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The team at SWC simplifies complex tax issues, helps you build and leverage your wealth to enhance your personal and financial freedom, and offers unparalleled peace of mind at every step along the way.

Demystifying the Inflation Reduction Act: Part 1 — The Clean Vehicle Tax Credit

By |2025-07-10T10:37:32-07:00August 26, 2022|Categories: Legislation, Tax Credits|Tags: , |0 Comments

Regardless of whether you approve of the most recent spending bill out of Washington D.C. or think that “Inflation Reduction Act” is a misnomer, now that it has been passed by Congress and signed by the President, it is law.

The best approach at this point for both individual and corporate taxpayers is to take advantage of the tax incentives that the legislation provides and identify the most effective ways to deal with new challenges presented by the legislation, such as the $80 million in additional funding for the Internal Revenue Service (IRS).

In this four-part series, “Demystifying the Inflation Reduction Act,” we highlight the key provisions in this bill that are likely to impact individuals, businesses, and corporations now and for years to come:

  • In this part, we cover the Clean Vehicle Credit for individual taxpayers.
  • In Part 2, we cover tax credits and rebates for offsetting the costs of making your home more energy efficient.
  • In Part 3, we focus our attention on various provisions in the bill that will impact businesses and corporations.
  • In Part 4, we cover other provisions in the bill, including tax incentives to help make healthcare more affordable and increased funding being allocated to the IRS.

Clean Vehicle Credit

Graphic for Clean Vehicle Tax Credit

The Act’s Clean Vehicle Credit replaces the current Qualified Plug-in Electric Drive Motor Vehicle Credit. It’s generally applicable to qualified electric vehicles, including plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell electric vehicles (FCEVs) placed in service starting in 2023 through 2032. (PHEVs typically operate on electricity until the battery is depleted, at which point they run on gas. FCEVs are typically powered by hydrogen fuel cells.)

Key changes introduced in the Clean Vehicle Credit include but are not limited to the following: Continue reading… Continue reading… Continue reading…

Keeping Pace with California Tax Law: Part 3 — Property Tax Relief for the Elderly and Disabled

By |2022-08-18T12:27:52-07:00August 18, 2022|Categories: Real Estate|Tags: , , |0 Comments

Welcome to the final part of our three-part series on keeping pace with California tax law. In Part 1 of this series, we covered Prop 19, which makes it more affordable for older California homeowners to relocate within the state. In Part 2, we explained changes to the parent-child exclusion, which enables children to inherit their parent’s property and parents to inherit their children’s property without a property tax increase, subject to certain qualifications and limitations.

In this part, we bring you up to speed on additional California state-sponsored property tax relief programs for helping senior citizens on limited income and those who are legally blind or disabled. Specifically, we’re going to cover the following:

  • The Property Tax Postponement Program, which is supported by the State of California Controller’s Office
  • The Property Tax Assistance Program, which is supported by the California State Franchise Tax Board (suspended for now due to lack of funds)

Pro Tip: The inserts mailed along with your annual tax bill contain details about any property tax relief programs currently available, so be sure to read those inserts carefully to determine whether you qualify for any currently available programs.

The Property Tax Postponement Program

The State of California’s Property Tax Postponement Program (PTP) allows homeowners who are seniors, are blind, or have a disability, to defer current-year property taxes on their principal residence if they meet certain criteria, including the following: Continue reading… Continue reading… Continue reading…

Keeping Pace with California Tax Law: Part 2 — The Parent-Child Exclusion

By |2022-08-18T12:28:56-07:00August 9, 2022|Categories: Legislation|Tags: , |3 Comments

This week, in Part 2 of our three-part series on keeping pace with California tax law, we bring you up to speed on the parent-child exclusion, which applies to any real property purchases or transfers between parents and children. In last week’s post, we covered Prop 19, which makes it more affordable for older homeowners to relocate in California.

In a nutshell, the parent-child exclusion enables children to inherit their parents’ property and parents to inherit their children’s property without a property tax increase, subject to certain qualifications and limitations. Prop 19 changed the way the parent-child exclusion works as of Feb. 16, 2021.

