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We’re a San Diego, Calif.-based boutique tax consulting firm focused on personalized tax and financial guidance to individuals and businesses. Here on our blog, you’ll find you’ll find news, insights, and observations from trusted sources in the world of tax planning and and financial guidance.
Understanding Trump Accounts: Giving the Next Generation a Financial Head Start
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One of the many provisions of H.R. 1 (aka, One Big Beautiful Bill Act), which was signed into law by the President in July of last year, is a federally funded stock market indexed investment account for children born between 2025 and 2028.
Funded to the tune of $14.4 billion, these account, which are also known as Trump accounts, were recently back in the news, when Michael and Susan Dell announced a pledge to seed millions of these and other accounts with a private contribution of $6.25 billion.
Taken together, children born between ’25 and ’28 will receive $1,000 in their accounts from the federal government, and $250 from the Dell’s contribution. In addition, the Dell’s pledge accounts for $250 for about 25 million other children born in 2014 – 2024 who live in zip codes where the median household income is $150,000 or less.
The objective of these accounts is to provide every qualifying U.S. child with a financial head start / a starter fund that can grow through investments in public stock markets to finance future life goals when these children become adults. That can include pursuing a college education or specialized training, buying a first home, or even using the funds to start a business.
In this post, we shed light on what Trump accounts are and aren’t, how they work, and what to expect.
According to the Council of Economic Advisers (an agency that resides within the Executive Office of the President), a Trump account started for a baby born in 2026 could grow to more than $300,000 by the time that child turns 18 (assuming maximum contributions and average U.S. stock market returns), and more than $1.9 million by age 28 given the same.
What Trump Accounts Are (and Aren’t)
A Trump account is a tax-advantaged investment account established on behalf of a child (under 18) similar in structure to an Individual Retirement Account (IRA). Think of them as a tax-advantaged complementary savings account for children.
They are not like a 529 plan, which is a tax-advantaged plan specifically for education that often offers tax-free withdrawals when used specifically for qualified educational expenses. Distributions from Trump accounts may be used for purposes other than education, such as buying a first home or starting a business. They’re also not a spending account or a trust fund that can be accessed at any time; early withdrawals are restricted and regulated. Nor are they a substitute for other savings/retirement tools.
How Trump Accounts Work: Eligibility, Contributions, and Distributions
Here’s how Trump accounts work (for more details, please see IRS Notice 2025-68 (PDF)): Continue reading… Continue reading… Continue reading…
Getting Paid to Play College Sports: Compensation and Tax Implications
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Student-athletes at American colleges and universities can now get paid for competing in sports (much like professional athletes), and they can earn additional income from the use of their name, image, and likeness (NIL).
An added bonus? They can enjoy all of these perks without suffering penalties for being paid to play. This change in rules has created a fast-growing market that includes brand endorsements, appearances, and income from untraditional sources, including participation in social media-related activities.
As NIL activities expand, businesses, collectives, and schools face important questions about taxes, worker classification, and compliance. The recent Grant House and Sedona Prince v. National Collegiate Athletic Association, et al. court case (aka the NCAA House settlement), which allows schools to pay athletes directly and allocates billions in “back pay,” raises the stakes for any businesses and brands that are involved with NIL deals.
Understanding NIL Collectives: Collectives are groups, usually formed by boosters or supporters of a college, that help student-athletes find and manage opportunities to earn money from their name, image, and likeness. Some collectives act like talent agents and simply connect athletes with companies that want to work with them. Others pay athletes directly for things like appearances or promotional work.
In this post, we explain what NIL is, how student-athletes are classified for tax purposes, the role that collectives play, and how the new rules affect businesses that engage student-athletes.
Giving Athletes the Rights to Their Personal and Professional Assets
The term “NIL rights” refers to a person’s right to control the commercial use of their identity, including their name, photos, likeness, gestures, or appearance. In practice, this means that all college athletes, not just football and basketball players, are allowed to earn money from the following: Continue reading… Continue reading… Continue reading…
8 Year-End Tax-Savings Steps for Business Owners
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If you own, operate, or participate in the managements of a business, taxes are always on your mind, especially at the end of every quarter, when estimated payments are due, and the end of the year, when you file your return. As tax year 2025 comes to a close, we at SWC are committed to helping you avoid any surprises while taking full advantage of all the tax breaks your business qualifies for.
Our recent post, “10 Year-End Tax-Savings Tips for 2025 for Individual Filers” revealed ways that any individual taxpayer can trim their tax bill. In this post, we focus our attention on tax-savings strategies specifically for business owners, starting with the often overlooked review of your businesses estimated tax payments.
