Stephen Merritt, CPA, PC  |  Certified Public Accountants  |  (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462

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GRRRRR Louis has his Sunday game face on!

What’s Inside

• The Trouble With 0% Financing
• Your Home is a Bundle of Tax Benefits
• Take a Look at Better Savings Rates
• Get to Know the New Employees at Stephen Merritt’s CPA Office!
• September Days
• Office Hours

The Trouble With 0% Financing

Companies want to make it easy to buy their big ticket items, especially at times of economic uncertainty. A popular technique is to offer 0% financing when you buy furniture, electronics and other household items. You can also take matters into your own hands with a credit card that offers 0% APR on purchases, balances transferred to the card, or both.

While paying for goods and services with 0% interest may sound appealing, there are risks you’ll face that you should be aware of before you take this step.

What’s hiding behind 0% financing:

Here are some of the potential problems hiding behind these 0% financing offers:

• Special financing offers make it easier to overspend. Psychology Today reported that credit card use can easily result in overspending, and the same is true for loans. The key is to understand the monthly payments you are committing to, and ensuring you can handle them. At the same time, try to assess your purchase decision. Would you buy this item if the 0% offer was not available?
• Some 0% APR offers come with deferred interest. Hidden in the fine print of some 0% interest offers may lurk deferred interest charges. This means that while you’re enjoying monthly payments with no interest, the interest charge accrues over time. If you miss a payment, have a late payment or haven’t paid off the loan by the end of the 0% offer period, the accrued interest gets added to your unpaid balance. The key is to precisely understand what happens if you miss a payment or don’t follow the 0% offer exactly as written…before you take the 0% offer.
• The 0% offer may be impacting the price. Remember, money has value and someone is paying the interest cost of the 0% financing. Usually the merchant is hiding the cost inside the price you are paying for the item.

What you can do:

Go New York Giants!Before considering a 0% interest financing offer on your next purchase, do this:

• Save up for large ticket purchases. Instead of financing items and ensuring you have even more bills to pay each month, start saving for pricier purchases on a regular basis. Even better, leverage the value of your savings within higher interest savings account options that are now in excess of 4 percent.
• Turn on your negotiating switch. Whenever you see a 0% offer, there should be a discount available to you for paying upfront. Someone is paying the interest and it is probably going to be you if the financing cost is built into the price you are paying.
• Pay on time! Finally, if you do think the 0% option is a deal for you… set up auto payments. Most of these deals are unforgiving and punitive if you miss a payment, so automate them to avoid this possibility.

Your Home is a Bundle of Tax Benefits

There are many tax benefits built into home ownership. Here is a review of the most common.

• The home gain exclusion. When you sell an asset for a profit, it creates a taxable event. If the asset, though, is your primary residence, you can exclude up to $250,000 ($500,000 if married filing jointly) of these gains. Special rules do apply, but this is a major tax benefit of home ownership.
• How to take advantage: You must live in your house for at least 2 of the previous 5 years to qualify for the home gain exclusion. Start planning now if you think you’ll be selling your house in the near future so you can qualify for this tax break.
• Itemized deductions. Mortgage interest and property taxes are two deductions you can claim as a homeowner. The interest is deductible on the first $750,000 associated with loans secured by your primary and secondary residences ($1 million for mortgages underwritten prior to 2018), while up to $10,000 of property taxes may be deducted. You may also deduct points paid as an itemized deduction over the life of your mortgage.
• How to take advantage: You need to itemize your deductions to take advantage of these tax breaks. Consider bunching your mortgage interest and property taxes with other itemized deductions such as charitable contributions, taxes and excess medical expenses to try and exceed the standard deduction for your filing status.

Your house is a great place to control the amount of tax you owe, but only if you know the rules and can apply these rules to your situation. Use this information as a starting point to see if there are ways to leverage your home’s tax benefits.

Take a Look at Better Savings Rates

A silver lining to continued interest rate hikes by the Federal Reserve is being able to earn more interest on cash stashed in your savings accounts. How much interest, exactly, you can earn depends on where you do your banking. Consider these tips to earn as much interest as you can, even if it means opening a new account:

Earn a bank bonus. Some banks offer a bonus if you meet specific requirements, such as depositing a minimum amount or setting up direct deposit. These bonuses can give you an incentive to try a new bank while padding your savings with a few extra hundred dollars.

