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About Jennifer Shelton, CPA

Jennifer Shelton, CPA, is an accountant at SWC — a San Diego, Calif.-based tax planning and financial strategy advisory firm for small-business owners, real estate investors, and high-net-worth individuals. A graduate of Kansas State University and a member of the Kansas Society of Certified Public Accountants (KSCPA) and the American Institute of Certified Public Accountants (AICPA), Jennifer has more than 15 years of experience in public accounting with a background in taxation and accounting.

The Pros and Cons of a Cost Segregation Study

By |2023-02-10T17:00:38-08:00February 10, 2023|Categories: Real Estate|Tags: , , |0 Comments

If you own real estate, or you’re interested in investing in real estate as a strategy for building or increasing your net worth, then you need to know about cost segregation.

Cost segregation study illustration for residential propertyCost segregation is a technique recommended by a tax planning firm that specialize in helping its clients reduce their taxes and increase their net worth. Cost segregation allows property owners and real estate investors to reallocate the costs of a property from long-term assets (which have a useful life of 27.5 years or more) to shorter-lived assets (which have a useful life of less than 27.5 years).

This reallocation can provide significant tax benefits because shorter-lived assets are eligible for accelerated depreciation.

Depreciation 101: Depreciation is an accounting technique that distributes the cost of tangible assets such as real estate over their useful lifespan. It reflects the portion of an asset’s value that’s been utilized, allowing you to gradually pay for and generate revenue from an asset over a specified period of time.

When a property is built or purchased, the costs of the property (such as construction costs or the purchase price and cost of improvements) are typically allocated to the building and land as long-term assets. However, many of the items within a property (such as carpeting, lighting fixtures, and appliances) have a shorter useful life and can be classified as personal property. By identifying these shorter-lived assets and reclassifying them as personal property, the costs associated with them can be depreciated over a shorter period, resulting in a larger tax deduction in the early years of ownership.

Starting With a Cost Segregation Study

To add cost segregation to your tax planning approach, start by ordering a cost segregation study from a reputable firm. Here at SWC, we work with several of these firms and can recommend the right one for your particular circumstances and objectives.

When you engage a firm in a cost segregation study, a cost segregation specialist identifies and reclassifies the costs of your property, typically by examining the property and its invoices, blueprints, and other documentation. The study then allocates property costs to real property or personal property. Findings from the study can then be used by your tax planning firm — in this case, SWC — to calculate a one-time catch- adjustment. That’s because the IRS allows the Continue reading… Continue reading… Continue reading…

How to Protect Yourself Against 2022 Tax and Unemployment Scams

By |2022-02-21T12:26:51-08:00February 21, 2022|Categories: Fraud Prevention|Tags: , , , , |0 Comments

It’s tax filing season — prime time for scum of the earth con artists to crawl out from under their rocks with novel ways to steal identities and scam people out of their hard-earned money.

That means it’s time for us, as one of Southern California’s premier women-owned tax planning and financial strategy firms, to let you know what to watch out for and how to protect yourself. By remaining vigilant and reporting suspicious activity to relevant government agencies and law enforcement, we can start gaining the upper hand over these criminals.

IRS scam graphic

In this post, we call your attention to four primary methods used to steal identities and tax refunds. We’ll also reveal common warning signs and offer guidance on what to do when you notice suspicious activity.

Text Message Scams

Text message scams usually involve someone pretending to be from the Internal Revenue Service (IRS). Over the last couple of years, fraudulent text messages have focused mostly on COVID-19 or “stimulus payments,” and included one or more links claiming to point to IRS websites or relevant online tools.

If you receive an unsolicited text/SMS message that appears to be from either the IRS or a program closely linked to it, take a screenshot of the text message and email it to phishing@irs.gov with the following information: Continue reading… Continue reading… Continue reading…

2022 Tax and Employer Rules and Regulations

By |2022-02-03T13:40:04-08:00February 3, 2022|Categories: Taxes|Tags: , , , , , , , , , , , , |0 Comments

If you own or operate a business, you’re no stranger to payroll taxes — the money you withhold from an employee’s pay to remit to government tax collectors on the employee’s behalf. You pay a portion of these taxes, and your employees pay a portion. The money collected is allocated to the following:

  • Federal Insurance Contributions Act (FICA) to fund Old Age, Survivors, and Disability Insurance (OASDI), also known as Social Security and Disability, and Medicare (health insurance for senior citizens and the disabled)
  • State Disability Insurance (SDI)
  • Federal Unemployment Insurance (FUI)
  • State Unemployment Insurance (SUI)
  • Employment Training Tax (ETT)

In today’s post, we’ll bring you up to speed on what you need to know to plan for, pay, and remain in compliance with these and other withholdings for 2022. We’ll also share information about important changes and reminders that your business needs to be aware of for the year ahead. First up, Social Security.