1. Review Your Estimated Tax Payments
Finding out your business owes thousands, or tens of thousands of dollars, in taxes because it didn’t pay sufficient estimated taxes over the course of the year, and then having to pay a penalty on top of that, is one of the nasty surprises we want to help you avoid. You have one last chance to correct any shortfall. Here are a couple easy ways to calculate the amount of estimated tax you’re likely to owe:
- Use last year’s percentage: If the business earned about the same amount of money this year as you did last year, look at the percentage of its income paid in taxes last year (federal, state, and local), and multiply that percentage by the company’s projected income for this year. For example, if the business earned about $200,000 last year and this year and paid 35 percent in combined income tax and self-employment tax last year, expect to pay about 35 percent this year. For a more accurate estimate, subtract business expenses from gross income before multiplying the percentage.
- Use an online tax estimator: You can find plenty of federal income tax estimators online. However, most are helpful only for estimating the amount of federal income tax you’re likely to owe. The estimate is not likely to include your self-employment tax or state and local taxes. Many calculators are designed only for estimating taxes on employment income, not business income.
After estimating the total income and self-employment tax the business is likely to owe, subtract the amount of estimated tax you have already paid to determine the balances owed to the US Treasury and state and local tax agencies, and then pay those balances by Jan. 15, 2026.
2. Reduce Business Income with Business Expenses
Business expenses are one of the most effective tools for reducing taxable business income because they directly lower net profit (the amount the Internal Revenue Service (IRS) uses to calculate your company’s tax bill). Deductible expenses include the following:
- Office supplies, software, and subscriptions
- Equipment purchases
- Vehicle expenses/mileage
- Utilities, rent, phone, and internet
- Contractor payments
Be sure to take advantage of Section 179 expensing, which enables businesses to immediately deduct the full cost of qualifying equipment and certain improvements in the year they’re placed in service instead of having to depreciate them over the course of several years.
For tax years beginning in 2025, your business can immediately deduct up to $2.5m of qualifying business property placed in service. This covers most equipment, off-the-shelf software, and certain improvements to commercial buildings (known as Qualified Improvement Property, or QIP).
Be aware of the following limitations:
- For purchases made between Jan. 1 and Jan. 19, 2025, the business is only allowed to deduct 40 percent of the cost right away using bonus depreciation. But for anything purchased after Jan. 19, 2025, you can usually deduct 100 percent of the cost in the first year, as long as the asset is placed in service during 2025.
- Section 179 cannot create a business loss.
- The deduction phases out once total qualifying purchases exceed $4 million, disappearing completely at $6.5 million.
- Rules get more complex for partnerships, S corporations, and LLCs taxed as either, so professional guidance from a the pros here at SWC may be needed.
Contact us for details on how the limits work and whether they will affect you or your business entity.
3. Set Up a Retirement Plan for Your Business (If You Haven’t Already)
If you don’t have a retirement plan for your business, you could be missing out on one of the most powerful tax-savings and wealth-building tools available. These plans allow you to make sizable tax-deductible contributions.
Most small businesses use defined contribution plans, such as the following, which are easier to manage than traditional pension plans: Continue reading… Continue reading… Continue reading…
10 Year-End Tax-Savings Tips for 2025 for Individual Filers
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The end of the tax year is fast approaching, which means there’s still time to execute some year-end tax-savings strategies, but not that much time. The One Big Beautiful Bill Act (H.R. 1) has extended and enhanced many taxpayer-friendly provisions, and you’d be wise to act now to take full advantage of them.
Here at SWC, we hate to see anyone pay more in taxes than they’re legally obligated to, which is why we offer year-end tax projection meetings for our clients from October through December. If you haven’t scheduled yours yet, use the Contact page on our website (click on the Appointments link to get started).
To demonstrate our commitment to helping as many people as possible minimize their tax burden and use the money they save to build long-term wealth, we present these 10 year-end tax-savings tips.
Tip No. 1: Review Your Tax Withholdings and Estimated Tax Payments
To avoid having to pay an underpayment penalty, take a look at how much income tax you already handed over to the government for the 2025 tax year in the form of withholdings from your paychecks and any estimated tax payments you’ve made.
To avoid an underpayment penalty on your federal income tax, your withholding and/or estimated tax payments must be at least one of the following:
- 90 percent of this year’s total tax liability
- 100 percent of last tax total tax liability
- 110 percent of last year’s tax liability if your current year’s adjusted gross income (AGI) is more than $150,000 ($75,000 if you’re married filing as single).
If you had unexpected income or capital gains during the year, we here at SWC can help you project your 2025 tax liability and take steps to avoid underpayment penalties. To schedule a consultation, reach us by visiting the Contact page of our website.