Parent-Child Exclusion in California

The Parent-Child Exclusion Before and After Prop 19

In California, real property, such as a home, is reassessed only upon a change in ownership, but when the change in ownership is within a family — specifically parent to child, child to parent, or grandparent to grandchildren — you can file for a reassessment exclusion to prevent a reassessment or reduce the reassessed value.

Before Prop 19 (effective Feb. 16, 2021), here’s how the parent-child exclusion worked:

  • Parents (transferor) could transfer their primary residence to their child/children (transferees) without a reassessment.
  • There was no limit on the value of the home that could be transferred.
  • The child/children could live in the home, use it as a vacation home, or rent it out.
  • Parents could transfer up to $1 million of California real property other than their primary residence to a child/children without reassessment. If the assessed value is more than $1 million, the first million dollars is transferred without change, and only the balance is reassessed.

Prop 19 changed the rules. For any property transfers occurring on or after Feb. 16, 2021, the parent-child exclusion works like this: Continue reading… Continue reading… Continue reading…

Keeping Pace with California Tax Law: Part 1 — Understanding Prop 19

By |2022-08-18T12:29:46-07:00July 27, 2022|Categories: Legislation, Real Estate|Tags: , |0 Comments

Nobody can accuse California legislators of being lazy when it comes to tax legislation. They’re constantly introducing new legislation, which often presents opportunities for taxpayers to reduce their tax liability. And whether you agree with their approach or feel such relief is a poor use of taxpayer funds, staying on top of these relief measures only benefits you and the things you care about.

As one of California’s premier tax and financial strategy firms, we keep a close eye on changes to federal, state, and local tax code, so that we can fine-tune each of our client’s personalized tax-savings and wealth-building plans.

California Proposition 19

In this three-part series, we discuss three recent changes to California tax code that may impact your taxes (hopefully in a good way):

Understanding Prop 19

Prop 19 — The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act — is intended to help retirees and older homeowners sell their primary residence and relocate within California more affordably. Starting April 1, 2021, eligible California homeowners could sell their primary residence and transfer the tax base from their previous home to their next home of equal or lesser value.

For example, suppose you’ve owned a home in San Diego for the last 20 years and its assessed value is Continue reading… Continue reading… Continue reading…

Tax Relief for California Taxpayers

By |2022-07-13T16:46:28-07:00July 13, 2022|Categories: Legislation|Tags: , , , |0 Comments

The California State Assembly — the lower house of the California State Legislature — recently passed legislation to offer inflation relief to California residents who filed their 2020 taxes along with addition tax-relief legislation. In this post, we touch on the key points of the new legislation.

Better for Families (Inflation Relief) Tax Refund

California Assembly Bill No. 192 establishes what is commonly referred to as the “Inflation Relief Tax Refund.” This bill authorizes a one-time tax refund of up to $1,050 for married filing jointly (MFJ) taxpayers with California Adjusted Gross Income (AGI) of up to $500,000 with a dependent and up to $700 payment for qualifying individual taxpayers with California AGI of up to $250,000 with a dependent.

Payments will be distributed starting late October (the earliest) with the last batch expected to be sent by the middle of January 2023.

To qualify to receive the refund, you must meet the following criteria:

  • Filed your 2020 tax return by October 15, 2021. If you didn’t file your 2020 tax return by this date, you’re not eligible for the refund. However, if you applied for an Individual Taxpayer Identification Number (ITIN) and had not received it by October 15, 2021, you must have filed your complete 2020 tax return by February 15, 2022.
  • Have a 2020 California adjusted gross income (AGI) of $500,000 or less (married filing jointly or head of household) or $250,000 or less (single filer)
  • Have been a California resident for six months or more of the 2020 tax year
  • Have not been eligible to be claimed as a dependent in the 2020 tax year
  • Are a California resident on the date the payment is issued

If you qualify, you will receive a direct deposit payment (if you filed your return electronically and indicated direct deposit on your tax return); otherwise, you’ll receive payment in the form of a debit card.

The payment amount you can expect depends on your adjusted gross income (AGI): Continue reading… Continue reading… Continue reading…

Do You Need a Title Lock Service?