Social Security Tax

For 2022, the Social Security tax rate is 6.2 percent for employer and employee — unchanged from 2021. The Social Security wage base has increased from $142,800 in 2021 to $147,000 in 2022. In other words, Social Security tax applies only to the first $147,000 an employee earns, so the maximum you would withhold on behalf of the employee is $9,114.

Keep in mind that the employee’s share is only half of the total Social Security tax owed. As an employer, you are responsible for paying the other half. So, if you deduct and remit $9,114 on behalf of your employee, you are required to pay an additional $9,114 as employer.

Self-employed individuals are required to pay both “halves,” so a self-employed individual with a net income of $147,000 would pay $9,114 x 2 = $18,228 in Social Security Tax. To take some of the sting out of paying both halves of FICA, self-employed individuals receive a deduction for self-employment tax on their federal income tax return.

Medicare Tax

The Medicare tax rate is Continue reading… Continue reading… Continue reading…

The Infrastructure Investment and Jobs Act: What Taxpayers Need to Know

By |2021-12-08T14:55:34-08:00December 8, 2021|Categories: Legislation, Taxes|Tags: , , , |0 Comments

Lawmakers in Washington, D.C., are interested in many things, including opportunities for creating generation-defining legislation. So it was in November that Congress passed a bipartisan infrastructure deal with implications that included changing the end date of the Employee Retention Credit and establishing reporting requirements for cryptocurrency transactions.

The Infrastructure Investment and Jobs Act (H.R. 3684), which was signed into law on the Nov. 15 by President Biden, was originally introduced in the U.S. House of Representatives as the INVEST in America Act. It began as a $715-billion infrastructure bill to address provisions related to federal-aid highway, transit, highway safety, motor carrier, research, hazardous materials, and rail programs of the Department of Transportation (DOT).

Infrastructure Legislation Image

During congressional negotiations, it was expanded to include funding for broadband access, clean water, and electric grid renewal. The revised version, renamed the Infrastructure Investment and Jobs Act, calls for approximately $1.2 trillion in spending.

In this post, we cover several new tax provisions in H.R. 3684 that may impact you as an individual taxpayer, contractor, or business owner.

New Tax Provisions for Individuals

As a result of the passage of H.R. 3684, the following tax provisions now apply to individual taxpayers: Continue reading… Continue reading… Continue reading…

Taking Advantage of the Work Opportunity Tax Credit (WOTC)

By |2021-11-03T15:39:33-07:00November 3, 2021|Categories: Business Taxes|Tags: |0 Comments

Need an incentive to hire a veteran or someone from an underserved demographic? You need to know about the Work Opportunity Tax Credit (WOTC) — a federal tax credit of up to $9,600 for employers who hire people from specific groups facing significant barriers to employment. (Tax-exempt employers can claim the WOTC against their payroll taxes.)

The WOTC creates an incentive for business owners to increase workplace diversity while providing the unemployed and underemployed with access to good jobs. If you’re a business owner or you manage a business for someone else, the WOTC provides you with the opportunity to grow your workforce at a discount as the economy recovers.

Jointly administered by the Internal Revenue Service (IRS) and the Department of Labor (DOL), the Work Opportunity Tax Credit is available for wages paid to certain individuals who begin work on or before Dec. 31, 2025. Under this program, participating companies receive a tax credit of between $2,400 and $9,600 per new qualifying hire.

Best of all, originally scheduled to expire at the end of 2020, the Consolidated Appropriation Act (CAA) extended the WOTC through December of 2025.

Screening Job Applicants

To take advantage of the Work Opportunity Tax Credit, you’ll need to screen applicants to ensure that they qualify. To qualify, employees must meet the following criteria:

  • Be a new hire, not an existing employee or previous employee being rehired
  • Belong to one of the qualified groups (see list below)
  • Perform at least 400 hours of service for the employer (employees who perform at least 120 hours of service may qualify for a partial credit)

Warning: Note that an employee’s wages cannot be used for both the WOTC and the COVID-19 employee retention credit. The same wages cannot be counted twice.

To screen job applicants, create a WOTC questionnaire that they must complete and submit with their application. Your WOTC questionnaire needs to collect details that enable you to determine whether an applicant is a member of one of the qualifying groups: Continue reading… Continue reading… Continue reading…

© 2014- Stees, Walker & Company, LLP (SWC). All rights reserved.
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