Tip No. 2: Consider Bunching Itemized Deductions
Each year, you can deduct the greater of your itemized deductions (mortgage interest, charitable contributions, medical expenses, and state and local taxes) or the standard deduction. The 2025 standard deduction is: Continue reading… Continue reading… Continue reading…
Catching Up With Recent Changes at the IRS
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That old adage about death and taxes deserves another look. Since 1913, the U.S. tax code has kept changing, and the Internal Revenue Service (IRS) issues updates every year that can affect you. Of course you can always rely on the experts here at SWC to keep you posted on recent changes.
Like what, you ask. Here’s just three recent changes that have popped up on our radar screen that you’ll want to know about:
- The rollout of the newly created Form 1099-DA, which expands reporting requirements for digital asset transactions
- Increased liability for employers who use third-party payers to process their payroll transactions
- The discontinuation paper check refunds to individual taxpayers
In this post, we highlight each change in turn, whom it is likely to impact, and how to navigate the new rules and procedures. The goal, of course, is to leave you well prepared for tax season 2026. Our next post will focus on additional changes you need to be aware before we meet with you during your October – December 2025 Year-End Tax Projection meeting.
First up, there’s going to be a new IRS form for reporting digital asset transactions.
New Form for Reporting Digital Asset Transactions
To formalize the reporting of digital-asset transactions and improve compliance, the IRS has developed a new Form 1099-DA. According to the IRS, a digital asset is any computerized representation of value recorded on a cryptographically secured distributed ledger like the blockchain or any similar technology. Digital assets include the following:
- Cryptocurrencies, such as Bitcoin, Ethereum, Solana, Dogecoin, and others that can be used as payment or held as investments
- Stablecoins, such as Tether, USDC, Dai, Ethena USDe, and others that are digital tokens attached to the value of fiat currencies
- Non-fungible tokens (NFTs), such as Render, Immutable, FLOKI, and GALA, all of which are unique digital certificates of ownership tied to digital art, collectibles, or games
- Tokenized assets that represent ownership in real-world assets, such as real estate shares or commodities
As a taxpayer, here’s what you need to know about digital assets: Continue reading… Continue reading… Continue reading…
Claiming Your One Big Beautiful Bill Tax Breaks
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A wave of new federal income tax-saving opportunities is on the horizon, thanks to the One Big, Beautiful Bill (OBBB, H.R.1, Public Law No. 119-21). These provisions, which will be rolled out over the next four tax years (2025–2028), are envisioned by the current administration as welcome relief for select taxpayers, primarily in the form of the following three deductions:
- Deduction for tip income (“no tax on tips”)
- Deduction for overtime pay (“no tax on overtime”)
- Deduction for interest on certain auto loans
In this SWC blog post, we take a deeper dive into these three tax breaks and explain what you need to do to fully take advantage of them, starting with no tax on tips.
Deduct Tip Income (Up to $25,000)
H.R.1 introduces an above-the-line deduction (up to $25,000) for cash or credit card tips earned in professions in which tipping is the norm. The Department of the Treasury and the Internal Revenue Service published this list of eligible sectors, covering occupations in:
- Beverage and food service (bartenders, waitstaff, dishwashers, etc.)
- Entertainment and events (gambling dealers, dancers, musicians, etc.)
- Hospitality & guest services (concierges, desk clerks, housekeepers, etc.)
- Home services (landscapers, plumbers, handymen, etc.)
- Personal services (personal care and service workers, private event planners, wedding photographers and videographers, etc.)
- Personal appearance and wellness (estheticians, masseuses, tattoo artists, etc.)
- Recreation and instruction (golf caddies, piano teachers, ski instructors, etc.)
- Transportation and delivery (valet parkers, pizza delivery drivers, furniture moves, rideshare drivers, etc.)
For more information, see Treasury, IRS issue guidance listing occupations where workers customarily and regularly receive tips under the One, Big, Beautiful Bill.
Note that this is $25,000 per return, not per taxpayer. So, if you’re married filing jointly (MFJ), and you collectively receive tip income more than $25,000, you can only deduct up to $25,000.
Be Careful: Though the phrase “no tax on tips” sounds like a full exemption, it is actually a deduction, not an income exclusion. You won’t owe federal income tax on the amount of tip income you deduct, but you are required to pay Social Security and Medicare taxes on that income. You may also be required to pay state and local taxes on that income.
Reporting is really important here: Your W‑2s, 1099s, or Form 4137 must clearly identify tip amounts and the profession that generated the tip income you received. And here’s something else you need to know: 2025 forms and withholding tables won’t be updated, but the IRS will issue transitional guidance for what “reasonable” reporting looks like.