By |2022-07-07T16:18:33-07:00July 7, 2022|Categories: Real Estate|Tags: , , |0 Comments

Many companies these days are promoting title lock services, claiming to offer protection against scammers who commit title fraud — a crime that involves fraudulently transferring a property title or deed from the rightful owners to the scammer.

Sadly, committing title fraud is easy — the scammer simply forges or tricks the owners of the property into signing a quit claim deed or other document to relinquish ownership of the property. The scammer files the document with the county clerk to record a change of ownership — to the scammer. The scammer can then try to evict the rightful owners, claim ownership of the property for themselves, and then sell it or (more commonly) borrow money against the home and leave the homeowners and lender to battle over the mortgage payments.

Title Lock Service concepts blue banner.

Scary, yes, but does a title lock service provide sufficient protection to warrant its cost? In this post, we explain what a title lock service is and help you decide whether it’s something you want to spend money on.

What Is a Title Lock Service?

First things first — a title lock service doesn’t lock your title. It doesn’t prevent someone from filing a quit claim deed or using some other method to fraudulently claim that you transferred ownership of your property to them. All it does is notify you, after the fact, when someone succeeds in filing a document that shows a transfer of ownership. It’s sort of like when you receive a notification from an online service that someone changed the username, password, or contact information for your account and letting you know that if you didn’t do it, then something suspicious is going on, and you need to look into it.

Many counties in the U.S. are starting to offer this same service for free. All you need to do, in most cases, is fill out a form to register for the service, provide proof of identity, list the properties you own that you want to be notified about, and specify your preferred contact information — email address, phone number, or mailing address. Whenever someone tries to transfer ownership of your property or change the name on the deed, the county notifies you, so that you can take legal action to protect what’s yours.

Title Insurance Versus a Title Lock

Don’t confuse title insurance with a title lock. Title insurance is a Continue reading… Continue reading… Continue reading…

Alert: IRS Increases Mileage Rate to 62.5 Cents Per Mile

By |2022-06-30T11:30:14-07:00June 30, 2022|Categories: Mileage|Tags: , , |0 Comments

Gas prices have risen, on average, about $2 per gallon since this time last year. In response, the Internal Revenue Service (IRS) has increased the standard mileage deduction for businesses 4 cents a mile starting July 1, 2022 — from 58.5 cents to 62.5 cents per mile.

Likewise, the new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022 — up 4 cents from the rate effective at the start of 2022. (The 14-cent per mile rate for charitable organizations remains unchanged because it’s set by statute.)

New IRS Mileage Rates

An increase of only 4 cents a mile might seem like a pittance, but when you do the math, it adds up. For example, if you drive a vehicle that gets 20 miles a gallon, 4 cents a mile results in a deduction of 80 cents per gallon.

Of course, that still doesn’t come close to covering the extra $2 per gallon you’re paying at the pump, not to mention all the other rising costs of owning and maintaining a vehicle for your business. You know, things like lease payments (or depreciation), license and registration, insurance, maintenance, and repairs.

Here’s a thought. Have you considered halting your habit of taking the easy way out (using the standard mileage deduction) and instead start keeping detailed records of all the actual costs of owning and operating the vehicle?

Understanding Your Options: Actual Expenses vs. Standard Mileage

That’s right. The IRS gives you two ways to calculate your business vehicle deduction: Continue reading… Continue reading… Continue reading…

Understanding the Tax Implications of NFTs – Nonfungible Tokens

By |2022-06-16T12:14:52-07:00June 16, 2022|Categories: Taxes|Tags: , , , , , , |0 Comments

Just when you thought that the world of finances couldn’t possibly become any weirder or more complex, somebody comes up with a new idea to challenge our understanding.

When FDR started the process of taking the U.S. dollar off the gold standard in 1933 and Nixon completed the process in 1971, they were unaware of where technology would lead us decades later. They had no clue that they were essentially opening the Pandora’s box of alternative currencies — first with cryptocurrencies like Bitcoin and ETH, and now with Nonfungible Tokens (NFTs).

