to Medium sized family businesses.
Everyone here at DiSalvo & Company, CPA’s wishes all of you the Happiest of Holiday Seasons this year, and we hope to see you before next year!!
DiSalvo CPA
Before You Purchase a Home
Real Estate is selling once again, and it is a great time to purchase a home here in Indian River and Brevard Counties. For many potential home buyers it could be that a mortgage payment will be the same, or less than what they are currently paying in rent. When you own a home you create equity for yourself, instead of a landlord.
If you have never purchased a home before, or if you haven’t done so in a while, the process can be quite daunting, so it could be a good idea to come in and talk to me, or one of my accountants, and make certain you are prepared for the purchase process. It is also a good idea to have your numbers laid out in front of you. Sometimes people go into the home buying process without fully understanding their financial picture.
It is important to remember that owning a home doesn’t just mean the expense of the mortgage, insurance, taxes and home owners association fees. If your dishwasher or air conditioner breaks, those are repairs that a landlord normally takes care of, and now you, as the homeowner have to pay for. It is always a good idea to set aside a little money each month to keep in a house account for just such emergencies.
Give us a call, set up an appointment and we will be happy to go over your financial picture with you. Then you will be well prepared for anything that comes up during your home purchase!!
DiSalvo Accounting
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