If you’re self-employed in a profession in which tipping is the norm, you’re eligible for this tax break, too! However, we’re waiting for Internal Revenue Service (IRS) specifics on how to report tip income via Schedule C.
In any event, you need to be aware of these three limits: Continue reading… Continue reading… Continue reading…
What the Passage of the One Big Beautiful Bill Mean for You and Your Business
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On July 3, 2025, Congress passed H.R. 1, a sweeping piece of tax legislation known as the One Big Beautiful Bill Act (OBBB). The OBBB is a nearly 1,000-page tax package aimed at preserving and expanding key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and so much more.
This pro-growth bill prevents the expiration of certain tax breaks while adding a host of new tax relief measures, including “no tax on tips,” “no tax on overtime pay,” “no tax on car loan interest,” and “no tax on Social Security.” It also provides tax incentives to businesses that manufacture in the U.S. and hire more U.S. workers, and it rolls back many of the green energy credits that we’ve written about in previous blog posts.
This post summarizes the most important changes found in the new law, which was signed by the President on July 4, 2025, focusing on provisions that directly affect individual taxpayers (as compared to corporations). Understanding these updates is important, whether you’re a high net-worth individual or family member, an employee, a small-business owner or entrepreneur, a parent, or a retiree. Or maybe you just want to know how these tax code changes are likely to affect you and how you can maximize your tax savings legally.
Here’s what you need to know.
Individual Tax Rates and the Standard Deduction
The 2017 Tax Cuts and Jobs Act (TCJA) reduced most individual income tax rates. The 15 percent bracket dropped to 12 percent, the 25 percent bracket to 22 percent, the 28 percent bracket to 24 percent, the 33 percent bracket to 32 percent, and the top 39.6 percent bracket to 37 percent. The One Big Beautiful Bill Act (OBBB) locks in these rate structures permanently.
Tax Relief at a Cost? While tax relief is always welcome, according to the Congressional Budget Office (CBO), doing so will add $2.2 trillion to the federal deficit over the next decade.
The standard deduction, which was nearly doubled in 2017, is also made permanent by the OBBB and temporarily increased further for tax years 2025–2028:
- $15,750 for single filers
- $23,625 for heads of household
- $31,500 for joint filers
This expansion reduces the number of itemizers and simplifies filing for most taxpayers. It is estimated to cost $1.4 trillion over 10 years, according to the CBO.
The Child Tax Credit
The 2017 Tax Cuts and Jobs Act (TCJA) doubled the Child Tax Credit from $1,000 to $2,000 per child. The OBBB makes this adjustment permanent, increasing it temporarily to $2,500 through 2028. Inflation adjustments begin in 2026. The $500 credit for non-child dependents also becomes permanent. These changes will cost an estimated $817 billion over 10 years, according to the CBO.
The Qualified Business Income (QBI) Deduction
To maintain parity between pass-through businesses and C corporations, the 2017 Tax Cuts and Jobs Act created a 20 percent deduction for qualified business income. The new law keeps this deduction and increases it to 23 percent starting in 2026. It also expands eligibility and adjusts phaseout thresholds to avoid income cliffs. Continue reading… Continue reading… Continue reading…
What That One Big, Beautiful Bill Act May Mean for You or Your Business
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Depending on how you voted in 2024 or which media outlets you follow, you might think the One Big, Beautiful Bill Act (OBBBA) is either a historic win or a major letdown. Since clients have been asking for our take, we want to share what we know and believe about the bill.
Passed by the U.S. House of Representatives on May 22, 2025, and passed this morning by the United States Senate, the bill includes 300-plus provisions, including one that seeks to extend the provisions of the 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025. But there’s much more to it than that.
While changes are expected as the legislation moves back to the House of Representatives for another vote, many provisions will likely survive the legislative process. This summary covers the main individual and business tax provisions broken down into the following four sections:
- New above-the-line deductions (tips, overtime pay, and vehicle loan interest)
- Business depreciation and expensing provisions (to encourage new investments in production property and equipment)
- Business interest expense limitation (to prevent excessive interest deductions that would reduce a business’s taxable income too aggressively)
- Clean energy credit rollbacks (to reduce subsidies for clean energy technologies)
New Above-the-Line Deductions
President Trump’s campaign promises are reflected in three above-the-line deductions proposed in the OBBBA. (An above-the-line deduction is one that reduces the adjusted gross income [AGI] used to calculate how much federal income tax is owed. It does not affect the amount of Social Security and Medicare tax owed.)