Taxing Nonfungible Tokens

These and other digital currencies and assets are not only challenging traditional monetary policy across the globe but are also adding another layer of complexity to tax laws and their enforcement. While Bitcoin seeks to replace traditional currencies, some can argue that NFTs — which also rise and fall in value — are seeking to replace physical assets, and therefore are subject to income tax and capital gains taxes.

In this post, we take a deeper dive into what NFTs are and the tax implications surrounding their ownership and use.

What Are NFTs (Nonfungible Tokens)?

Stories about Nonfungible Tokens (NFTs) are everywhere in the news. But what exactly are they?

Nonfungible Tokens (NFTs) are digital assets that represent real-world items, from art and music to articles and sports trading cards. But these aren’t just copies of files found on the internet. NFTs are nonfungible, meaning they’re Continue reading… Continue reading… Continue reading…

4 Ways Businesses Can Save on Taxes in 2022

By |2022-06-09T14:02:33-07:00June 9, 2022|Categories: Business Taxes|Tags: , , , |0 Comments

Every cloud has a silver lining. That’s especially true of the clouds that gather around business owners near tax time (which happens to be all the time, by the way). The tax code is highly complex.

According to one estimate, the federal tax code — at a whopping 2,652 pages — is 187 times longer than it was a century ago. The silver lining to all this? Within that highly complex tax code are the keys to the kingdom: unlocking enormous tax savings.

This is especially true for businesses, because government organizations at the federal, state, and local levels all want to stimulate business development. They know their funding is tied directly to the profits and personal income that those businesses generate. And the primary way governments stimulate business is by offering tax breaks and incentives.

Tax Forms for Businesses

As a business owner, you can capitalize on those tax breaks by 1) knowing about them and 2) taking full advantage of them over the course of the tax year. That means not waiting until April 15 of the following year, when it may be too late.

In this post, we address four areas of focus for reducing your business taxes in the 2022 tax year. We also want you to consider asking your CPA or tax planning firm about scheduling a mid-year meeting for your business, because the steps you and your CPA take now will pay dividends in the Spring of 2023!

First up is a section of the tax code that allows you to deduct the cost of certain types of property as an expense, rather than requiring that the cost of the property to be capitalized and depreciated.

Section 179 Expense and Bonus Depreciation

The U.S. tax code provides different methods for writing off the cost of new or used machinery or equipment. Consider the following four options: Continue reading… Continue reading… Continue reading…

Want to Reduce Your Income Tax? Start Planning Now!

By |2022-06-02T14:06:42-07:00June 2, 2022|Categories: Taxes|Tags: , , , , , , , , , , , |0 Comments

You probably just filed your 2021 tax return a month ago or so, and you’re ready to put taxes at the back of your mind for at least a few months. This may not be your best thinking because, if you want to pay less in 2022, now’s the time to start planning.

What you do from now until December 31 of this year, can have a significant impact on how much income tax you’ll owe, or the size of the refund you can expect to receive, next year. That’s why here at SWC, we’re encouraging our clients to schedule a Mid-Year Tax Planning Meeting as soon as possible.

Marni Walker SWC CPA

In fact, tax planning is becoming increasingly important for two reasons:

  • First, thanks to inflation and other economic pressures, increases in income aren’t likely to keep pace with inflation. Saving on taxes may help alleviate some of that pain.
  • Second, if any pieces of current administration’s tax plan are implemented, tax rates for both individual and corporate taxpayers could increase. Having a tax plan in place to account for these potential increases and maximize the deductions and credits for which you qualify, may help to counter some of those increases.

As you prepare for your Mid-Year Meeting with us, we encourage you to start thinking about the various steps you can take now to avoid any nasty surprises next year, including:

  1. Consider adjusting your tax withholding or estimated payments
  2. Get a grip on the timing of investment gains and losses
  3. Take advantage of lower tax rates on investment income
  4. Check your deduction strategy
  5. Be prepared for issues related to virtual currency
  6. Consider if a reverse mortgage is right for you

In this post, we’re going to cover all of the above and more. First up, tax withholding and estimated payments.

Review Your Tax Withholding or Estimated Payments

The U.S. has a pay-as-you-go tax system, meaning that citizens pay taxes as they earn money. Here’s what that means: Continue reading… Continue reading… Continue reading…

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