Look beyond your local bank. If you want to earn enough interest on your savings to keep up with inflation, look beyond your local bank to the range of online banks offering much higher interest rates. For example, Chase banking customers are currently earning 0.01% on their savings, while those who save with UFB Direct are earning 5.06% APY with no monthly maintenance fees or minimum balance requirements.

Take advantage of new banking tools. Bankrate.com shows approximately 60% of consumers are very or somewhat interested in using a digital bank in the coming year. This is partly due to the digitization of nearly all other aspects of our lives, but it’s also due to convenient online tools like mobile check deposit, virtual account management and bill pay features.

Watch out for fees. Take note that many of the best bank accounts with great rates don’t charge monthly maintenance fees or any hidden fees. However, you’ll want to read over the fine print for accounts you’re considering so you know for sure. This is especially true with CD’s at some banks that tease with high interest rates, but hide the 1% to 3% penalties of your balance for early withdrawal.

Stability is important. When making a banking move, double check to ensure your deposits are FDIC insured. But even if insured, you still should check the press for any indication of deposit risk at your chosen bank. And if your current bank is still offering low interest rates, it may be subject to deposit flight limits that may create difficulty removing your funds. So while your money is insured, it may be hard to withdraw should this happen.

Today’s interest rates can be a boon for your finances, but you’ll need to put in some work up front to find the best bank for your particular situation. Shop around for a new bank and look for ways to get ahead, either through banking bonuses, great rates or both. The time and effort you spend will be worth it in the end!

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

Get to know the New Employees at Stephen Merritt’s CPA Office!

Louis needs his beauty sleep.

What is your favorite color?

Jakob: Green, emerald or forest green

Corawin: Pink and Green

Amy: Pink and Blue

Sydney: Purple

What is your favorite movie/ TV show?

Jakob: Jacobs Ladder and Futurama

Corawin: The Princess Bride and Lost + Little women (Korean drama) Very good!

Amy: Ferris Bueller’s Day Off – other 80’s movies (Breakfast Club, Pretty in Pink, and St. Elmo’s Fire)

Sydney: Stand By Me and The Vampire Diaries

What is your favorite song at the moment?

Jakob: Funk in the Hole by Roy Ayers

Corawin: Advice For The Young at Heart by Tears For Fears (It was my wedding song!)

Amy:A Sky Full of Stars by Coldplay

Sydney: Angry by The Rolling Stones

What is your favorite holiday and why?

Jakob: Christmas, for family tradition and being close with loved ones

Corawin: Any time I get to spend time with my family, but especially Halloween because my dad goes all out! Plus I got married the week before:)

Amy: Halloween- I love clever and creative costumes.. but I hate being scared!

Sydney: Thanksgiving because all the food (DUHH) but also spending quality time with my family and my boyfriends family

What is your favorite thing about working at the Stephen Merritt CPA Office?

Jakob: The comradery of everyone and the conversation’s at lunch

Corawin: Learning new things, working in a quiet but fun environment and seeing my family everyday (Jakob) and watching him grow!

Amy: The team vibe- everyone is working toward the common goal of doing the very best for our clients and teammates

Sydney: Louis and the family lunch we have everyday:)

September Days

Here are some Days to Remember in September!

September 1st – College Colors Day

Calling all college students, family, friends, fans and alumni! On the Friday before Labor Day, wear your team colors to celebrate your team spirit. Help carry on the traditions by singing along and wearing your team’s color!

September 4th- Labor Day

Every September on the first Monday, Labor Day recognizes men and women who build this country. From the beginning, this country has relied on its workforce for its infrastructure. We salute the American workforce!

Go New York Giants!

September 7th- Football Season

Clear your Sunday schedule! American football started in 1929 and gained popularity in the late 1930s starting with 8 teams. With the NFL growing and stabilizing, the NFL is worth 91 billion dollars and has 32 teams in 2023!

September 9th- 9/11 Remembrance Day

We Remember.

On September 11th, 2001, nearly 3,000 people passed away by the attack on the twin towers. We take this day to dedicate it to those who risked and lost their lives trying to help save people. Even the search and rescue animals who participated. We Remember.

September 19th- Voter Registration Day

Make your vote count! This day helps to ensure eligible voters register in their districts each year. Having awareness provides valuable information for each state.

September 22/23- First Day Of Fall

Que the best time of year! with the autumnal equinox marking the end of summer and the beginning of fall.

September 30th- National Love People Day

A day to love EVERYONE!

Unconditionally

Office Hours

Monday – Thursday

8 AM to 5 PM