Here are the three new above-the-line deductions proposed in the OBBBA:
- A tax deduction for tip income (“no tax on tips”)
- A tax deduction for overtime pay (“no tax on overtime”)
- A tax deduction for interest paid on loans used to buy certain vehicles manufactured in the United States
Tax Deduction for Tip Income
The proposed “no tax on tips” deduction is for certain tips reported on W-2s and other tax forms. With one out of every 30 workers in the U.S. depending on tips to make ends meet, a tax deduction for tip income is an essential need for some.
Here are the requirements to qualify: Continue reading… Continue reading… Continue reading…
Deferring Taxes on Real Estate Sales with a Like-Kind / 1031 Exchange
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If you’re thinking about selling an investment property, the first question you should ask before anything else: How much of my profit will go to taxes?
For real estate investors, entrepreneurs, and high-net-worth individuals like the ones we work with here at SWC, the answer to that questions can be “tons!” That is, unless you know how to work the system. A like-kind exchange — also known as a 1031 exchange — enables you to sell one investment property and reinvest the proceeds into another, all while deferring capital gains taxes. It’s a savvy move, but only if you follow the rules.
In this post, we provide a clear breakdown of how like-kind exchanges work, what rules you need to follow, and how to make the most of this powerful tax-deferral strategy.
Here’s what you need to know.
Understanding the 1031 Exchange
A 1031, also known as a like-kind exchange, involves exchanging real estate used solely for business or held as an investment for other business or investment property that is the same type. For example, you may sell a rental property and buy a different rental property.
Generally, when you make a like-kind exchange, you’re not required to recognize a gain or loss under Internal Revenue Code Section 1031 (there’s where the moniker “1031 exchange” comes from.) However, if as part of the exchange, you also receive other (not like-kind) property or money, you must recognize that gain to the extent of the other property and/or money received. Under no circumstances can you recognize a loss.
Deploying a1031 exchange is a powerful strategy for real estate investors to postpone paying capital gains taxes on the sale of their investment properties. By selling one investment property and reinvesting the proceeds in another investment property of equal or greater value, you can defer capital gains and depreciation-recapture taxes. Better yet, by continuing to defer capital gains through successive like-kind exchanges, you may eventually qualify for a basis step-up, which can effectively eliminate the deferred taxes altogether!
Basis Step-Up? A basis step-up is an adjustment of the cost basis of an asset to its fair market value at the time of an owner’s death. If the cost basis of the investment property is equal to or greater than that for which the property ultimately sells, the profit from the sale is zero or negative, meaning no capital gains tax is owed.
A Sample Transaction
Capital gains taxes can be as high as 42.1 percent depending on your income, filing status, and state. If you’re a client of ours, we can provide a precise estimate. If you’re not one of our clients, we encourage you to consult your CPA to obtain an estimate based specifically on your unique situation. Before selling an investment property or a property you use exclusively for business purposes, you should always know how much you stand to lose in taxes.
Let’s look at how much money a like-kind / 1031 exchange could allow you to defer in taxes for the sale of a $1.5 million investment property in California: Continue reading… Continue reading… Continue reading…
Understanding Your Eligibility Under the Social Security Fairness Act
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Here at SWC, we love to hear from clients who received big chunks of money they weren’t expecting, especially when it’s thanks to the Social Security Fairness Act. Usually, they have mixed emotions because they’re overjoyed by the windfall profit and simultaneously concerned about the potential tax implications.
Emotions aren’t mixed on our side. That’s because we’re pleased with our clients’ good fortune and we’re eager to help them keep more of their money through savvy tax planning.
Take a phone call we received recently from one of our clients, a recently retired schoolteacher over the age of 65. She told us she received a letter from the Social Security Administration (SSA) informing her that she was going to start receiving unexpected benefits, thanks to the recent passage of the Social Security Fairness Act. She had no clue about her eligibility and was so excited to find out she was due a retroactive payment from the SSA for 2024!
Our client was fortunate that the SSA was able to confirm her eligibility and get in touch with her. Not everyone who’s eligible will be so lucky. The SSA openly admits it doesn’t know how to get in touch with everyone who’s now eligible for benefits and unaware of their eligibility.
If you’re retired or close to retirement age, here’s what you need to know about the Social Security Fairness Act.
What Is the Social Security Fairness Act?
The Social Security Fairness Act, signed into law on Jan. 5, 2025, is legislation that repeals two provisions that reduced or eliminated the Social Security benefits for more than 3.2 million people who receive a pension based on work that was not covered by Social Security (a “non-covered pension”) because they did not pay Social Security taxes.
The Act addresses the following two provisions: Continue reading… Continue reading… Continue reading…